Any restaurant owners/managers here? (past or present)

In My Humble Opinion
1

I’m afraid a couple of my relatives are about to make a huge financial mistake. They’ve just inherited a nice chunk of money (around 300 thous), and what they’re planning to do is A) quit both their jobs and B) open a restaurant.

This is, apparently, the ‘life long dream’ of the husband, and his wife thinks it’s a peachy keen idea too.

My big problem is this ‘planning’ and ‘life long dream’ doesn’t seem to have included any practical research or training. :frowning:

Yes, the husband is a great cook. In the sense of cooking spectacular meals for small dinner parties. He loves to throw dinner parties, getting 6 or 8 friends in and cooking for them while they hang out in the kitchen drinking wine and telling him how wonderful he and his food is. Fine. But I just can’t help suspecting that that will not scale seamlessly to being a great head chef responsible for turning out hundreds of meals every day.

Besides that, ISTM that running a restaurant will entail a whole lot more than cooking. It’s got to be like running any other small business, right? You have to deal with labor (with all the legalities that involves), taxes, advertising, suppliers, cash flow… a thousand things other than roasting heads of garlic. All sorts of business matters to take care of, and neither of them have any experience along those lines. (He’s in IT, she’s an IC nurse.)

Their ‘thinking’ seems all castles in the air to me. For example, they are talking about buying this 200 year old stone building to house their restaurant. Said building has been vacant for the last fifty years to my sure knowledge, and likely much longer. Is it structurally sound? How hard is it going to be to plumb/wire/etc a building whose walls are all stacked stones? I suspect (just from viewing the outside) that it really isn’t large enough for the restaurant they’re aiming for. They just say, airily, ‘oh, I’m sure we can fit 40 tables in there.’ Really?? With those thick walls, there’s less open space than you think. Plus restrooms, storage space, and, oh, yes, a KITCHEN?

And this building is located near the end of a narrowish dead-end road, and there’s nothing else on the road except maybe ten houses widely spaced out. (I think the zoning there calls for 2+ acres.) Isn’t that going to make it much harder to develop a customer base? No one is going to be ‘just passing’ and decide to stop for a meal. They are just ‘ordinary people’, it’s not like they are famous or have an existing base of customers willing to go out of the way to eat at their restaurant.

Well, he (let’s call him Joe) thinks he has a base. Those friends who come to his dinner parties. Yeah. Somehow he doesn’t consider that someone who raves about his food when he’s a guest at a party may not be willing to go out of his way AND PAY for the same food. Even if they are, we’re talking, what, several dozen people? That’s not enough to fill all the tables he’s planning on a single night! And how often could they possibly want to go eat at any given restaurant? Once a month, maybe?

There is essentially no parking at present other than an unpaved driveway, but there’s ample room for a parking lot behind the building. MAYBE. The property runs down to a stream, whose size varies enormously over the year – way higher in spring than in summer/fall. The banks have overgrown willows, and there are big patches of rushes and cattails and such. To my relatives this means ‘lovely natural views.’ To me it suggests a lot of the space will be considered ‘wet lands’ and thus precluded from development.

I’ve been trying to get them to look into these matters BEFORE they quit their jobs/buy the property/etc. but they say I’m “Just being negative” and “why are you trying to destroy our dream” and stuff like that. Right now the only ‘preparation’ they doing is creating a menu. As in, lots of tinkering with layouts and fonts and such. :smack:

They also point out that “I don’t know anything about running a restaurant” and that is absolutely true, no two ways about it. BUT THEY DON’T EITHER.

I think at least one of them needs to seriously study the business side of running a restaurant – are there schools for that? Or at least they could work in a restaurant similar to what they want to run for six months or so. Heck, maybe Joe should take a job cooking in a restaurant and see if he likes the life. I suspect it involves a lot longer hours and way more work than he realizes. Something you enjoy as a hobby might be a drag as a full time job.

Does anyone here have the experience to say what they SHOULD do before jumping into this? I’ll pass the advice along – maybe they’ll listen to someone else.
Or…maybe I’ll all wet. You can say that, too, no offense will taken and I’ll just butt out of their affairs.

2

I’m sure there are books you can buy on restaurant management. And you can hire someone with experience to run the place for you. (or help you run it)

3

Since the OP is looking for advice, this is better suited to IMHO than GQ.

Colibri
General Questions Moderator

4

I would encourage them to take some of that $300K (or whatever) and take classes for a quarter at a local community college. The culinary arts programs often include hands-on professional time in a real kitchen (or even the school cafeteria) so they understand what it’s like being on your feet and cooking for eight hours a day. Ask around at the local schools and see if they have anything like that. And to be truthful, he might enjoy the experience of going to culinary school but still realize the restaurant business isn’t for him. I would call that money well spent.

Failing that, I would encourage this wonderful cook to get a job at an existing restaurant to test the waters. He may be surprised how tedious it gets cooking the same ten menu items over and over again without the opportunity to be creative. There are very few restaurants in the country, as I understand it, where the chef gets to reorganize the menu on his daily whim. If he intends to have repeat customers, he’ll need to have a stable menu — good for customers, dull for him.

5

You seem awfully invested in their downfall, though I’m sure you mean well.

If they own the restaurant they don’t necessarily have to have an active hand in its operation, unless they choose to. I’m sure they can hire people with industry experience to run it. However, if they do plan to run this place by themselves with little to no outside help, I would agree they are probably in over their heads.

Restaurants have such an incredibly high rate of failure even among people with experience running them that it’s a gamble either way.

6

I am not in the restaurant business per se, other then designing a few as an Architect. Your relatives don’t have enough money and I doubt a bank today will be willing to part with a loan on two people who have no experience and no client base who appear to not have done even a simple business plan.

As for the building–if they do enough captial improvements they may need to bring the building up to the current building code. That might consume an inordinate amount of their capital. Whatever estimate they are carrying to do the renovation–they should double it, then double it again. They might have enough then…maybe. Does the zoning in this area allow commercial uses? Most residential areas do not–and the zoning and building departments will look very closely at parking if the zoning allows it. They dont’ want to piss off the neighbors by not having enough parking.

As for the restaurant, unless they have a established client base I don’t see it working in an area that is not well travelled. There is a place near us that finally has found a restuarant that works there. This location has had 3-4 different types of restaurants but none of them were anything special that would cause you to go out of your way to go there. One was a mexican restaurant–a good one, but why would I go way out of my way for one where there were three good ones in town? This location is great, next to a creek and has a great view, etc. What finally is working there is a BBQ place. There isn’t another one in town–it is unusual enough that you would travel to it, etc. It has succeeded in this location but only because it is offering something unique. Too bad it isn’t a great BBQ joint! If it was a great joint then it would succeed for sure!

From what you described I doubt your relatives will be in business for more then 6-10 months. Just my opinion, but it is extremely difficult to be successful in a restaurant and being off the beaten path with no experience isn’t going to be seen as a plus by any lending institution.

Good luck though trying to convince them It sounds like they are determined about this based on what you wrote.

7

You are right. This is a really really bad idea. (Long time professional cook here.) Restaurants fail for all kinds of reasons, and location is a big one. On the basis of that alone they are fucking up. Renting a space that already has a pro kitchen installed and is a proven location is the way to go here.

It sounds like they have no clue as to how hard they have to work and how lucky they have to be to enjoy even a modicum of success. Plus Hakuna is right, They don’t have anywhere near the cashflow they will need. Just getting that building up to code and putting in a pro kitchen could conceivably cost well more than 300 thou. They might as well burn the money up in their fireplace; they have that little chance of succeeding.

That said, you have told them of your concerns. Now unfortunately you must back off and watch them destroy their lives.

Is there a chance they could succeed? Sure, a very small one. But with no previous experience, that chance becomes infinitesimal. If this were the 70’s, they might have a shot. Now not so much.

Don’t lend them any money, kay?

8

I think you’re exactly right. They have no experience and are operating on a pipe dream. Unfortunately, until they clue in and spend some of the 300k on classes and actually work for a year in the type of restaurant they want to own, it’s going to be a very expensive lesson for them.

All you can do is stay out of their way and for Og’s sake don’t give them any money.

9

I’ve never owned or managed a restaurant, but I’ve seen enough episodes of Kitchen Nightmares and similar shows to know this is a bad idea. I agree with the suggestion to invest some money on classes, books or a restaurant internship. And the impression I get is that owning and running a restaurant is incredibly hard work.

10

Good lord, please make them watch a few seasons of Ramsay’s Kitchen Nightmares before they do anything.

11

I work in the Continuing Education department at a Community College and one of my collegues, the director of our Small Business Development Center, has some excellent advice for anyone thinking of starting up a new business. Tell them to find a local business that does the same sort of thing as what they are contemplating and offer to work there for free for 6 months to get a feel for what they are getting themselves into. If they can’t go the 6 months without the income, they can’t afford to start a new business; the other business will most likely appreciate the free labor; and they will get a good idea of what is actually involved in making a business like that work. Then they can decide if that’s really what they want to do.

12

I briefly owned a restaurant, very much against my will (my dad died and left it to me) but from watching my dad successfully operate a series of restaurants in New York City up to that point (and working in one of them for a while), I can tell you that the skill of preparing food is pretty low on the list of skills a restaurant owner needs. You can pretty easily hire a talented chef, but you can’t so easily hire the management skills that you need from Day One. In addition to the organizational/planning/financial training that you need, you need really sharp people skills, as you’ll have to get along with customers, staff, suppliers, etc. most of whom will be lying to you regularly, and you have to keep them happy without showing your annoyance at near-constant barrage of bullshit you’ll need to deflect. If the husband thinks he’s a good cook, let him work as one for a while and see if this changes his ambitions any. Bad idea.

13

I am a former fine dining server/bartender/sommelier/manager, and I echo the other’s sentiments. They truly have no idea what they are getting into, particularly with the building they are contemplating using.

Renovations are extremely costly, particularly if this building as you describe it is in the state it is in. No kitchen, needs wiring, etc? Good grief, fuck that noise. That will most assuredly eat up all their 300k.

And the location is horrible. You can’t reasonably expect a place with no surrounding businesses on a dead end road to succeed. It’s possible, but extremely unlikely.

You know what they would be better off doing? Buying out an exisiting bed and breakfast and running it. They would have a restaurant and a kitchen, and the actual size of the crowds that you have to cook for is much more manageable and they can minimize labor costs by doing much of that themselves.

And even then, in these economic times, very very risky.

If it were me, I’d take a super nice two week vacation, bank the remainder of the money and resume my job.

14

Exactly. Lots of people can prepare delicious food. That’s the easy part. The hard part is how to turn that delicious food into a profitable business.

Have either of these people ever worked in a restaurant at all? Even waiting tables? Because waiting tables at least gives you some idea of all the things that you have no idea about.

Statements like the following demonstrate just exactly how clueless they are:

Do they even know how many tables can fit into a given space? Do they know that there are standard guidelines for this sort of thing? Have they drawn a floor plan?

Do they even know how much mundane things like diswasher racks and restaurant-quality coffee makers cost? Dishes and napkins and sugar packets…that stuff adds up like you wouldn’t believe! (Or I should say–you’d probably believe it. They might not.) Never mind the costs of furniture. Oy.

I know that the print catalog for E&A Supply has lots of charts and lists and things in it–like “for X seats you need Y plates and Z glasses” and seating diagrams and so forth. Even just using that standard info, they should be able to run a sample supply shopping list. Paging through the catalog should give them ideas for other things to put on the list. Add it all up and it might begin to give them a clue. Of course, the mock shopping list should probably be tripled or quadrupled to find the real number, but hey, maybe if they see that just getting 40 tables with dishes and stuff will cost them well over $50,000, they might begin to realize that $300,000 won’t cut it.

15

First off, three hundred thousand dollars will go very, very quickly. Even without renovations. Even without buying a building. We owned our building outright and had a carpenter in the family and still went through money like water.

Some other observations I have from working in restaurants and then running my own:

There is a massive amount of food waste in a restaurant, because you’re not just whipping things up based on what you have in the fridge like you might at home. You have to anticipate what your customers will want and have that on hand, prepped, and sometimes those anticipations are wrong. It’s better to have too much than not enough, though. Too much and you have to toss out waste; too little and you might very well lose customers when they find out you can’t make everything on the menu.

Also, you have to deal with assholes. All the time. Asshole employees who fail to show up or think they know how to work the deep fryer and end up turning the valve to release the oil all over the floor instead of turning it on, all at six o’clock in the morning on Sunday when you’ve got a big group of people coming in for breakfast. Asshole customers who will create complaints so that they can try to pressure you into giving them free food, because they say their toast was toasted on both sides when they specifically asked for only one side to be toasted. Asshole distributors who will try to screw you out of every penny possible when you’re ordering, along with “forgetting” things in your order, making substitutions without asking you, and failing to warn you when an item is going to be discontinued.

Oh, and let’s not forget matters of theft! Cooks messing up orders purposefully and then eating the waste. Servers “forgetting” to write up an order correctly and pocketing the money. Money mysteriously disappearing from the till.

If they sidestep the complications and woes of hiring a full staff and intend to do most of the work themselves, then they can expect to spend just about every waking moment in the restaurant. No, I am not exaggerating. Even with employees, we typically entered our café at five in the morning and did not leave until ten at night. There was prep work and paperwork and accounting and cleanup and, oh yeah, the rather minor tasks of cooking food and serving customers. When I left the restaurant during daylight hours, it was to make purchases for the restaurant.

It is a huge, huge undertaking. If you don’t have prior experience, it’s positively nightmarish. If it is not your psychotically obsessive passion, you’re very likely to be dissatisfied. If you’re working with family members or a romantic partner, you may hate one another by the time you’re done. It’s something I’ve considered getting back into, as I think a lot of my own dissatisfaction came from working with family and being a bit young for the responsibility, but even I recognize how shaky the business is and how demanding it is on your mind and body.

Your friends are in for a very rude awakening.

16

I hear Gordon Ramsay remark on Kitchen Nightmares that every Tom Dick and Harry seems to get inheritance money and decides to open a restaurant. It’s the business equivalent of getting old and retiring in Florida. I’d say they use the money to pad their savings and he take the newfound security to take a job he enjoys, like being a chef. Less risk and you still get to cook.

17

In this economy, I’d be very, very wary of trying to start up any new business, as FoieGrasIsEvil said, especially something that is a pure luxury. The other posters have pointed out some other dreadful flaws in Joe’s business plan, so I won’t repeat them.

Maybe Joe could become a caterer. Of course, then he couldn’t buy that “perfect” building. And, of course, he would still have to build a customer base.

I think that this is an incredibly bad idea. I also think that Joe and his wife are not gonna listen to any common sense, no matter who offers it.

18

I got my friend Kevin hired, with no experience, at the restaurant where I cooked. He was all excited and told everyone he wanted to go to culinary school and open his own restaurant. The whole kitchen line started laughing and my boss said “oh, we’ll fix that.”

19

Show them this.

My advice is that they should buy a boat. They’ll lose just as much money but have a helluva lot better time doing it.

20

I’m neither a restaurant owner nor manager, but I own a small business.

I opened the business somewhat undercapitalized, but with over 20 years of industry experience, a solid business plan, and well researched location (leased - if they can buy this stone building and still have enough left to set it up as a restaurant how can it possibly be worth having?). Things were going pretty well until the economy went south.

Perhaps you could gently suggest to them that they could wait a little while until the economy is a little better. If they open a restaurant now and fail due to external forces they’ll have severly limited their capacity to ressurect their dream and try again.

Dining out is a non-essential service. Everyone in the business groups I meet with who owns a restaurant is hurting right now. Maybe there’s someone in a local or nearby Chamber of Commerce who’s willing to talk them through some of the harsher realities, such as energy bills doubling on one year, the increasing cost of food, etc. Have they thought what it will cost to heat/cool this 200 year old stone building? I like quaint and charming probably even more than the next guy, but it it’s uncomfortable I’m not going back regardless of how yummy the food is.