Starting a restaurant in Philly

[Lazrowp]

Hi!

I am attempting to document the trials and tribulations faced with opening a restaurant in Philadelphia. Before proceeding, I want to point people to the threads “The Alinea Project” and “Starting a Restaurant in NYC.” These are fabulous, inspiring, and educational to read. I hope this thread that comes close to these other threads while presenting a different perspective.

So you all know, I have been dreaming about opening a kaitenzushi (conveyor belt sushi) restaurant in the USA for many years. I lived in Osaka Japan for 5 years and it was during my time in Japan when I first came in contact with this unique restaurant style. Of course I was always discouraged by my family and friends from trying to get into the restaurant business. Finally, after “thinking” about this venture for the last 5-7 years, and working in the industry for the last 2 years in preparation, I am ready now to go for it.

I secured my Japanese Sushi Chef/key employee, my nice location in Philadelphia, my architect, my lawyer, “most” of my financing, and I even started my liquor license application. 3 weeks ago, I finally passed all my zoning requirements (I went through 3 different zoning hearings successfully: the Civic Association, the Business Group Association and lastly the city Zoning Board). Within the next 1-2 weeks we will submit our building drawings so that we can receive our building permit. My landlord will be doing some demolition and build out (new HVAC, electric & gas upgrades…) before I begin my own construction. With this in mind, "it seems" like I am on target now for a September opening! (of course so many things can happen to delay the opening)

I would like future topics to include: Finding a space, Interactions with architects & lawyers, Lease negotiation, Financials, Marketing, Branding, Menu Creation, Health Department...



Paul

[Andrew Fenton]

Welcome, Paul! I'm looking forward to reading about your experiences. There are all kinds of interesting issues that will, I'm sure, come up. I'd be interested to hear other local restaurateurs chime in, especially on Philadelphia-specific issues.

[cdh]

Welcome indeed! Would love to read about your adventures in entrepreneurship!

[philadining]

Welcome! And thanks for sharing your experiences here. I'm sure we'll find them interesting, and I hope in turn we can be of some help too.

Your restaurant should be a nice addition to our scene here. I thought the conveyor-belt sushi places I saw in Tokyo were really cool. I was a little surprised that Pod's version wasn't really successful. I think there were just too many other options there, so not everyone at the sushi bar was eating sushi, leading to less turn-over of the plates.

I would think that would be the biggest challenge, balancing the selection and freshness at the less busy times. But I think you'll do better if you're focusing on that one thing, if most or all people sit at the belt and eat from it.

Best of luck, and thanks again for sharing your insights.

[mrbigjas]

good luck, paul, and thanks in advance for sharing.

[Lazrowp]

Thanks for your warm welcomes! I would like to share the below experience:

Deciding on an area within Philly:

Before I decided on Philly, I checked out the vacancy rates in the paper. Philly showed a higher % compared to Boston and NYC so I thought that finding a decent location would be easy. (The joke was on me as the vacancy rates reported in the paper relate to office space, not ground-level retail spaces) Anyway, armed with my “vacancy-rate fact”, I began to look for a location in Philly while I was still living in Brooklyn, NY.

I hopped in my car and 2 hrs later I was in Philly looking for locations with my handy digital camera. I started my search by cruising around and taking photos of all the “for lease” signs around town. I considered University City, Old City, South Street, and Center City East and West, Chinatown, Northern Liberties and even Graduate Hospital. It was easy to compile a large list of names and numbers from the many signs and early on I felt my search was going pretty well. After a while I came to the below conclusions:

University City: Originally my #1 choice. So difficult to find a space and have an easy setup due to U.Penn’s domination of the property scene as well as their regulations. Additionally, POD has their presence on the campus. Even though my concept is so different I thought that would be bad karma. On the plus side, the University and the UPenn Hospital population was extremely attractive. Negative side - that the population is reduced in the summer.

Old City: Great area to open a bar. Not a good lunch. Mon-Wed nights slow. Thurs, Fri, Sat are the $ nights. Difficult to get a liquor license and the rents were high.

South Street: Like Old City - nice to open a bar. Not a good lunch. Mon-Wed nights slow. Thurs, Fri, Sat are the $ nights. Many people under 24 years old which is not my target.

Center City West: Potentially a great lunch and dinner. Too expensive.

Center City East: Potentially a great lunch and dinner. Best value?? (I write “??” as I can’t prove this) This area became my #1 choice after I eliminated University City.

Chinatown: Great place to open a Chinese restaurant or a karaoke bar. Least expensive rent?? (I write “??” as I can’t prove this)

Northern Liberties: I heard this was the new “SoHo area.” I didn’t think it was all-that and it was not cheap and there was no lunch. Also on the weekends it didn’t have a huge volume of traffic, except around some bars.

Graduate Hospital: Too raw now. I knew I needed something more central for a restaurant location.

Paul

[stephenc]

Chestnut east of Broad is the hot area now.

Is that where you decided upon?

[herbacidal]

I like how you've come to your conclusions, and I agree with them.

CC East is most likely your best choice.

Off the top of my head, I'd be thinking about Chestnut St, between 13th.

I don't think any of the available spaces have restaurant appropriate systems in place, so your renovations budget will likely be on the high end of your estimates. But marketing-wise I think it's a good extension off of Goldman's area on 13th, and rents shouldn't be as high because of the number of vacancies. Also Center City District would like to increase activitiy there (although what level of commitment they have is a concern.)

That said, I know Chestnut west of Broad (especially in the past year) has rents equal / comparable to Walnut. I don't know if they've extended that trait to Broad East. Plus Goldman's planning additional apartments in the area.

Chestnut 8th to 10th would also be possible, building off of Starr's presence there, although he no doubt has inspired the rent of surrounding properties to increase.

Actually, Chestnut 10th to 12th might not be bad either, with the Victory Building @ 10th and Chestnut now opening for residents.

I think Chestnut is finally seeing the seeds of increased "cool" activity.

[Lazrowp]

After well over a year of searching I found the spot 1117 Walnut Street between 11th and 12th. I had made offeres on two other locations but I was rejected basically due to my mom & pop restaurant status. Apart from the spots I made offers on, I saw 2 or 3 dozen other spaces which I rejected due to my own parameters (money, physical traits of the space, location...)

Paul

[philadining]

You've already got a spot right? 1100 block of Walnut? I think that will be an excellent location. And if a noodle house pops in nearby, even better for reminding people to go to that neighborhood for Japanese food. The only downside of that location, like most of center city, is parking, but it's a great walk-up destination.

oops, you answered my question while I was asking it! Were the other spots you made offers on in the same area? If not, why were you leaning toward those spots?

Edited May 31, 2005 by philadining (log)

[Lazrowp]

Chestnut St, between 13th: the Goldman's area

I was too late to get in there. Also, actually there will be a new sushi restaurant opening up there soon - right accross from El Vez in The Stetson building next to Capogiro. They will have a sushi restaurant on the El Vez side and a deli on the Chestnut Street Side (one large space searated by a communal kitchen... two separate businesses) I heard. I believe they will open within the next 2 months.

[philadining]

They will have a sushi restaurant on the El Vez side and a deli on the Chestnut Street Side

←

I was wondering what that was going to be, the renovations look kind of nice.

I would guess, and it's only a guess, that you could do fine amidst other sushi restaurants, that there's something about the format that you're pursuing that makes it a specific destination. A conveyor-belt place is going to be fast, less-expensive, less formal. I love that kind of thing, I can't even count the number of movies I've missed because the meal dragged out longer than I had planned.

In your research, does that seem to be the case, that a place like you're planning can coexist with other conventional sushi restaurants by serving different niches?

[KatieLoeb]

Lazrowp:

Welcome both to eGullet and to Philly! I'll be watching your restaurant development with interest. I wish you the best of luck in dealing with the myriad city agencies, regulations, etc. and feel free to PM if I can be of any assistance.

[SG-]

Hi! 

I secured my Japanese Sushi Chef/key employee, my nice location in Philadelphia, my architect, my lawyer, “most” of my financing, and I even started my liquor license application.  3 weeks ago, I finally passed all my zoning requirements (I went through 3 different zoning hearings successfully: the Civic Association, the Business Group Association and lastly the city Zoning Board).  Within the next 1-2 weeks we will submit our building drawings so that we can receive our building permit.    My landlord will be doing some demolition and build out (new HVAC, electric & gas upgrades…) before I begin my own construction.  With this in mind, "it seems" like I am on target now for a September opening!  (of course so many things can happen to delay the opening)

I would like future topics to include:  Finding a space, Interactions with architects & lawyers, Lease negotiation, Financials, Marketing, Branding, Menu Creation, Health Department...



Paul

←

I applaud your decision to introduce a kaiten sushi bar here in Philadelphia, we truly need a wider variety of Japanese restaurants. I'm sure you considered this but the choices we have today on one spectrum is the expensive but IMO inconsistent and overhyped Morimoto and the rest basically fall into the predictable mediocre cookie cutter standard "American" Japanese restaurant menu. Furthermore I would argue that most ciritcal staffing (ie. food) locally are more often than not likely run by ethnic groups other than Japanese which I don't care what anyone says takes away from its authenticity.

My only advice is to keep it simple and focus on the quality and authenticity of the food. We've got too many places that just can't seem to get the fundamentals right. Honestly there's not a lot of competition to worry about when it comes to Japanese food. Look forward to your new place and keeping my fingers crossed.

[Lazrowp]

Making Offers:

I know that Conveyor belt sushi (C.B.S.) needs a high-volume area and can coexist with traditional sushi restaurants…as our target audience/price point is different.

One of the key factors in the C.B.S. business model is the low price point. Unfortunately, that translates directly into lower profit margins, which means that C.B.S. needs a higher volume of people to compensate for the lower margins. After I determined that Center City East was my 1st choice around Philly I contacted brokers. The brokers who bothered to return my initial call were all glad to meet. I began to see more and more places and over time learned what I liked and what I didn’t like. In fact, one of the initial spaces turned out to be the 1st space I made an offer on.

I learned a couple of things from dealing with brokers. Mainly, that if you are not a large existing entity, you will need a lot of luck to find a broker who will really pay attention to your needs. The brokers are usually working more for the landlord which is where they make their money. In my situation, the landlord pays the broker their fee for signing me up so the brokers loyalties are more with the landlord. Also I learned that one broker does not have the same information that another broker might have. I kept in contact with at least 3-4 brokers during my search, and only towards the end of my year plus search did any broker come close to showing me the same spots. I was extremely disappointed in this aspect as I was unable to really on just one broker for anything.

My 1st Offer:

1029 Chestnut Street. Uuugggg!!!!! This property is owned by the Philadelphia Parking Authority. It was a great price but it only had 2 out of the three “location location location” that everybody talks about. (At night this block has a ghost town feel). So, their broker agents wooed me for months and finally I made an offer. Once I submitted my offer, I was strung along for 2-3 months waiting for their response. Supposedly the people who made the decisions were out, or they were working on something else big and couldn’t consider my project yet, or they needed to see about another offer. Finally I was given a positive response back from my initial offer. I brought in an architect, a kitchen hood company, a HVAC company, and I even had a builder buddy come down from NYC to check the space out so that we put together a list of concerns that I needed addressed before I went any further. Of course this delayed the P.P.A.’s response again and finally, after a 10 month period from the start, I was told simply that Joe Eagan who heads the P.P.A. and has compete discretionary authority, decided he didn’t want a restaurant in the space. I was shocked. Only recently, months later, have I learned to “let my negative feelings go.” This was a big live and learn experience.

My almost 2nd Offer:

7th and Chestnut. Interesting block that has nice retail business. There are 3 or 4 spaces restaurants spaces still available today on this street. The space I was most interested was across from arguably one of the best Japanese restaurants on the East Coast, Morimoto. I love the contrast of a restaurant like Morimoto and a C.B.S. restaurant. I liked the space I was looking at and was excited about being so near to Morimoto as well as the other restaurants on that block, but in the end the build out costs would have been too much. I was also still slightly stunned over the 1029 Chestnut rejection, which I considered almost like a backup spot as I was considering the 9th & South location at the same time.

My 2nd Offer:

9th and South Street. I did not like “South Street” for C.B.S. but 9th & South, near the Vespa store and the Whole Foods Supermarket is a different vibe than “South Street.” This spot would have a nice dinner, great weekend business, but lunch would be trouble as there is minimal activity. I made an offer on the property but ultimately was turned down as the owners of the property had a different business in their mind for the space. Fortunately, the same owners liked me for a separate space which turns out to be the space I settled on.

My 3rd Offer:

1117 Walnut Street. Soon after I was presented with this opportunity, I made my offer. I knew this location potentially had the “location location location” I was looking for. Right near Thomas Jefferson Hospital and University, in the Washington Square West neighborhood, in an active nightlife bar scene, close to Chinatown as well as other professional offices. The block seemed to have a decent lunch business as well as a decent dinner business. This is a rare combination.

Paul

[Lazrowp]

Architect Interaction

I wanted my best friend’s brother to be my architect but early on he told me he wouldn’t do it as he felt I needed someone local – which made sense both then and now. I wasn’t too keen on needing an architect, but that was because I was too naïve about building a restaurant in the beginning. I thought that since the conveyor belt that I would use would represent almost 100% of the seating capacity, that I would basically just be painting the walls, adding some lights and opening the doors. I didn’t realize that the architect would be doing everything from inspecting the sites, hand-holding, to helping shape the conveyor belt, to helping with the lease negotiation, to designing the restaurant, to creating the documentation necessary to submit for every meeting and license, to attending zoning meetings….

I learned that the architect does not do a couple of key things I thought they would do:

- Kitchen design: there are specialists out there who make their living designing kitchens. Even architects who have done several restaurants always say they don’t specialize in the BOH. Luckily the companies who sell restaurant equipment all claim that they can provide kitchen drawings and certainly their advice is valuable.

- MEP (mechanical, electrical, plumbing) drawings are done by engineering firms, not architects and are often necessary.

- Construction. I didn’t realize that the architect does not necessarily become involved with this step. Project management is not always included in their fees. (my construction has not yet begun so I am sure to have some interesting learning experiences)

Paul

[mrbigjas]

ok when are you hoping to open again? because i'm jonesing conveyor sushi now.

[Lazrowp]

Early September if all goes as planned.

Paul

[shacke]

Early September if all goes as planned.

Paul

←

Let's start planning an e-gullet dinner - LOL. It would be a fitting end to this interesting thread.

Evan

[stephenc]

What's the decor gonna be?

Traditional rustic japanese, or post-modern?

And have you settled on a name yet?

[Cath]

How timely - haven't posted here in a long time, in large part because my husband and I have spent the better part of a year trying to open a restaurant on E. Passyunk Ave. in S. Philly. It's been and continues to be baptism by fire, including but of course not limited to zoning hearing delays, unsatisfactory architect issues and inevitable construction delays - we thought we'd be open in May, then June/maybe July, now it's looking more like September (2005 - we think).

Given our relative lack of experience in the industry, some people have remarked on how "bold" we are to do this, which I know is code for "ARE YOU HIGH??" But an unusual opportunity for us to make a mark in our neighborhood - in the form of a very well-priced site on a revitalizing commercial strip - presented itself, and our very talented chef (Luciana Spurio of the former Buon Appetito, for those of you who may remember) was eager to stay on in the area and spread her wings. So this is where we are now, anxiety-ridden and cash-poor but excited.

I could go on and on with all the excruciating details (and I just might yet!), but it's great to not feel alone!

[Lazrowp]

You are not alone!

[mrbigjas]

cath, i was totally gonna point you to this thread so you could... uh... commiserate? is that the word i'm looking for?

but i hadn't gotten around to it yet. glad to see you came across it.

[Lazrowp]

How timely - haven't posted here in a long time, in large part because my husband and I have spent the better part of a year trying to open a restaurant on E. Passyunk Ave. in S. Philly.  It's been and continues to be baptism by fire, including but of course not limited to zoning hearing delays, unsatisfactory architect issues and inevitable construction delays - we thought we'd be open in May, then June/maybe July, now it's looking more like September (2005 - we think). 

Given our relative lack of experience in the industry, some people have remarked on how "bold" we are to do this, which I know is code for "ARE YOU HIGH??"  But an unusual opportunity for us to make a mark in our neighborhood - in the form of a very well-priced site on a revitalizing commercial strip - presented itself, and our very talented chef (Luciana Spurio of the former Buon Appetito, for those of you who may remember) was eager to stay on in the area and spread her wings.  So this is where we are now, anxiety-ridden and cash-poor but excited. 

I could go on and on with all the excruciating details (and I just might yet!), but  it's great to not feel alone!

←

Cath, here is a list of items that I try to consider:

Marketing

Advertising

Public Relations

Promotions

Branding

Community Relations

Environmental Stewardship

Accounting

Purchasing

Receiving

Staffing

Training

Financing

Insurances

Payroll

Designing

Employee Morale

Repairs & Maintenance

Financial Reporting

Employee Manuals

Job Descriptions

Health Department

Storage

Conveyor Belt Strategy

Uniforms

Policies & Procedures

Lunch Menu

Dinner Menu

Kids Menu

Takeout Menu

Security

Internet Presence

Trash Removal

Exterminator

[shacke]

How timely - haven't posted here in a long time, in large part because my husband and I have spent the better part of a year trying to open a restaurant on E. Passyunk Ave. in S. Philly.  It's been and continues to be baptism by fire, including but of course not limited to zoning hearing delays, unsatisfactory architect issues and inevitable construction delays - we thought we'd be open in May, then June/maybe July, now it's looking more like September (2005 - we think). 

Given our relative lack of experience in the industry, some people have remarked on how "bold" we are to do this, which I know is code for "ARE YOU HIGH??"  But an unusual opportunity for us to make a mark in our neighborhood - in the form of a very well-priced site on a revitalizing commercial strip - presented itself, and our very talented chef (Luciana Spurio of the former Buon Appetito, for those of you who may remember) was eager to stay on in the area and spread her wings.  So this is where we are now, anxiety-ridden and cash-poor but excited. 

I could go on and on with all the excruciating details (and I just might yet!), but  it's great to not feel alone!

←

I had heard Buon appetito was moving but then it closed and never re-emerged. I wonder if it was YOU who told me that when we dined there? Looking forward to returning. Ah those squash blossoms....

Evan