[jbkunt2]

Hi all,

We all are probably aware how brutally competitive the restaurant industry is. That said, I have some interest in opening up a restaurant concept that is hugely popular in NYC but doesn't exist here in Chicago currently.

It's a relatively simple food selection, which obviously makes it somewhat more manageable.

I'd have to find chefs, ideally that worked at the place I would model the concept on.

I have very limited experience in the industry, however.

My idea would be to find a partner who has this experience - ideally a current restaurant owner.

I have money to invest and time. I would hope that the required investment would be less than around $200k (so 2 partners at $100k a piece).

Any thoughts/stories/comments appreciated.

[redbeard]

I'm sure Veloce will weigh in....but in case he doesn't: don't do it. Unless you have years of experience in the industry you will get eaten alive.

Have you read kitchen confidential?

There are much better ways to invest your money.

[samsamsam]

(07-16-2015 12:53 PM)redbeard Wrote:  

I'm sure Veloce will weigh in....but in case he doesn't: don't do it. Unless you have years of experience in the industry you will get eaten alive.

Have you read kitchen confidential?

There are much better ways to invest your money.

For sure Veloce would probably give you top notch insight, not trying to volunteer him. He is a pretty busy dude.

So many businesses fail. And taking on a partner who is more experienced than you may set you up to be cheated.

May I suggest you get a job at a restaurant that is sort of like one you would like to open? You can get some real perspective that way.

Or go the food truck route, I think your investment is less. If it really works then migrate to a fixed location.

Also, I think thechef could possibly chime in also.

Maybe send them a PM and politely ask them to comment on this thread.

Best of luck!

Edit: As much as reddit gets clowned, as long as you are looking for real info and not SJW opinions you can find stuff. I googled this to help you out. https://www.google.com/webhp?sourceid=ch...restaurant

[PainPositive]

200k? That is way too much investment to risk with no experience. I'm opening a Chinese take-away restaurant for less than 10k. Seems like a better option and you'll probably learn just as much with lower risk.

[Lou pai]

jbkunt2,

I own a restaurant. So I will give you my perspective. A little background on me, before I opened the restaurant I worked for an investment bank in nyc and worked in restaurants on nights and weekends so I had experience before I opened my place.

My restaurant is a gourmet burger and beer bar, good concept that is scale-able.

Here my thoughts on restaurants:

Very hard work and its hard to come up with a concept that works.

Restaurants can make you tons of money, if ran properly.

Hire good managers with experience and let them run the place. Pay them well but make it on a bonus structure. So give them goals to hit.

In regards to stealing it is a lot harder for employees to steal from restaurants these days. POS systems can monitor and track everything.

The biggest thing is we if you are an owner/manager that you are a glorified babysitter. Im 28 years old and have to constantly babysit my staff even the servers/bartenders who are older than me.


As an investor, you can make money. I have four investors in the deal as limited partners. They have no say over day to day management but they have decision power when it comes to salaries for managers, taking out loans, etc. They are making money, I use an outside bookkeeping and accounting firm to do the books and they get quarterly statements and distributions.

[Travesty]

(07-17-2015 08:19 PM)Lou pai Wrote:  

...

How many hours per week on average were you working between your IB job and the restaurant jobs and for how long before you pulled the trigger to start your own?

That's very impressive, especially done by 28 years old.

[Lou pai]

Travesty,

I was working an average of 80-100 hour weeks for about 2 years before i pulled the trigger. I worked seven days a week on average 12 hour days, sometimes longer.

My investors pretty much all said the restaurant could fail for a number of reasons but they knew it wouldn't fail because i didn't put in the work and hours.

[Travesty]

That's amazing, great to hear your advice on here.

[Lou pai]

Thanks, Travesty.

I have been a member of the forum for a while but usually I just read the forum instead of contributing. Felt it was time to give some advice on an industry I have knowledge in.

[Veloce]

(07-16-2015 12:26 PM)jbkunt2 Wrote:  

Hi all,

We all are probably aware how brutally competitive the restaurant industry is. That said, I have some interest in opening up a restaurant concept that is hugely popular in NYC but doesn't exist here in Chicago currently.

It's a relatively simple food selection, which obviously makes it somewhat more manageable.

I'd have to find chefs, ideally that worked at the place I would model the concept on.

I have very limited experience in the industry, however.

My idea would be to find a partner who has this experience - ideally a current restaurant owner.

I have money to invest and time. I would hope that the required investment would be less than around $200k (so 2 partners at $100k a piece).

Any thoughts/stories/comments appreciated.

What exactly is your question? Find some specifics to address and then we can respond accordingly.

If you have no experience, go out and get a part time job as a server. From there start observing.

General restaurant operations are dependent on the success of what I call the "Holy Trinity":

BOH (back-of-house) management, or the chef
FOH (front-of-house) management, or the floor manager/GM
Administrative, bookkeeping, financials, permits, HR, etc

Ideally, you have a highly experienced veteran managing each of these main categories. Problem is, the highly experienced veterans usually demand a pretty high salary.

You're right to start at a simple concept, like Lou Pai. The fewer moving parts and the simpler the concept, the better. Imagine your restaurant is a manufacturing plant, it's nearly the same thing. You receive raw materials from which you create a signature product that you market and sell to a consumer. Create the right product, do it consistently, and do it profitably. That's really all it comes down to, but easier said than done. As you're starting out, you're not going to be able to afford a badass chef, a badass GM, and a badass office manager. You or someone you partner up with will need to wear many hats, which is why experience is so necessary.

I'd say your best scenario is to assume FOH and administrative responsibilities and find yourself a chef. You're going to have to know what to look for as there are many degenerate chefs out there that will talk up a good game and then fuck you over later.

Not trying to dissuade you. It's a wonderful industry. But it ain't easy.

Edit: Also 200k is a good number. It's really not that high by restaurant standards. I'm currently looking at starting a place with a partner and we have 100k to put in, this is considered a very low, bare minimum amount. Just getting a plumbing connection can cost 25k

[Veloce]

Some dos and don'ts:

DON'T get into the restaurant industry because you think it's easy money. Many people mistakenly assume that because a restaurant charges $45 for an entree, they must be printing cash. Fine dining places usually make less money than casual concepts, not more.

DON'T get into the restaurant industry for ego purposes. Don't do it to say "I have a restaurant" and have a place to invite all your friends to eat for free.

DON'T get into the restaurant industry because you love food and love to cook and have always thought that you would be good at it.

DO get into the restaurant industry if you love this industry and are extremely passionate about working your ass off

DO get into the restaurant industry if you have a very thick skin and can deal with difficult customers and unreliable employees

DO get into the restaurant industry if you love intense problem solving, and crave an environment that is physically, mentally, and spiritually taxing on a daily basis

DO get into the restaurant industry if you genuinely believe in hospitality, in treating complete strangers like visitors in your home

DO get into the restaurant industry if you love sales and pitching ideas. You will have to create and serve a product that you genuinely believe in and want people to buy.

[Biz]

(07-18-2015 02:58 PM)Veloce Wrote:  

Some dos and don'ts:

DON'T get into the restaurant industry because you think it's easy money. Many people mistakenly assume that because a restaurant charges $45 for an entree, they must be printing cash. Fine dining places usually make less money than casual concepts, not more.

DON'T get into the restaurant industry for ego purposes. Don't do it to say "I have a restaurant" and have a place to invite all your friends to eat for free.

DON'T get into the restaurant industry because you love food and love to cook and have always thought that you would be good at it.

DO get into the restaurant industry if you love this industry and are extremely passionate about working your ass off

DO get into the restaurant industry if you have a very thick skin and can deal with difficult customers and unreliable employees

DO get into the restaurant industry if you love intense problem solving, and crave an environment that is physically, mentally, and spiritually taxing on a daily basis

DO get into the restaurant industry if you genuinely believe in hospitality, in treating complete strangers like visitors in your home

DO get into the restaurant industry if you love sales and pitching ideas. You will have to create and serve a product that you genuinely believe in and want people to buy.

Absolute GOLD.

I agree with everything that has been said so far. I've been in and out of the restaurant / bar industry for many years and can attest to all of the points made. It's a tough industry not for the weak of heart but you learn so much about the psychology of interaction that it helps across the board in your everyday life and life going forward. Whether that just makes you jaded or you actually enjoy helping people that's up to you to decide.

I definitely recommend getting a job at a restaurant, even a few of them so you can compare. Just observe everything that's going on and try to learn the everyday flow of things.

I do feel like I should warn you or at least give you a heads up, the restaurant industry is full of shit bags, it's the main reason why I quit and will probably never go back as an employee. Managers suck in general, they're usually on a power trip trying to prove something or just think they're way more important than they really are, most of the time they're not. Let's not forget the drama, this comes with every restaurant and is industry standard wherever you go. It's the closest you can get to high school after actually going to high school.

[Easy_C]

Then again, if the Lou survived an IB analyst gig he's probably got the book smarts, thick skin, and soft skills needed to successfully a restaurant.. OP should expect a brutal environment when starting up.

I also may be able to offer you some input from within my own family. I've got an immediate family member who has five years experience in restaurant management(and a similar type of joint to what Lou described)...and was one of the company's best managers.

[el mechanico]

In my opinion the best case scenario is hole in the wall that clicks out good food like a Swiss watch but even though I have 0 experience all give my expert opinion based on what I've seen happen.

First. The throw money at it guys. Never seem to keep it together and I'm thinking they think you only have to invest once. May cause entitled/resent. No good for food or staff.

Second. Themes/brewhouse and new guy on the block. Pick a good location and have very skilled dedicated staff from the jump.

Gangster. Make kick ass food the ones you know and do not give a fuck if anyone ever show up to eat. (Italian)

Diner. Greek style baby! 24/7 cash machine!!!

Boutique. Zen forest of kale and organic whatevers. Bad choice.

Slices. Slice first. If you can do that move on to a small menu of grinders no fryer or hood $$$ Move into delivery and keep your food at top ass notch level.

I have an interesting story about a local place that's pretty big and busy..

So this investor from ? buys the place and it's being ran and managed buy MY BOOKEEPER AT MY JOB I'll send the link to veloce and it's making money. I was like what? She said she agreed to it cause all her kids and grandkids have jobs!! Makes real money!

[Lou pai]

A few more thoughts.

Location is really important. They are two types of restaurants either they are local or destination spots.

Local is a restaurant that attracts your locals, they come to the restaurant two or three times a week for dinner, to grab a beer, etc.

Destination restaurants are restaurants where people come once a month for a special occasion. They can do really well but requires incredible food and atmosphere.

If you are looking to design the concept and then have people run it. I would try to find a manger who could put up some money. Or I would give them equity once you recoup there money.

Example you put in 200k, you offer the manager a base salary and bonus. When you are fully paid back offer him 50% of the equity.

This might sound a bit contrarian but overall restaurants are not incredible difficult to run if you open up to make money. Most restaurants fail because owners open it up to be cool or to game broads both bad reasons to open a restaurant.

[MidWest]

I've always wanted to open a Mexican buffet style restaurant. There are Chinese buffets, Japanese buffets, and your regular Golden Corral. But very rarely a Mexican food buffet. Someday I will.

[Veloce]

(07-18-2015 08:48 PM)Lou pai Wrote:  

A few more thoughts.

Location is really important. They are two types of restaurants either they are local or destination spots.

Local is a restaurant that attracts your locals, they come to the restaurant two or three times a week for dinner, to grab a beer, etc.

Destination restaurants are restaurants where people come once a month for a special occasion. They can do really well but requires incredible food and atmosphere.

If you are looking to design the concept and then have people run it. I would try to find a manger who could put up some money. Or I would give them equity once you recoup there money.

Example you put in 200k, you offer the manager a base salary and bonus. When you are fully paid back offer him 50% of the equity.

This might sound a bit contrarian but overall restaurants are not incredible difficult to run if you open up to make money. Most restaurants fail because owners open it up to be cool or to game broads both bad reasons to open a restaurant.

I would expand upon this a bit.

Location should be specifically targeted to your clientele. Part of any business plan includes a market analysis. Who is your customer, what is their age range, income, etc. Find out where they live and hunt them down for business.

Some restaurants start out as a food truck first which has some benefits, the most obvious and beneficial is mobility. If you set up shop in a downtown area and business sucks, hey, you can move. Try across from a university (for lunch hours), next to a business park (also for lunch), or outside of a nightclub (late night).

Opening a brick and mortar requires a bit more diligence because once you sign that lease and do a build out, you're in.

And on that general theme, have a specific idea of your final product. Imagine you're opening a birthday present and inside is your dream restaurant. What does it look like, smell like, sound like, taste like? The more details you can get on paper and conceptualized ahead of time, the better. Once you have that final product on paper, work backwards. This will also help with your partners so you can all make sure you're on the same page. You don't want surprises popping up with partners once operations begin. You'll have more than enough surprises and unanticipated issues to deal with already.

[jbkunt2]

Fantastic advice. Thank you all.

[Eddie Winslow]

Very pleased that a restaurant thread already exists - maybe someone successful can help me out. Here's my situation:

Got an excellent price on a small restaurant lease in Brooklyn in a neighborhood that's about to blow up.

I have an excellent chef who's already left her job in Manhattan and is fully committed to our project.

We have a cool concept that hipsters will definitely get down with. There are very, very few food options in the area at the moment. We also made a contract with a popular bar across the street (that does not have a kitchen) to provide them food.

We estimate we need another $35K to get it open and have enough cushion to absorb the growing pains/the winter months. Anyone have any advice on what I should do, or better yet, helping me out?

[Merenguero]

(11-19-2015 07:42 PM)Eddie Winslow Wrote:  

Very pleased that a restaurant thread already exists - maybe someone successful can help me out. Here's my situation:

Got an excellent price on a small restaurant lease in Brooklyn in a neighborhood that's about to blow up.

I have an excellent chef who's already left her job in Manhattan and is fully committed to our project.

We have a cool concept that hipsters will definitely get down with. There are very, very few food options in the area at the moment. We also made a contract with a popular bar across the street (that does not have a kitchen) to provide them food.

We estimate we need another $35K to get it open and have enough cushion to absorb the growing pains/the winter months. Anyone have any advice on what I should do, or better yet, helping me out?

Use the Steve Martorano strategy, adjusted for inflation. What I mean is put forty dollars in your pocket and go to a bar near your restaurant (preferably a different bar every time), and order a glass of wine. Hand the $40.00 to the bartender, tell him you don't need change and that if anyone comes in asking if he knows a good restaurant, to send him your way. Do that for a year and it is a $2,080 investment that pays dividens. All that being said, I literally grew up in Jersey Shore restaurants and there is no way in hell that I would ever open up a restaurant anywhere.

[booshala]

I worked on a team that opened up 100+ franchise locations (current 2000 locations) of a food service concept in Asia. My family has owned and operated multiple restaurants in California. I also managed for an upscale casual restaurant chain (like Cheesecake Factory) and worked as a bartender, server, sushi chef, busboy, etc in many different places... I have a good grasp of the industry.

People who think that they're going to be the next glamorous restaurateur hobnobbing with celebrities are almost always delusional. Also precious how - without fail - every person who's come to me for advice or sounded off on this dream is someone who has little to no experience in the industry... just pipe dreams and hopelessly under capitalized to boot. That being said, I think there's actually an established formula for success if you want to be "successful" in the food service business, it's just that nobody wants to do it except the older immigrant generation: fuck ego/glamour - you basically need to keep your fixed costs as small as possible (labor/rent/food cost) and grind out as much volume as you can with a concept that appeals to the masses. Exploit your efficiencies and then when scale is maximized, open another location replicating the system that got you success in the first place, rinse and repeat. You'll likely need family members to manage your satellite stores to prevent theft and you'll be working a minimum 70 hours a week while you're ramping up (closer to 90-100) but the end goal can definitely get you to a comfortable level of income where you're making the equivalent of a respected surgeon or partner at a law firm.

It's no coincidence that there are hamburger shops and taquerias everywhere you go: it's because owners families make up the bulk of the labor, and you can pump out low food cost items that most Americans like to eat. Certain niches like Asian food also tend to be profitable because they've become familiar enough for Americans to enjoy plus they have moats that protect them from the inevitable patrons that think they can "make a better steak at home". Very few people have commercial grade burners at home and even if they did, they wouldn't know where to begin in making a decent pad thai. Same with sushi - it basically costs more to buy all the ingredients/tools to make it at home than just going down to your neighborhood joint.

[Merenguero]

^^^
Good post. I think overall Greek diners have a really good success rate, but I've also seen enough of those places fail miserably, often because the family who owns it has too many irons in the fire, in the form of other businesses. Two of the main things which dictate a restaurant's success are if restaurants in the immediate area have a high success rate and how high the overhead is. I know of a part of the D.C. area that has close to a 100% failure rate. People with a poor business sense went apeshit during the last year and opened well over a dozen sit-down restaurants in that area the last year, most of them small chains. I guarantee most of them don't last a year and that no more than one or two of them will be in for the long haul. One of them in particular is probably in the top five restaurants I have ever been to in terms of quality. The building is a brand new construction, the overhead is ridiculous, the service and management are really bad, and the place is always either empty or slow. I give the place eight more months.

The thing people don't understand about the D.C. area is this. Maybe 1 to 3% of the population is insanely wealthy, some of the richest people in the world. Many of these people live in areas like Potomac, Bethesda, and Northwest D.C., but they can be found in any number of communities. Maybe another 50% earns high five figures or low six figures, teachers, police officers, government workers, small business owners, lawyers. The whole rest of the population is welfare recipients, unemployed people, and minimum wage earners. When you average it all in, it seems as though this area is really wealthy, but really, a large of the wealth is held be a small percentage of the population. Which groups tend to frequent sit down restaurants? Mostly the first two. If you open a restaurant where a lot of, or most of, the population fits into that third group, you are setting yourself up for failure.

[Menace]

Shaw?