Advice to a Student Wanting to Start a Restaurant

[jackal10]

Every so often I get a student on the MBA course or who is referred to me who wants to start a restaurant. I've just had another one, who feels motivated to open a Caribbean themed restaurant. What advise should I give them besides "Don't" or "You are foolish and will loose all your money and friends".

Usually these are people with no catering experience, but who like giving dinner parties and have been told by all their friends (also not in the trade) what a good cook they are.

I try and explain that restaurant cooking and home cooking are different, and the restaurant trade is capital intensive, labour intensive and fickle, and few make money, except from property speculation.

If that fails I tell them to get some catering experience first, and if need be arrange for them to work for a while in a local restaurant where the chef will give them a hard time. I also suggest they read Bourdain's Kitchen Confidential, and assure them it is not exaggerated.

If that doesn't put them off I then I ask for the budget and the marketing plan, and ask them to justify the expected occupancy figures.

I'm glad to say no one has opened a restaurant yet.

[srhcb]

Besides the excellent advice you've already related:

Go to work in a restaurant. Start off on the wait staff, bussing tables and washing dishes. If you still love the business ....

Secure twice as much financing as you think you'll need.

Partner up with somebody who has experience in the business in either the front or backstage, preferably both.

Be prepared to fail. They say success breeds success. In the restaurant business failure (sometimes) breeds success.

As for a comp'd meal in exchange for your advice. If they say "sure", give them an "F"!

SB (been there, done that, but still tempted to do it again )

[LaurieB]

My advice may seem, on the surface, over-simplistic.

And that is to know how to everything yourself. And I don't mean cooking, stocks, pastry.

In random order:

Can you bartend? Know how to stock a bar? Design and purchase for a wine and or other beverage list?

Can you or have you waited tables?

Can you do plumbing/electrical/heating and cooling repairs? Paint?

Do you have at least a rudimentary sense of how to handle a payroll?

Do you have good people skills -- from dealing with surly young prep cooks to surly patrons, and all the levels of folks in between?

Do you have a good design sense, balanced with what is actually practical for a working restaurant? (Example: I once worked at a restaurant where the salt & pepper shakers had been selected solely for their very cool look --- completely in keeping with all the other design elements. They were so cool looking that customers where slipping them into purses and pockets at an alarming rate -- and a $40 a pair, that was a hit. They also had to be hand washed.)

You get the picture.

The advice to work for a while, in both front and back of the house, is excellent. Owning and operating a good restaurant is not merely about being a good cook. Extreme good luck to you.

Laurie

[FabulousFoodBabe]

My advice would not be a checklist of "can you" or "do you," because they can pick 5 out of 10 and say, "I'm halfway there."

I'd say, "work in a restaurant for at least 6 months." Doesn't matter how or where; six months will tell you if you're cut out for it. Listen and learn, and believe what you see.

One of the things that makes me smile (well, wince) is the attitude that "properly managed, there's no reason why a restaurant can't be profitable in the first six months/be open five days a week and stay solvent/offer a little something for everyone, thereby broadening the customer base and, ka-ching!, make even more money." "That failure rate might happen to an experienced restaurateur, but he doesn't have a law degree from Yale." That kind of thing. (what, if people don't come in, ya gonna sue them?)

Lotsa luck. It's hard to convince people that yes, its a labor of love but that it's a business as well.

[BonfireCuisine]

Ah the labor of love...

I have my own labor of love - a 59 seat bistro in Seattle. Here are my rules for staying alive (so far so good - ask in me again in one year)

1. Gather more money then you think you need. No really have it in cash in your bank. Do have access to your bank at all times via internet banking. Know who has been paid and who hasn't. Know when money comes in and when to expect it in.

2. Don't get a second mortage to fund your restaurant. Don't think about it, don't put up your home.

3. If at all possible, stay away from investors who have never been in the restaurant business. They wouldn't understand the business flow.

4. Inventory everything - know what you have on hand, where it is, what it costs. This is where you determine "are we making money"

5. Don't expect to get rich but do hope you can pay the core bills.

6. Determine where you can get your supplies. Not just sysco, FSA but the farmers market, the bread guy, fish guys. This allows you to; if you need to, run your produce to the edge (to save money) and yet have a place to get more.

7. Accept the fact that Credit Card processors and the actual process sucks. When a guest dines and pays for food on Friday, you won't see the funds in your bank till Tuesday. So for me, On MOnday I have lots of money - then I write checks for bills and by Friday I'm almost broke. Then on MOnday it starts all over again.

8. Question everything - no really even your (depending on your experience) bartender, wine director, chef, supplier - hell even your wine rep. Unless you are a rockafeller, you need to understand your business from the bottom up.

9. Accept the fact that your landlord, as nice as they may be when you sign the lease. Is only concerned that your monthly check clears. They really (95% of the time) don't give a rats ass if you had your checks stolen and the bank freezed your account because they thought fraud was going on and you'll be late in the payment. The landlord really doesn't care, sad to say but true.

10. Resist the urge when in business to get extra money from those "restaurant funding" companies. All it is - is a way to pay more interest to someone else for the money you don't have.

11. Learn to say "No thanks not interested at this time" and hang up. You will get multiple phone calls each day asking you to buy this, order that, advertise in this book/mag/newspaper/website.

12. Lastly but not my complete list - realize that if you pay attention, keep good books, maintain consistency, watch the labor hours, pay your bills mostly on time, keep your food costs low and try not to drink your all of your good wine. Maybe just maybe you'll survive - so far it's working for me abet slowly but working.

Running a restaurant is a pain in the arse but at the same time fun and exciting. Boy do I have some stories to tell but thats a different email.

Well in anycase - anyone that tries to open a restaurant best of luck and if I'm in town, I will come by and give you some business. Maybe I'll get that nice bottle of wine that will turn your nine hundred dollar night to a thousand dollar night. What can make a good night a great night is that one four top that comes in 15 mins before you close and they happen to be foodies.

Jason

[Mikeb19]

The restaurant business is difficult. It's unlike any other business. I can't imagine possibly opening a restaurant without intimate knowledge of the business.

What alot of people forget, is that a good chef is your most important asset. I've recently seen several restaurants do very poorly because of a lack of a stable, skilled chef (the owner thought it would be a good idea to hire 2 co-chefs at the last minute - well the idea bombed, and hard). As nice as the decor, drinks, service is, people come for the food. Bad food and you won't get any return business.

The best restaurants I've seen always have been ones in which the chef had a financial stake in the restaurant (owner/part owner). I've seen it happen - the owner and chef have a disagreement, the chef leaves and takes the whole staff, and the restaurant is forced to close.

In any business, you need a product. Then you build your business around that product. You can't build a business, and then at the last minute come up with your product and hope to be successful.

[BryanZ]

Every so often I get a student on the MBA course or who is referred to me who wants to start a restaurant. I've just had another one, who feels motivated to open a Caribbean themed restaurant. What advise should I give them besides "Don't" or "You are foolish and will loose all your money and friends".

I'm glad to say no one has opened a restaurant yet.

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Kids like this are dumbasses who have no future. Definitely. I would say there's no hope.

Definitely should stick to I-banking or law school. Yep.

[lcdm]

Wow what a question. I agree with most of what is written.

My husband and I own a wine shop. He manages it, I work a “normal” 9-5 job w/benefits (I worked there part time plus my “normal” job before kids). During college I worked as a waitress at a diner 6pm-6am on the weekends and 1-2 nights a week. IMHO working somewhere and owning are two entirely different things.

1.Benefits – offering benefits may break the bank, if you don’t you have to make sure you are covered personally $$$$$$ (also you get what you pay for).

2.Wait staff, cooks, dishwashers are a transient lot, who will fill in the spaces when someone doesn’t show up (usually during a holiday weekend). Also you have to worry about who is getting along with who, who’s not. What are you going to do if a waitress complains about getting pinched by customers/by the chef, what if the waitress retaliates (like sort of stabbing a cook with a knife)?

3.Don’t plan on a life outside your business, holidays, weekends, sleep, vacations, social engagements, forget them. In fact if you plan a vacation 3 employees will not show up (jail, sick, never coming back, shacked up/drugged out).

4.No one cares about your business the way you would, get over it, it’s just a fact. Maybe you’ll get lucky and hire someone that does, don’t count on it.

5.Some may say look at the guy who is successful and owns three restaurants……. He/She worked like a dog for 10-20 years to just pay their loans and doesn’t know their kids birthdays (if they have kids).

6.Family & friends – how will you handle this, discount/free – they may take up valuable table space from paying customers.

7.Fundraisers – prepare to be bombarded by every school/charity/hospital/town function, yes they are important, but when you are just paying the bills it’s tough and people tend to think “since you own a business”.

8.More importantly – do you like people? I mean really like people, all types. The blue haired ladies that ask for a discount, the people that count their pennies, the people that complain to make themselves seem better/more knowledgeable than you. The people that send stuff back even though it’s fine, the people that complain to receive a comp…… My sister and husband opened a business and came to the conclusion that they were not cut out to serve the people (they liked people just fine, were great at parties, my sister has the patience of a saint, just couldn’t stand the neediness and “special requests”).

[johnsmith45678]

Yes, for six years, 1976-1982, I owned a restaurant called Inn Season. It was the craziest thing I ever did. You can see the announcement of opening, a sample menu, or just the logo. If anyone near and dear to you wants to open a restaurant, I can now be hired to talk them out of it. The restaurant was purchased and reopened as the Nagapan restaurant.

http://muller.lbl.gov/

[Timh]

Also ask them how deep are their pockets? Can they float the place for a year, incl. payroll inventory, and all of the accompaning taxes?

[Daniel Rogov]

Usually these are people with no catering experience

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Much of the advice given here is quite sound but I would question the desirability of gaining catering experience before opening a restaurant.

There are huge differences between catering and the restaurant industries. As one example - in catering you have to serve x meals, all basically the same, with a few options perhaps, and as close to possible all of the meals have to be served at the same time. In restaurants the trick is a la minute preparation, responding to many different orders, some coming simultaneously, some hours after the other.

There are huge differences between the well-run catering business and the well-run restaurant. Different traiining requirements on in-the-field demands on chefs, sous-chefs, cooks of various kinds, service staff, etc.\

It is true that at times restaurants are asked to "cater meals" to a group. In nearly all such cases even the finest restaurants fail to live up to their usual high standards.

[jackal10]

By catering I meant restaurant or similar experience.

Thanks for all the comments.

"In the the restaurant trade to make a small fortune start with a large one"

I just wish we could be more positive. There are restaurants that succeed, and people who do make money, even if they are the exception.

[Carrot Top]

On the positive side, Jack, there are some fairly standard tools (measurement tests) used by restaurant consultants that can give some very good information as to whether either a specific business plan or a specific location would prove better rather than worse. It's no assurance of success, but it is a good stepping stone to start off on - a bit more data can be assessed beyond the nice soft fuzzy stuff.

These tools are available in some textbooks that focus on restaurant management and/or opening a restaurant.

[ruthcooks]

The good cook who receives compliments on his food from friends is basking in the glory.

Make a list of the other things involved in restaurant running (assuming a moderate beginning) besides cooking and basking:

Cleaning toilets when the cleaners don't show up

Washing dishes when the dishwasher doesn't show up

Cooking when the chef/cooks don't show up

Running down to the grocery when the delivery truck: a) doesn't show, b) delivers inferior goods, c) is out of what you need most, and/or when you forget to order at all

Bookkeeping and writing out checks

Taking money out of your pocket to cover those checks

Dealing with nasty customers, complaining customers, and little old ladies who smile and tell you that you should include dessert in the price of the meal

Having the walk-in go on the fritz and having to replace all of your ready made foods and staples like a 5 lb jar of blue cheese dressing

Taking the linens home to wash every night

Having a staff of students who all quit because you won't allow them to go to Ft. Lauderdale for spring break

Ask the would be restaurant owner if he loves each of these things as much as he loves cooking, planning, basking or whatever most appeals to him. These are the things he'll spend most of his time doing.

When I closed and auctioned off my second restaurant, an acquaintance came up to me and said, "I'll bet this is just like losing a child."

I said, "Are you kidding? This is like becoming a bird!"

[Carrot Top]

When I closed and auctioned off my second restaurant, an acquaintance came up to me and said, "I'll bet this is just like losing a child."

I said, "Are you kidding?  This is like becoming a bird!"

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I love this line.

I hope that this is not going too far off-topic. . .if it is, perhaps a moderator could set up a different thread, but this question arises directly from all the thoughts posted above and from the original question about opening advice. . .

What do you think is the reason most restaurants fail, that do fail?

I am sure that the NRA (the restaurant association not the gun people ) has statistics on this, but it's always worthwhile to hear ideas directly, too.

[Carrot Top]

I'd also advise that they read/study the top trade journals for at least a year preceding their final decision as to whether or not they want to "really do it".

Something like this one in the UK might be useful. Trade mags always tend to put a different "face" onto a business than one would see otherwise.

[Reefpimp]

For a few years now I've wanted to combine my two trades into a business.

You see, not only am I a pretty decent line cook (I sneer at 'chefs,' because I can out-drink most of them and because I need something to feel superior to) but I am also a merchant mariner; an able-bodied seaman with lifeboatman and tankerman endorsements, and am on my way to my 600-ton Master's and Unlimited Tonnage 3rd mates papers. My idea has been to buy a small ship, and put a restaurant on that. Waterfront location, obviously; and the interesting thing is, it falls under Admiralty law, not any particular set of codes. The vessel i'm looking at (and Vessel is to be the name of the establishment, because it has pleasant connotations and is a gentle pun) is a former USCG icebreaker, 180' long. Show me where in the United States one can buy waterfront land outright for $1685 a running foot, especially with a structure meeting applicable laws; I can, and will.

But the more I look into it, the more disenheartened I am. I think I might revamp my business plan to run it as a "catering hall" that is occasionally open to the public. That would allow me to only need to run it 5 days a week, or less. Or perhaps as "time-share condos:" Investors purchase a stateroom for a week at a time, and I cook for them and maybe cruise around if I can find the sailors willing to work for cheap. Surely to God somebody wants to do that and eat Mediterranean Fusion three meals a day; I can think of a dozen guys right off the top of my head! Working vacation?? OKAY!!

My point being that it is entirely possible (I'm speaking theoretically here) to look forward to making a bit of money if one is willing to think outside the box. Will I be dating strippers and driving Ferraris in two years? Probably not. But I'll have a great houseboat and maybe get to do some real good cooking while I'm at it. Hell, I'm not getting rich working for other people; I might as well not get rich working for myself.

[Darcie B]

Hell, I'm not getting rich working for other people; I might as well not get rich working for myself.

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I love that line!

Just make sure you announce it on eG when you open; I'm sure you get some customers.

I have always wanted to work my way across the ocean to get to Europe (cooking on some sort of commercial vessel). My fear is that I will be someone who gets and stays seasick for the entire journey!

[johnsmith45678]

Will I be dating strippers and driving Ferraris in two years?

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Forget the restaurant -- just open a strip club (which could have a kitchen in it!).

[Reefpimp]

Thought about that. But I used to bounce in nudie bars; and if you think you've got problems with your kitchen staff, let me assure you, it is NOTHING compared to the headaches of dealing with... that particular demographic. For instance, if there are drugs on board I could very easily lose the vessel under RICO seizure statutes. And there is no such thing as a strip club without cocaine. At least, though, I wouldn't have to worry about them eating me out of house (boat) and home.

[BonfireCuisine]

If I may interject – Catering is a skill that I think really compliments the skill of a restaurant owner (among other things).

I owned (still do) a catering company before buying my restaurant. True there are completely different aspects to both but at the same time there are aspects of both that make one better at each one. For example, when you do a catering job and you leave the kitchen. You drive 40 mins to the job site, unpack your things, setup your tables, set up your stations, etc… If you forgot to bring ladles – you’re screwed. There is no running back for that “one” item. Now of course this forces you to be come creative and hope that “insert grocery store name” has some kind of replacement item. I think it kind of breaks down like this…

Catering gives you the skill of absolution – meaning Mise en place means more here then anywhere else. At the restaurant, if you run low on filet, you can quickly cut it to order. On a catering job, if something happens and you don’t have it – SOL.

Restaurant gives you speed – there is nothing like the feeling you get after you just plated 400 covers on a Friday night in a hot, stuffy kitchen next to other cooks who smell worse then you do.

Catering gives you cost control – waste not want not – do you take a filet of salmon and cut 5 perfect 6oz pieces to leave one 3oz portion or do you make 6 perfect 5.5oz portions?

Catering gives you labor control – want to serve a dinner party on 3 people ask me how.

Restaurant allows you test out your menu idea before you serve it as a entrée selection.

Given that small list – I’d even say (my experience has hotel and country experience) working in hotels, country clubs, etc.. and working in the kitchens or even as a banquet server and putting out banquets that total of 1000 for the evening. That teaches you organization, preparation, patience and urgency.

But in reality – the restaurant business is a hard business. Not so much the cooking part; it’s a walk in the park, it’s the other part of business that’s a pain in the arse. I digress what other people have said in this thread.

Regarding dating strippers and driving Ferraris – strippers only stay as long as the money is flowing and it’s not the Ferrari that costs a lot of money (once you get past the purchase price) it’s the monthly insurance payment.

Love your post Ruth – except here in Seattle I’d change (paraphrase) “staff of students quit because you won’t let them do spring break” to “staff of burners quit because you won’t let them go to burning man”.

Jason

[Carrot Top]

I’d change (paraphrase) “staff of students quit because you won’t let them do spring break” to “staff of burners quit because you won’t let them go to burning man”.

Jason

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Aside from underfinancing, this is the number one reason that I can see happening for small places closing (a bad meal or two makes customers not go back, and creates "talk" that affects future business). It creates such inconsistency in food and service that it is heart-rending to watch, yet the solution seems next-to-impossible to find.

Edited October 31, 2006 by Carrot Top (log)

[Lactic Solar Dust]

I believe that if you truly love business, cuisine, and serving people then I think we should support whoever wants to open a restaurant. It is important, however, that this person needs to seriously consider if they truly love business. As we all know there are so many different variables that are entered when running any business: marketing, upkeep, etc... You need to be ready to put your heart and soul into your business. If you are not ready to commit to being the first one there and the last one to leave perhaps as late as two or three in the morning then do not even think about.

Of course you need a passion for serving people and making them happy.

Passion for cuisine comes last. You need to possess a good business sense and a passion for serving people.

A lot of work...but very fun if you love it!

[vengroff]

Whenever a brilliant dinner party host starts thinking about restaurant ownership, I always offer the same advice:

Twice a week, every week for the next year, host a dinner party for 10. Buy quality ingredients and good wine from passionate and reputable local suppliers, then spend the whole day preparing for the dinner. For an average of $50 per person or less I am confident that you will be able to produce many fantastic dinners and have a great time, both in the kitchen and at the table with your guests. At the end of the year, you will find that you have spent $50,000, worked two days a week, and spent the other five doing whatever else interests you.

Contrast that with what you can expect the first year in the restaurant business. First, you will be working seven days a week, and rarely if ever enjoying any time at the table with your friends or customers. Second, it is highly unlikely you will burn through less than $50K. You could very easily go in the hole much deeper than that.

So if you really want to open a restaurant, save yourself a lot of time, trouble, and expense, and just take your dinner party hosting to the next level, as described above. All I ask in exchange for this advice is that you invite me to the table once or twice a month.

[larousse]

On the positive side, Jack, there are some fairly standard tools (measurement tests) used by restaurant consultants that can give some very good information as to whether either a specific business plan or a specific location would prove better rather than worse. It's no assurance of success, but it is a good stepping stone to start off on - a bit more data can be assessed beyond the nice soft fuzzy stuff. 

These tools are available in some textbooks that focus on restaurant management and/or opening a restaurant.

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Where exactly, if you know?