Based on an acquaintance’s opening a coffee shop I think what happens is people go in with an awesome plan of providing wonderful, organic food made with quality ingredients and when the costs overwhelm the income corners get cut fast. Nice ciabatta bread becomes store bought wheat bread. Homemade soup becomes Campbell’s soup. Cold press coffee becomes iced drip coffee, etc. The owner is so exhausted and stressed that they don’t care as much, or they really believe that no one can tell the difference.
Like I mentioned earlier, we sell a lot of soup, in fact, we sell it by the gallon. We have several different mushroom soups. Everyone’s favorite, the one that people will call us back a few hours later to compliment us on…Campbell’s. Of course we just sell it as “Cream Of Mushroom” and leave the name off of it. But that’s an anomaly.
ETA, I guess it’s not really an anomaly, you can often find store bought things breads, frozen mass produced soups, canned something or other that’s better then what you would normally get, but it takes time. We spend HOURS every year trying bread from stores, going to food shows to try different chickens, getting samples of soups from food service places…most of them suck, but it’s awesome when you find a great one.
Both of the restaurants, going enterprises, sold off, that I watched fail, were purchased by the accountants. It’s the kiss of death, I’m telling you.
They can see into the books, they can see the money coming in, they see the owners socializing in the bar and buying people drinks and it looks like win, win, win to them.
Thing is, restaurants are extremely socially demanding things. Accountants, clever as they are with numbers, often lack the social skills required. They aspire to them, wish they had them, but in the end they don’t. Without solid people skills it will fail.
One place, the two owners had the hottest spot in town, lined up out the door most nights. Money coming in hand over fist. But they were both doing two shifts a day in the restaurant. The new owners had no intention of putting in that kind of time, or doing any of the really hard work. They just wanted to make the schedule and smooze at the bar. Well guess what, you’re going to have to pay someone to cover those four shifts that are now not being covered. There goes all that money you were making! Add in that their social skills extended to only the people/crowd they were already comfortable with. It’s not enough. I quit the day they I found out the manager was covering the liquor order and they tried to pay me with a post dated check. Six weeks, from packing them in, to closing the doors.
Think hard about the risk you’re about to take.
See the above.
I am in commercial real estate and in addition to selling the occasional business, I also lease up spaces where delis have been.
Food service businesses with no experience typically die like flies despite working their hearts out. It’s a hard, hard way to make a living, and it’s a terrible way to go broke. Marriages are often broken on the rocks of restaurant ventures.
There is SO much stuff you have to be spot on with and one mis-step can cost your hugely. Some people can make it big, but do not underestimate the amount of work necessary to succeed in a single store deli. It’s back breaking.
Let me also chime in from the standpoint of having worked for US Foodservice. Granted I did USDA commodities, but I trained in general CS before I took over USDA.
If you go with any commercial food service supplier, they will want you to have a minimum weekly $$ amount when ordering. Back in the late 90s when I worked for USF, it was IIRC $250.
And that being said, when equipping the deli prep area, many equipment supply places will sell used equipment.
I might go along with the suggestion for your husband to go work in a deli for a year, then to consider a food truck. They are a good medium balance between working in a deli and starting a business for yourself. Check into what a used truck sells for, and decide what you want to sell for product. Keep in mind you will have to take and pass a food handling and safety class, and keeping the hot stuff hot and the cold stuff cold without the food quality deteriorating is important.
You could actually run a roach coach as a mobile sandwich, salad and soup shop with bottled cold drinks.
You need to be scrupulous in listing the ingredients. [and whatever you choose, when you make homemade goodies, please give consideration to NOT putting mushrooms, peppers or tropical products in everything … last roach coach where I worked made pretty much everything with either mushrooms or green peppers, and used palm oil to fry in. Even if I wanted something, it was pretty certain to be cross contaminated no matter how careful you are and mushrooms are a frequent allergen, many people are not into the taste of peppers and tropical oils are bad for you and many people are allergic to tropical/palm products.]
Hi everyone. Thanks so much for all your input. I do plan to address some of the issues brought up, but I’m so darn tired from not sleeping a wink last night, that I want to come back to it after a good nights rest.
One or two quick points.
The plan was to be a lunch time only store. Open from 10:30 to 3:00 or so Tuesday thru Saturday. So Husband can work from 7:00 am to 5:00 or so, without any problem.
Most of the food is deli sandwich’s, which can be prepared fairly quickly. Or big pots of chili or stew or soups, which can be prepared once or twice a week and reheated or possibly kept warm. A good homemade mac and cheese. Potato Salad. Prebaked goods in the refrigerated display case. Things that freeze well. Frozen brownies with Ganache on top. Etc.
I can process payroll. I have done that for 25 years. I can even do it on a Saturday and still keep my paying job if need be. We do have some family that would be willing to take vacation during our opening to help us out. Or we could rethink the by himself and start out with an employee or two.
We have already planned to ask the owner of the very successful deli we frequented for the past 25 years (which is the model we want to imitate somewhat) if she would let my husband work for free for a week or two. We were regulars until we relocated. She might go for it.
My husband does have many years of experience in purchasing on a wholesale basis.
He has shopped for everything from facial tissues to luxury Coaches.
He’s good at it. Enjoys the hunt.
St Pauler, great list. I really appreciate it. I’ll address it tomorrow early.
I hear you guys. I’ll rethink the bread issue. And the customer is always right issue. The insurance could be a real problem. This is California. So, yeah that could be a deal breaker. However, the place is almost set up already. I do think we can buy what little is not there for well under 20K. And we do still have some 401k money. We could float a small loss for a year. I wouldn’t want to, but we do own our home free and clear. We have no credit card debt. One car payment. And that damn rental house, which I guess we could walk away from.
We aren’t looking to be the next big thing. Just make a comfortable living doing something we enjoy and are good at.
Does anything I’ve added make a difference?
Damn. I don’t want to be stupid, but I also don’t want to live with regret. Decisions, decisions.
Actually yes. You mentioned that you processed payroll for 25 years. Did that include everything that went along with it (941, 940, Schedule B, Form 941, SUTA, FUTA, W2 etc) Assuming it did, that would give me a a lot more confidence that you understand what goes into a business over someone who has never done any behind the scenes work. So many people truly think that the owner dumps the register into his pocket every night and takes it home. I’m not saying processing payroll takes means you understand what percentages everything should be at, but at least it would help you to understand how involved everything is. Nothing is simple. Payroll isn’t as simple as handing people checks, buying turkey isn’t as simple as ordering it from Sysco (I’ll bet we tried 20 different types of turkey before we settled on one, which happens to be from Sysco, but every few (3?) years they let all their vendors bid on the contract and even though it’s spec’d the same it’s still different and the whole process starts over).
Yes Joey, every bit of it. Including payroll tax audits passed with flying colors. I can produce monthly financial statements. Balance bank accounts with literally millions of dollars in the account. The kind with credit and debit card payments. Never plugged so much as a nickel. Oh, Sorry, sounds like I’m applying for work. 
My husband worked for a non profit agency for developmentally disabled adults. He turned a $4000.00 a month loss into a profit center after nine months. As far as we know, it is still making a profit. We use them for lawn service on the damn rental.
So, we do bring some assets to the table. I should have been more clear on that. We both understand the concept of profit and loss. We’ll add delivery if it is warranted. We are open to any and all suggestions.
Better???
There is a very good reason why you don’t see restaurants running only lunches most of the week, but I’m sure you’re aware. Hey you could be the one that makes it work!
I hate to discourage anyone from their dream, truly. And sometimes, you just gotta ignore everyone’s advice and do what you feel in your heart. I’ve just seen a lot of restaurants fail is all. Do you have a strategy in case it all goes south on you? Will you be okay?
I just wanted to give a second recommendation that you might want to start off catering to the local businesses from home at first. That way, you can gauge the market, and reduce your up-front costs. You can create a small menu, and a website to facilitate orders. Then you can deliver orders during lunch hours. That would seem like a more prudent way to do things initially. Besides, you can always open a store later on if the numbers are right.
As an aside, have you looked into refinancing or selling your rental property? If you a taking an $800 hit every month, that should probably be your first priority. Interest rates are really low right now, so you may be able to offset some of that deficit with a loan that has better terms.
My doubts enter at the point above. How do you know it’s something that you’d enjoy and be good at?
In my area in Michigan, there are lots of them. Well, I wouldn’t call them “restaurants” even if some of them have some seating. Their entire existence is due to the huge industrial base. The job-shop employees absolutely swamp these places during the lunch rush. It’s good food, cheap, quick and close to their work.
In the county seat, there are a few lunch-only restaurants, too. They cater to people waiting with their beepers to be called for jury duty, lawyers, judges, and government workers.
I wouldn’t want to go to either of these types of places in lieu of a proper restaurant during proper evening dining hours, though, and their business model seems to reflect that.
That’s a huge friggin’ leg up on the people that go into this blind. If what you’re doing now is even a little bit related, I’d suggest you pull some P&Ls and BS’s (with percentage of Income) and stare at them for a little while. Just to get a feel for some numbers. Also, don’t forget about credit card processing, and make sure to accept Amex so you can get the drug rep business.
Anyways, at some point, like a marriage, you just have to jump in. Maybe it’s time to turn the thread around and instead of a bunch of people trying to talk you out of it, you ask us questions about things you’re not sure about. Do you or your husband have any questions? I might only be 31, but I’ve been on the payroll here for 19 years and have done everything from stocking shelves, to fixing coolers, to running the catering end of things to doing the bookwork to virtually everything else that comes along with running a small business. I’ve been to unemployment hearings, meetings with the bank and crawled around under vehicles trying to figure out why the snow plow blade won’t drop. I’ve dealt with employees that have locked themselves in the bathroom and semi drivers that told me I’d be responsible if their truck got hit because they were double parked in front of the building (moron). I’ve renegotiated credit card rates and patched holes in the parking lot. I’ve fixed the forklift and done the photography for our website. I’ve dealt with shoplifters, scam artists, dishonest employees, entitled customers, assholes, pieces of shit, dirtbag vendors, fuckwads, trash, as well as some of the nicest people in the world that will bend over backwards for me because I’ve bent over backward for them. I’ve fixed ruptured hydraulic hoses, broken alarm systems, roof leaks, popped floor tiles and problems with state sales tax licenses. I’ve been to 1001 vendor food shows (including the Fancy Food Show) and tried more samples then I can remember and met with more sales people, vendors, manufactures, distributors and brokers then I can keep track of. I know who to talk to if I want to try a new product without spending a ton of money. I’ve learned how to pick my battles and which fights aren’t worth my energy. I’ve learned how to win a fight by letting the other person think they’ve won…You name it, I’ve done it.
Just to comment on what brickbacon said, I mentioned renting a kitchen and selling to some local places to test the waters upthread for a reason. At least in Wisconsin, you HAVE to have a certified kitchen. You’ll get busted for trying to work out of your house. With a certified kitchen, the local heath inspector will give you the OK and periodically will stop back to make sure you’re place is safe. There are codes that you have to comply with and they can’t monitor that if you’re doing it out of your house. At my store, we won’t sell your product if we know you’re making it at home. Same idea, just don’t do it out of your house. Get a (certified) kitchen, get (business) insurance, CYA in case someone gets sick.
I worked in the restaurant industry for 15 years and, as mentioned above, you need to watch Kitchen Nightmares, the UK version. Let me rephrase that: You MUST watch it. Every episode. Heck, throw the US version in there too, even though it’s watered down, over-produced, and formulaic. Kitchen Nightmares, UK version, is what you want.
You will be amazed by the vast array of problems that can plague restaurants, and any one of them can bring a restaurant down at breakneck speeds. You will take so much insight away from that series. WATCH IT. The series features Gordon Ramsay as host: A card-carrying asshole who has more Michelin stars than fingers, an astounding achievement. He is one of the greatest restaurateurs the world has ever seen and HE has had restaurants crash and burn. Think about that.
Restaurants are tough. Period. I worked in a very successful restaurant chain for many years. It was a very well-oiled machine and when the place was pulling in a profit margin of 5% to 10% the owners were jumping for joy because, in the restaurant biz, that is great! And they had that place running like a Swiss watch.
From what I’ve seen, there is no way I would ever get into the restaurant business. No freaking way. It can be extremely difficult. And it’s not like I’m scared of responsibility: Right now I co-manage an outdoor equipment store that does a million a year in revenue. That’s hard enough. But restaurants? No way.
A friend of mine trained and worked as a chef for years and he told me that if he wanted to open his own place he would need to work 15-hour days for five years straight before he would be able to relax for even a second, feeling confident about its stability, viability, and overall general success. I don’t think he was blowing things out of proportion.
I think one of the problems with the “Hey, let’s open a restaurant!” dream (and I’m not suggesting you suffer from this) is that the general public unknowingly have a very narrow and skewed perspective of the business. A good restaurant sells an illusion centered on great food, service, and atmosphere. Customers have no idea whatsoever with regard to how a proper restaurant actually operates behind the scenes and it is nothing like what they would assume. And they shouldn’t know. They are there to stare into each others eyes over candles and a kick-ass pinot noir, not to get a hard lesson in stock rotation, proper salmon fillet techniques, and whether or not you should fire your best server because they insist on being late and smoking out back where customers can see.
But “civilians” get clouded by the romance of it all and they think they “know” because it’s all so insidiously familiar: They cook and eat all the time. How hard could it be? The answer: Hard. In the end, it’s a business requiring a unique skill set and a relentless and disciplined eye for a wide range of many seemingly unrelated details. A skill set that can only be acquired the hard way, just like any other business.
If you want to open a restaurant it is imperative that you work in the industry for, at least, a couple years, ideally gaining some experience in every position. After that, you will be in an informed position to make a decision, and a hard one at that.
When you watch Kitchen Nightmares (which you must) you will often hear Ramsay ask something like, “So, how much are you in for?” The answer is always shocking. You’ll hear numbers like $200,000, $450,000, $750,000 coming out of the mouths of ordinary working people like you and me. Many are ruined. EVERYTHING is on the line: House, retirement, kid’s college funds, etc…
Sorry, I don’t mean to be dramatic and such a downer. This stuff just strikes a chord with me for some reason. There are many successful restaurant out there. Find out why.
Good point. We did work at the same place for over ten years, so we have some experience working together. I do appreciate that this would be different. I actually already told my husband that we have to promise not to blame the other if this doesn’t work. We have been together over 25 years. So we’ve got some methods in place that keep us from killing each other.
OK, I’m working on a business plan. We’re getting a look at the inside of two options today. Well, husband is, I have to work. I hope to get going on some insurance quotes today or tomorrow. I did see a news report on the top five web site managers. One was $36.00 a month and a second was $500.00 annually. I do need to research advertising costs. And a lot of other stuff.
We did think about a food truck. I have never seen one here. It is still an option we are considering, but I’m wondering if there might be some sort of city policy against them or something. They were a dime a dozen where we used to live. The littering that went along with some of these trucks was horrible. hmmm. need to look into this. But the thing is, this one location could be really good. I am actually surprised we can afford it. At least I think we can. And I’m worried that it won’t be available in 6 months or a year if we wait. Lots to think about.
Ok, this is a great list. I’ve already talked about some of these. Gotta get the insurance quotes. I think I’ve over estimated my utility costs, so I’m good there.
Tables, chairs and some of the equipment is in place at one locale, we would have to allow for these at the other option, but we do have the 20K. Ok, I can increase it a little. Don’t need the payroll company. I can do all the books except yearly business tax filings and I can probably do some of those. I do have a good CPA and I can give him good records that will help keep those costs down.
I’m not positive…I’ve heard home cooking is not allowed in this state. I could be talking out my butt on that though. I’ve never looked into it.
Thanks again for taking the time to make this list. Keep your brain handy, I plan to pick it if I can.
I think you have to get more specific that that. Let’s say the business is sort of on the borderline. One of you doesn’t think the business is worth the effort, and wants to withdraw and get a regularl job. However this means that the other spouse, who does think the business will ultimately suceed, has their dreams and goals crushed because you need both people to run it. What happens then? Is Over It spouse allowed to withdraw, if it means the death of the business and the crushing of Hopeful spouse’s dreams? Is the Over It spouse trapped in the business forever, or until Hopeful spouse also gives up, whichever comes first?
The times that will strain your marriage are not when the business is either obviously suceeding or obviously failing. It’s when it is marginal, and you disgaree about how much more time/energy/money to sink into it.
I have to leave for work, so I have to make this short. First, I apologize for so many back to back posts.
I know it may sound like we’ve already made up our minds to do this. And if the insurance is not out of reach, we may have, so yeah…I think I might want to turn the direction of the thread.
I mentioned the location to a co-worker yesterday. She said the place was always busy and she doesn’t know why it closed. She thinks an ownership change spelled its doom, but not sure. Another co-worker suggested adding coffee. We make two or three coffee runs in the office each week. Buying 10 or 15 fancy drinks each time.
They might buy from us…until I quit working there anyway. If it comes to that.
Husband is also very handy. He can fix just about anything (like you), so that’s a big plus too.
I know that this does not guarantee success either, but seriously, we have hosted every family event for years. We’ve cooked every holiday meal almost by ourselves for over 20 years. The deli we want to mimic is very successful and they don’t even offer delivery. We have wanted to do this for years, but were both employed making good to really good money, so never took it further than just dreaming and wishing about it before. My husband has a potato salad that has turned non potato salad eaters into potato salad lovers. Again, no one point will make this work, but when you put them all together, maybe we have at least a better than average shot?
And finally, we are looking into refinancing the damn rental. Just have to finish the paperwork.
Thanks again all of you. I was hoping for a decent response. You’ve all outdone yourselves.
nwye, I wish you the best of luck whatever you do.
There is at least one food truck operating in El Dorado County so they’re probably not prohibited. Your city and county departments of business/professional regulation (or equivalents) will probably be able to give you the answer to a broad question like “can I serve food from a truck?”