People like food, they want to eat it, and chances are high you're making food that's generally recognizable as such and part of a general culinary category and price range. There are acceptable standards for service, wait times, cleanliness, and so on, that you can meet or exceed to provide a certain level of experience.
From what I understand, and being around the business, restaurants almost invariably sink or swim based on how good a real estate deal they've been able to get, and their ability to have a stable staff and be relentless about controlling costs, things like spoilage, advance planning, etc.
Software based startups are all about growth. You fuck around as you describe and when you nail the product it grows like crazy at a very low marginal cost.
Restaurant economics essentially look nothing like that. They aren't about growth, they are about margins, and since they have to be highly price competitive, that means fundamentally the business is about managing expenses.
That depends. Minnesota passed a new law in 2015 called the Cottage Food law that allows certain types of food (primarily baked and canned goods) to be made in a home kitchen and sold to the public. See http://www.mda.state.mn.us/licensing/licensetypes/cottagefoo... for details.
I think this is pretty great. Regulation has its place, but there's a lot of value in allowing people to easily make an income too.
This sounds like it was written by someone who doesn't like food. What I've seen in NYC, over and over again, is that of course you don't want the worst location (or financing terms), and you don't want to shoot yourself in the foot with incompetent operational management or an ever-churning staff. However, those are simply the prerequisites; they're necessary, but not sufficient for success.
If you want to thrive, you absolutely have to have a kick-ass product† (that you also happen to wholeheartedly believe in). If your menu just isn't inspiring (or it's too expensive or otherwise not right for the neighborhood / night-time crowd) -- it doesn't matter what your staff turnover is or much forethought you put into the operations. Inevitably you will fail.
But if your menu is truly awesome, people will make a beeline to your little hole-in-the-wall, wherever it is, and jostle for a spot at your narrow formica sitting counter and a chance to wolf down your product, nevermind the styrofoam bowls, plastic sporks and tissue-thin napkins.
Case in point: http://xianfoods.com
† By product I mean the combination of "menu offering, ambience, staff and cultural vibe." The interplay between these can be quite subtle, and it's tricky to get them right (which is why it's really to believe in what you're doing, and have taste in all things, not just food). The point I'm trying to make is that from what I've observed, it's definitely not primarily a matter of managing your margins and not getting screwed by your lease.
Nearly everyone in the restaurant business cooks good food. Many however can't figure out how to do it profitably.
There are always edge cases. If your food is incredibly good then people will beat a path to your door sure. But in a city of 24,000 restaurants the exceptions, the hundred or two out of the way culinary sensations tend to prove my general rule not undermine it. And even most of those don't make it to a seventh profitable year.
The places that last own the building or have a long lease.
My point is that (along with all the other boxes one should tick in starting a restaurant in a cutthroat market like NYC) -- and in particular if your goal is to run a business that's actually thriving, and not just marginally surviving -- it's not sufficient.
You'll more likely want one of the tens of hole in the wall spots around xianfoods that have no website, no name, not even a Yelp or a Google map indicator. Things that serve steamed buns out on the street or shops that are little more that hallways to order food and leave.
How'd they get to where they are now? Because they get food, they get what what people really want, and they found a culinary niche that until that point had been widely ignored.
That's how they made their "brand".
This. One of my online contacts was the general manager of the world famous Armadillo World Headquarters in Austin, and that ended in 1983 because they lost their lease.
That's not exactly a restaurant, but it's close enough IMO for comparison.
And does IP protection happens in that business ? How ?
I guess I'm wondering:
The comment at the root of the thread suggests restaurant aspirants can address the risks of opening a new place by adopting the "MVP" ethos of startups.
Some discussion ensues suggesting that's unlikely to be the case.
Someone suggests that diners are likely to accept "MVP" restaurants, without the dominant expenses (notably: commercial real estate, staff expenses), if the dishes are original enough.
I'm wondering, outside of food trucks, does that ever happen?
EDIT: I remembered one of them was featured in the NY Times this week, that makes it very to explain :) They started without a store front, selling bread to co-ops and food markets. It became a cult favorite, then it became a staple at local restaurants and coffee shops. They partnered with a excellent coffee shop, Public Espresso, to do a food truck, and launched this beautiful restaurant, in a light commercial corner in a heavily residential district. http://www.nytimes.com/2016/09/18/travel/breadhive-buffalo-r...
Restaurants have horrendously low margins[0] - from 1% - 5%, so even if you're selling hundreds of plates of pasta/burger/lobster it's quite possible that your restaurant is making a loss.
[0]: https://www.sageworks.com/pdf/Data_Release_06102014.pdf
Edit: (remembering article from years ago) A few, very few restaurants have been successful based on low-prices through economies of scale these are a very exceptional group I believe.
2. Compliance, permitting, inspections and so on make your idea of a restaurant MVP literally impossible in Manhattan and the state of New York.
I guess this is a long way of saying "make sure you have good food, that sells, and make sure you can actually sell it (at a profit)".
And it depend son what sort of restaurant. It'd pretty clear that, for example, Mexican food places tend to be more interested in selling (higher margin) Margaritas than enchiladas.
Montreal has/had much better restaurants, but it seems that was much about immigrants wanting to have their own place in the New World. I was there between 2002 and 2003 and the best places seem to have vanished.
I have zero experience in the food industry. But I tell you two things from observation:
1. First, learn where the profit is made. For many restaurants the profits are made with alcohol, not with the food.
2. I have seen restaurants with the most delicious and affordable food bite the dust. It is my impression that in places like NYC you are more in the real estate business than in the food business. Your landlord raises the rent and you are out.
I respect people that run successful restaurants. I think the difficulty is often highly underestimated.
Booze is the easiest thing to make money on. The only labour involved is opening the bottle and pouring. My parents were always happy to keep the place open if there was a table of drinkers at the end of the evening.
Buy into a brand that is cool. Not an actual brand like coca-cola, but a cuisine type like Thai or Vietnamese. Those are way more in fashion at the moment than Chinese (bad rep for unhealthiness), but you can make them with the same staff.
Decor and ambience matter more than anything. Being in a fine restaurant is as much about being seen in the right place as eating good food. It's like art; most people can't tell the difference between mediocre and great. But a gallery in Chelsea sends a different signal to one in Shoreditch.
Finally, running a restaurant is indeed difficult. You're competing with people's own cooking, ready-made meals, and every other eatery in the area. Sure, there's three meals a day to sell to each person, but there's also a constant influx of people wanting to give it a go.
Even if I had the money, I don't think I would open a resturant, other than a pizza place, or a burrito place with a long lease. I heard the failure rate of resturants in New York City is 95%. Those odds might be wrong, but I wouldn't want to try to beat them.
I worked in three restaurants. I was a cook at two. I'm aging myself, they are called chefs now. I was making roux based soups, and bread, so I guess I was a chef? All the resturants I worked in failed, and I always felt like a cook.
If I ever owned a resturant, I would try to minimize risk.
I'm not a foodie anymore, so it would probally be a pizza/burrito place. My food costs would have to be low. And yes--the food would need to be good, and plentiful. I would want to have customers take the leftovers home, and remember why they ate at my resturant.
It would be located where young people interact/spend money. Example--near a university.
It would have a long lease, or a lease tied to profitability. The business would be a corporation for bankruptcy purposes.
Their would be no wait staff. (People can pick up their own food). Then again, I have seen a pretty face bring in masses. First dilemma!
I would definetly want a liquor licence. My place would only need a beer/wine license. Next dilemma! I gave seen little dives do great because they have a full liquor licence.
I would fire all my help every six months. Yes--gasp! Harsh, but I have read two of the better books on resturant managent, and both say this in a round about way. I don't belive everything I read, but this one rang true. There's a lot of theft in the business. A bad attitude by a server/manager can empty a place slowly. I would be upfront in the interview though. I'm not sure how I would verbalize the fact they they will get fired in nine months from now though. I might keep the right people? Then again, at the places I worked in, the nicest/wardest working person was usually embezzling money. I will say that I was accused in high school of embezzling money fron a resturant, and honestly, I wasen't. I just wanted to do a good job. After all I just said--I couldn't just fire good employees after a period of time. Then again, I will probally never open up a place. Third dilemma!
I would Never load my resturant up with cheap labor. I will walk out of any resturant that loads up their resturant with cheap help.
I'll get a lot of flack for this next one, but if I opened up a resturant/bar, I would load it up with pretty women. I am still shocked how much young guys spend in order to impress a pretty women. The demographics of the men were from 20's to late 30's--no wonder? I was one of those guys. "Oh Ari--the tips I gave you."
Isn't the resturant business lovely? It's too bad we have so many resturant positions available in America. It's a horrid job on so many levels. I feel bad for everyone, especially the owner because so many of them go out of business, and so many went in with the right attitude.
A lot of dilemmas? That's why it seems like every successful business owner I knew had a successful/helpful father. A father that can take on financial risk, and wanted to help his kids. I sometimes think success in America is comming from a enabling family that can take on risk?
To be precise, the people in the kitchen are: the chef, zero or more sous-chefs, zero or more specialists (gard-manger, pastry...), zero or more cooks, an expediter and the dishwasher(s). In a very large restaurant, each specialist may have cooks working under them.
There's only one unadorned "chef".
Coincidentally, his restaurant was financed by his dad.
This hits home. There are plenty of bars that have absolutely atrocious service but still get repeat patrons because the bartenders are smoking hot. Sex sells.
1. Have good food, that sells. Nothing else matters. No big up front investments. Have a killer product, which you make in your home kitchen if you have to. I thought Americans knew this, with their food trucks and shared kitchens.
I see this all the time. People thinking about how to name their company, how the logo looks, or in this case which forks to use. These things matter, but only in the long run, when you're able to sell your product successfully already.
Access to money and people like the author make this difficult, you aren't forced to survive.
A restaurant near me has started without a name, no interior decoration and a less than good but not too bad location. After six months they had a line out the door, every night. After a year they had a name. After two years they renovated, but just a little bit. Now it's 5 years later, it looks fancy, they have a logo and it's nicely renovated. But they started with the product.
I think it's a good idea to do everything in reverse, especially when we are worried how we are perceived. We see finished, well working things and think we need to emulate everything they are doing, including the expensive business cards, when it's really the other way around. Product first, being forced to survive, the details come later. Makes for a much more relaxing atmosphere as well, with much less meetings that go nowhere.