Opening a restaurant...

Discussion in 'Food & Cooking' started by hahsgyahba, Dec 9, 2014.

  1. hahsgyahba

    hahsgyahba

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    Dear all,

    Hi! I am a 30 year old academician, a researcher/scientist to be precise. Instead of solely continue teaching and conducting research, my wife (a designer) and I have been thinking (since past 2-3 months) of opening our own restaurant and have also done a lot of research into it - especially how to get finance, inventory details, what kind of restaurant we want, staff, etcetera. Obviously, a lot (and a lot) just goes into it... And as you all know, we are noobs and have gazillions of questions.

    First things first, where would be an ideal place to discuss this? To begin with, I thought I should introduce myself.

    (i) I would like to know what role does an owner play in a restaurant? Well, there is a manager, a head chef, other cooks/chefs, servers, and cleaners. Where does an owner fit into this?

    (ii) Another related question - who hires whom? Or how does the hiring process start?

    (iii) What sort-of experience should my wife and I have before we get into the restaurant business?

    PS - I am looking forward to opening a Steak-house.

    -Yahba
     
  2. foodpump

    foodpump

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    May I suggest doing what we --hospitality career professionals-- have all done before we managed a business?

    Work in the industry.  Like all of us, start at the bottom bussing tables and/or washing dishes.  Keep a close eye on the owner/manager and watch how they deal with everyday situations and how they plan for the future.

    In regards to your questions...

    1) Managers and Head chefs and Maitre D's are all great, they are also supervisory positions.  This also means they will command a higher salary. It's a question of how much labour you can afford, and also of how much freedom you want to give to your employees. Study any successful restaurant and one of the partners--or both, will hold a supervisory position.

    2) He who signs the paycheck is he who hires (or she).

    3)  Work in the industry at least 2 years.  You will need this time to aquaint yourself with current trends, with real estate prices, with suppliers, and to establish a network of co-workers that you would like to hire at a future date.

    4) Financing.  This is probably the most important question to ask.  Even if you just won the lottery and have money to spend, I strongly suggest writing a business plan and sharing it with your bank manger.  This is the ultimate "acid test", if the bank manager doesn't like it, odds are you won't make it past your first 6 mths.
     
  3. chefwriter

    chefwriter

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    Foodpump has given you some excellent advice. 

    I'll second the advice that you should get some experience before continuing. 

    What I'm really curious to know is why you would want to give up two careers to open a restaurant? Is it safe to assume you both make a decent living at what you do now? Do you have nine to five hours? Your wife is a designer. I don't know what that is but it sounds like a nice job. Being a researcher/scientist sounds like a nice job and both jobs must have taken some education and hard work to achieve. 

    Are you hoping to make more money? Do less work than you do now? 

    After a decades long career in food service, many years of which was spent working long hours for little pay in my families' restaurant, I sometimes find myself envying those who made different choices and now have good paying jobs with "normal' hours. While I currently have more normal hours working for a corporation, the pay could be better. 

         The grass is always greener, we are supposed to take responsibility for our choices in life and I have many great memories of my various experiences but I'm still curious as to why you would trade what would appear to be good careers for the trials and tribulations of restaurant ownership. 
     
  4. hahsgyahba

    hahsgyahba

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    Dear @foodpump,

    Thank you so much for your feedback. Sorry for the late reply - had to do grading and put the scores online. 

    I am currently in the UK and am planning to open a restaurant in the US. Our plan is as follows - my wife manages the restaurant and I continue my academia-career with little contribution to helping my wife. Just so that we have a source of income. The thing is that we would like to open a restaurant where we can employ people and donate part of our profits to an organization with good cause.

    (1) I am currently talking to 2 restaurant owners who are helping me with understanding the working of a restaurant, esp how to set one up (from scratch).

    (2) Good to know that we will be the one hiring. I always thought that I hire the manager and the (head-)chef first, and then they help me hire the others.

    (3) Yes, I agree with you - my wife and I are currently looking for part-time jobs as servers (maybe possible) or managers (highly unlikely to get one with no prior experience).

    (4) Regarding the financing, yes I am working on a business plan and have looked at plenty online. I think I can make one which the bank(s) will be happy to finance - but as you know, time will only tell!

    I have a few questions:

    (B1) Are there investors other than banks that I can look up to?

    (B2) How to select a place - apart for demographic, rent, condition info, what should I look at?

    (B3) Do I first hire the manager/chef and then get a contract with a designer so that the manager/chef can provide feedback or should I get it designed the way I want and then side-by-side hire the manager/chef.

    (B4) Basically, I first look at the place, include it in my business plan, get the loan from the banks, get licenses, hire a designer, chef and manager, get the kitchen-stuff [in accordance with chef?]. Is this the correct order of starting up?
     
    Last edited: Dec 14, 2014
  5. hahsgyahba

    hahsgyahba

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    Dear @chefwriter (CW),

    CW: What I'm really curious to know is why you would want to give up two careers to open a restaurant? Is it safe to assume you both make a decent living at what you do now? Do you have nine to five hours?

    > I am not going to completely give-up the academia-career in the start. My wife wants to own a business and make profit and donate a part of that profit too. Apart from my academia salary (which is not very great to begin with ~ $55k or so as a starting-salary with loads of responsibilities), I thought it would be great to own a business, esp a nice restaurant. We will have a decent living with both of us working for someone/some organization but its always good to work on something of your own is what I have seen. Yes, it very difficult and demands time and energy, but at the end I think it is worth it.

    CW: Are you hoping to make more money? Do less work than you do now? 

    > yes, we are hoping to make more money than if she was just working for a company. Do less work? No, it will be more, much more but after a few years, I think it is worth all the energy.

    So the thing is that yes, we want to make more money and be able to make get-away trips to other states or EU once a year, and live a comfortable life. I think instead of us working, its better that one of us works for a constant source of income and one of us gets into business and earns more than in a job which will pay-off after a few years.
     
    Last edited: Dec 14, 2014
  6. fablesable

    fablesable

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    @hahsgyahba  I was just curious what made you look to the restaurant industry in the first place to start a business?
     
  7. hahsgyahba

    hahsgyahba

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    Dear @Fablesable,

    A restaurant is serving something that as long as humans multiply, there will be a need for it. We thought of a lot of other options - but food and alcohol was something that always topped our list - its the most basic need in Maslow's pyramid too! /img/vbsmilies/smilies/smile.gif

    What do you think? /img/vbsmilies/smilies/confused.gif
     
  8. foodpump

    foodpump

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    Of course it is, but dining out is a luxury, not a necessity, while cooking for yourself is a necessity--a survival skill.

    I don't want to discourage you, but I really think you need to work in a restaurant for at least a few years to understand the business.  It's not  all about cooking, or serving, or pleasing the customer--it's about making enough money to cover all of your costs.

    Here's something you can do right now, it won't cost you a cent, nor will it take up much of your time:

    Go visit a used restaurant equipment store.

    I'm serious, it's a great learning experience.  Yes a single door refrigerator really costs $3,000, yes, a plastic ingredient bin on castors that holds one sack of flour costs $400.00, yes a commercial quality food processor really does cost $1,000. 

    -But there are "voices" talking to you in that store.  Yes that freezer that is only 6 mths old and 30% cheaper than new is telling you something. Who originally bought and why? Why did they only use it for 6 mths? Who bought it from that owner, and at what cost?  How much mark-up is really on that freezer?

    -Most restaurants--well over 75% of them, fail within the first 6 mths, 90% don't make it past the first 18 mths.  This is the bitter, cold, harsh reality. 

    Why do they fail?

    -Many fail because of undercapitalization--not enough money to hold through that first crucial first year. 

    -A lot fail because of parking or liquor licensing issues. 

    -Some fail because of lousy leases or/and lousy landlords. 

    -Some fail due to complete ignorance of municipal codes like electrical, gas, plumbing, and health,

    and

    -Some fail due to lousy management. 

    You need to work in the industry in order to recognize these issues, to anticipate them, to deal with them, and more importantly to avoid them.

    Am I making any sense?
     
  9. hahsgyahba

    hahsgyahba

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    Dear @foodpump,

    Oh yes, you are completely making sense. I found about similar reasons for failure when I was doing research about restaurants.

    Regarding the inventory, I have already made a list of things I will need by visiting websites and looking at a (hard-copy, 800 pg) catalog that one of the owner of the restaurants I am speaking with gave me.

    I am thinking, for a start to get things on lease for the first 2-3 years and then see where things go. I have already made a fine-detailed list of things I will need on tables and in kitchen from napkins, different types of forks to tiny storage containers that go in the freezer.

    What do you think of leasing? The people I am talking to her mentioned it is a good idea - not a bad one atleast.

    Secondly, we are looking for a job in the food industry - I am hoping to find a part-time job.

    We still have a few questions, if you don't mind helping us...

    (B1) Are there investors other than banks that I can look up to?

    (B2) How to select a place - apart for demographic, rent, condition info, what should I look at?

    (B3) Do I first hire the manager/chef and then get a contract with a designer so that the manager/chef can provide feedback or should I get it designed the way I want and then side-by-side hire the manager/chef.

    (B4) Basically, I first look at the place, include it in my business plan, get the loan from the banks, get licenses, hire a designer, chef and manager, get the kitchen-stuff [in accordance with chef?]. Is this the correct order of starting up?
     
  10. chefedb

    chefedb

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    Unless you have some previous rest. or food service experience I would say you are just taking a gamble. Be very careful. Everyone thinks the food business is show business Well it is not  Even though self employed you have a boss  and that's the front door of your place. It has to be staffed, cleaned, insured, shopped for on a daily bases  the door is the true boss you work for it and it is unforgiving.
     
  11. saucygirlb

    saucygirlb

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    Agree with the previous post, to a point and that is that it is never easy to work for yourself, in any industry. With that said some of us are just destined to be entrepreneurs :)

    We are in the process of developing our first restaurant as well. I think in general, I agree with all of the advice given with the caveat that if this is your dream and you are confident in your abilities then you should definitely proceed, albeit carefully :)
     
  12. cheflayne

    cheflayne

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  13. flipflopgirl

    flipflopgirl

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    This may sound harsh but needs to be said.
    It is the worst sort of fool that plans to wager his family's financial future on advice taken from random people on an Internet site.
    Find and hire a consultant.
    Find some really old guy that has been in the hospitality industry for his entire life.
    Maybe he comes from a family that has owned restaurants and took over when his dad retired.
    Now his kids are running the place but he is not ready for the rocking chair.
    Someone that knows the answer to every question you have asked plus the ones you haven't even thought of.
    Yeah you will have to pay for those answers but much better to pay upfront now than later when you are in the weeds.
    Just IMO.

    mimi
     
  14. foodpump

    foodpump

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    O.K. landlords......a whole different story.

    First, take a look at businesses for sale and/or properties for lease.  DO NOT EVEN THINK ABOUT building a working restaurant from scratch right now.  Look at the properties, at the leases, and most importantly at the rent.  Remember, every business that is for sale either failed or isn't making enough money to cover expenses.  You have to figure out why.  

    Say I'm a landlord, and I have a 3,000 sq ft restaurant for lease.  I am greedy and kicked my last tennant out after his 5/5 year lease expired because they wouldn't accept a 20% increase in rent.  He was paying, oh, say $7,000/mth plus property taxes, plus strata fees, plus utilities (aka "triple net").  I know what I got, and it includes a private 20- car parking lot, as well as a location on a good street with lots of shopping and other services.   Here you come along with your proposal.  I'm thinking you have no experience running a place, wondering if you can commit to a 5 yr or even a 3 yr lease, and if not, how I'm going to chase you for money.  Why should I take a gamble on you?  I just want to collect my rent every month and take the wife to Hawaii twice a year-same as always.  If you fail in the first year, I'm out a bunch of money and have to go through the hassle of leasing again

    In my last post I wasn't talking about buying equipment.  Used food equipment dealers are vultures.  When a restaurant goes under, the vultures come out.  A piece of equipment worth $4000.00 is bought for maybe $1,000--if that, and then resold for $5,000. I kid you not.  I don't want to put too a fine line on this, but right now a whole bunch of used equipment dealers are salivating at the thought of someone starting up a restaurant with no practical experience.

    Put your plans on hold for a while and work.  Keep on eye on the property listings, keep an eye on other places to see what they're doing, and most importantly, keep an eye out for people, they kind you'd want to hire. 
     
  15. chefboyog

    chefboyog

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    Hi,

    Interesting thread.

    My main concern ( among many for you), is that you stated it is your wifes venture, she is going to " manage" and you will not be involved. Why are you here not her? And why hire a " manager side by side a chef" if your wife is the manager? Does she have management exp? Sooo many variables but I do wish you luck.

    Unless you are very rich and have money to loose I say walk a way for now. Come back with questions on how to cook.

    Bank wont roll it anyway I dont think. Even in America lol.

    What is Academia anyway? Your a prof?

    Designer lol.
    Yeah hire one of them haha. We talking million dollar restaurant here it 100k? Did I miss something?
     
  16. hahsgyahba

    hahsgyahba

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    Thank you so much for your thoughts, @foodpump, @flipflopgirl, @chefedb, @SaucyGirlB, @chefboyOG.

    I am not planning on opening a restaurant right away, and I am writing to you experienced people to get some idea. I understand how difficult things can be - when I first started independent research, it was difficult as heck but then you watch your colleagues, advisor, friends in other discipline and learn and prosper. And we are going to put in our best - we come from a very hard working and good-thinking family.

    @chefboyOG, I am a scientist/postdoc/research fellow.Its a stage after PhD and before becoming an assistant/associate professor. My wife is not a manager, she is currently working at a convenient store. She is following the thread and have written those questions. Both of us are using this. She says Hi! to all of you!

    @foodpump, yes vultures is the appropriate word for them! My friend who is guiding me and telling me about restaurants did mention this - he used the same word! By the way, thanks for informing me about how landlords think - I never placed myself in their shoes. Yes, I am going to work - looking for a job as a waiter/server. Need to know the kitchen and cooking business inside-out before I start one.

    @flipflopgirl, yes, I am currently talking to two people (also my friends) about restaurants and they are guiding me but its a bit slow now because of the Christmas season.

    @cheflayne, thank you so much for your answers. Yes, I did forget about parking and handicap-accessibility -- see that's why I write to you guys! :)

    I have questions:
    (C1) Do you think it's a good idea to give a theme to a restaurant? For example, an Indian restaurant close to my place has a music-decor, so they have a village-hut-ambience with classical musical instruments and pictures placed appropriately. Well, I am thinking of opening a steak-house -- does a themed steak-house sound good? I have seen some with forest-y ambiance and some plain ones - both working well.

    (C2) How do you guys hire a chef? Now apart from cooking capabilities, calm-nature, what do you guys look for? Anything special. One of my friends mentioned that at times, a couple of chefs in his restaurant don't get along very well. Is "politics" common or it depends?

    (C3) If there are investors other than banks, who are they and where can I find them?
     
    Last edited: Dec 15, 2014
  17. chefboyog

    chefboyog

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    C3 = your mom. But thats a bad idea as well.
     
  18. hahsgyahba

    hahsgyahba

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    @chefboyOG, hahahaha, I have already discounted that idea. Mother-in-law, too...
     
  19. foodpump

    foodpump

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    C2....

    "What was your food cost and your labour cost at your last place of employment?"

    Every other question is secondary to this one, every other question will originate from this question. Sounds simple, but you really have to dwell on this for a few weeks to truly appreciate it.
     
  20. panini

    panini

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    @hahsgyahba

    Hi. Lots of responses, most good and true.

    Are you planning to structure your tax status as a donation type of business?

    If you are going to finance anything, leasing equipment and thing are usually out. no collateral.

    Here in the US the way things are now, to get 500k you need to have 500k locked up with bank access.

    just sayin