- WHITE PAPERS
By Marjorie Borell
Most aspiring restaurateurs imagine creating an intimate gathering place at which to feed and entertain their neighbors, friends and family. Some are chefs lured by the joy of gourmet cooking. Others are simply seeking that pot of gold.
But just because you have experience managing a restaurant or can whip up a divine cassoulet, that doesn’t guarantee you’ll be able to take the heat when the bartender is indisposed or the equipment breaks down.
Statistics show that almost 80 percent of all restaurants close within their first year of operation. Yet despite this grim reality, there appears to be no deterring the stalwart restaurateur.
So if you feel up to the challenge or think Murphy had it all wrong, here are 13 reasons that might make you want to reconsider.
1. Forget about “quality time” with loved ones. Do you like weekends, holidays and attending your kids’ birthday parties? Do you eagerly anticipate family vacations and annual New Year’s Eve celebrations? Too bad, because chances are you will be working in the restaurant during those times. Owning a restaurant means you will be at work while your customers have all the fun.
2. You won’t get rich. People think that if they open a restaurant, they will immediately begin to draw a paycheck. But unless you are actually doing the cooking, managing the house, hosting or waiting tables, don’t expect to be compensated. Sure, your restaurant may take in a lot of money, but if you become an absentee owner, you’ll be spending most of it on your staff.
3. Expect the unexpected. You prepare for 60 and 100 show up - or worse, the reverse. A snow storm, downpour or other natural disaster befalls you and suddenly your customers don’t show. Conversely, but equally damaging, is having a mob of hungry people all show up at once. And what about power outages, staff no shows and missing deliveries? Apologies, insurance and backup generators only go so far.
4. Staff reliability – an oxymoron? It’s hard to imagine the pressure cooker of a commercial kitchen. In-fighting, dishwashers missing in action, chefs nipping at the cooking sherry and health inspectors at your doorstep. Kitchen workers and wait staff are a transient group, and just when you have them trained, they up and leave.
5. Trust – or who (re)moved my cheese? Be assured, it wasn’t a mouse. Once stealing begins it can become epidemic and, over time, can have devastating financial consequences. When cash and inventory go missing, fear and suspicion poison the entire atmosphere.
6. Trends and friends are fickle. What may be delicious to you may not be something your customers will pay to eat. Ethiopian barbeque, spicy vegan or gluten-free, and soy-based Italian may have some core believers, but in the long run, most people look for variety, familiarity, predictability, consistency and downright, good tasting food.
7. Even good reviews can be bad news. Restaurant reviewers can be devils or angels. A bad review can be devastating, but a great review can hurt even more if you’re inundated with customers you don’t have the ability to accommodate.
8. Complying with The Man. The cost of setting up a commercial food service increases with every official on the city payroll. The health department may insist that you replace your grease trap. The building inspector may fine you because the bathroom is too narrow for a wheelchair. The food must be kept at the right temperature, the floors must be clean and dry and inspections must be passed. Violations can result in lost earnings.
9. Profits – A foreign concept? For a restaurant, a profit and loss statement is a powerful tool because the key to controlling profits is knowing when you have a problem. Many owners make the mistake of giving their accounting over to a friend or trying to do it themselves. The wiser choice is to focus on your operations and let a certified public accountant specializing in restaurants handle your finances.
10. How much??? How long??? Restaurants, like most business ventures, tend to take twice as long and cost twice as much as originally budgeted. Unexpected delays, failed inspections, late deliveries, underestimated costs for gas, power, water, sewer, security and garbage removal can set you back even before you begin. Call pest control, equipment and refrigeration leasing and service contractors, linen services, insurance providers and governmental permit and licensing departments to get accurate estimates and timetables.
11. Are you experienced? Not everyone who succeeds starts out with experience. If you’ve never opened or operated your own restaurant, you may want to consider hiring a restaurant consultant. With a good consultant by your side, you can avoid making costly mistakes that can deflate your dream faster than a shaken soufflé. Ask other successful restaurateurs in your area for recommendations, join your local restaurant trade organization or search the internet.
12. My concept can’t lose! No one in the neighborhood delivers gourmet burgers. You sign the lease and you’re off and running. Business is great. Then, right across the street, is a construction crew. Hey, you’re thinking, the more the merrier. That is, until their sign goes up, “The Meating Place” - Steaks, Chops, Steakburgers. Free delivery. Grand Opening - all orders half price!
13. Uncle Sam – your most reliable customer. Between myriad regulations, government imposed fees and costs you cannot control, you can only guess what your profits will be. Laws governing minimum wage, overtime, benefits, health and safety, licensing and operations and, of course, taxes make that tall fellow with the white beard and striped top hat your new silent partner.
So dreamers, even if your restaurant turns out to be one of the successful, you will still have to run it. Make sure it is what you really want to do and love to do. Running a restaurant takes time, passion and energy. And if done right, the benefits are endless.
* Marjorie Borell is a real estate broker and consultant with Manhattan Restaurant Brokers, and founder of www.restaurantspaceny.com. She can be reached at (917) 837-3761 or email@example.com.