Seeking advice

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Joined Aug 22, 2018
Hello,

I happened to come across this forum and thought I would reach out for some advice. I apologize if this is only for restaurant industry professionals as I am in healthcare and have absolutely no I industry knowledge. To make a long story short my husband, who has no restaurant experience either, wants to open a family restaurant. He acquired the business credit and is officially an s Corp. He is looking at a lease that wants a personal guarantee for 5 years. This lease would hold both of us personally financially responsible for the lease for 5 years. I am terrified of this. While he is an excellent cook and has an excellent co-cook; I know the projections for new restaurants is about a 40% success rate. It will be a small restaurant. He plans on only hiring 1.5 co cooks alongside himself and my step daughter to run the register so overhead would be low. But the rent including taxes etc is $3,600. He was projecting a gross profit of about $36,000 before expenses based on average 100 customers / day spending $13 a person on average. Does this sound realistic? Thank you so much for your feedback as I really have no clue. I am trying to be supportive of him yet realistic at the same time.
 
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Joined Sep 26, 2017
The 40% success rate is for professionals with years of experience.

In your case, it's about 4%, sorry to say.

If you really want to go ahead with it, I suggest you try to find a much shorter lease. 5 years is suicidal.
 
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Joined Aug 22, 2018
The 40% success rate is for professionals with years of experience.

In your case, it's about 4%, sorry to say.

If you really want to go ahead with it, I suggest you try to find a much shorter lease. 5 years is suicidal.
Thank you for your honest reply.
 
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Joined Oct 31, 2012
I will first disagree about the five year lease being suicidal although I don't know much about leasing. I would suggest ownership is better but I've only owned and never leased. I realize leasing can work in certain situations but I have also noticed that if and when the restaurant becomes successful, the landlord suddenly wants a bigger share. This too often results in the restaurant having to move or close. Ownership of the whole thing prevents that. In any event, this lease isn't the only option available. A bit of research will provide other opportunities. Don't be so excited about any deal that you make a bargain you'll regret.
I also think that if you plan to own a business, you then commit to being in business for much longer than five years. It may take up to five years to get a complete handle on things.
Anyway, a bigger concern is why your husband would have the arrogance to think he can run a restaurant with zero experience. Being a good cook is only part of the operation and typically the fun part, despite being stressful as all get out. (As a partial explanation I'll say that cooking at home for friends means everyone eats when the food is ready. In a restaurant, you cook the food when the guests are ready. Not the same thing at all.)
I can't suggest strongly enough that he get a job in a local restaurant doing anything. Let the owner know what his plans are. This way the owner might provide your husband with awareness he would not otherwise share.
Restaurants apparently seem to appear to be easy and glamorous to the lay person. They are anything but.
Should your husband decide to go ahead anyway with no experience, at the very least make sure he gets a Sales Tax Account at the bank. The sales tax is not his money for one second. With the account in place, at least the sales tax will be paid if the whole operation goes belly up.
As for his projections, they aren't worth the paper they are written on. To operate successfully, he will need to have enough money on hand to cover expenses regardless of how many customers may come in. There will be days of 240 customers and other days with twenty. More often less than more.
 
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I was talking in the context of the OP's situation.

I bought the whole thing out right myself when I opened mine, because I was prepared and confident.

At the same time, I had a friend that signed up for a 2-year lease when he opened his restaurant. His operation went bust in just 4 months and he almost went bankrupt trying to pay off the rest of the payments.
 
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Oh my, my Hopeful...

Sounds like you are leasing a defunct restaurant, hope you did research on who they were, and why they closed... Might even want to contact them and get some intel about your potential landlord. (I'm not saying to believe every word, just to get a little info.) So, I also think about the status of the equipment and building as well as division of responsibilities, if applicable.

Of the thousands of variables, where is your closest competition? "Family Restaurant" is tough if you plan on competing with a menu of a hundred or so items... This means managing several hundred ingredients and food waste can be deadly. How much to order, storage and handling present a steep learning curve. Sanitation knowledge? Get your certificate!

If you are the only dining option for 30 miles, that increases the possibility of success!

Before you pull the trigger on this I would hope you do significant research to avoid "I wish we would have thought of ___________ before we committed to this!"

If you could think about driving into the parking lot and focus on every aspect, from that point to the part when you leave just from the customer perspective and what they might expect. Need a new sign? Landscaping? How will seating work? Menus? Items on the table? How are the chairs? Decor? Plates and silverware? Do the same for back of house (kitchen) Matching menu items to the equipment needed, don't overtax any one piece of equipment, etc. Don't forget the record keeping and tracking of money flow. Who is going to do the training? What permits and inspections are needed.

Just a thumbnail of some issues.

Good Luck!!!!
 
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Cannot agree more with the above - especially the part about experiencing a restaurant in full service, before and after.
And no - a weekend or two would not be enough

I've met many people that have opened restaurants - most of them however hired experienced chefs to run their back of house and generally either ran the front of house themselves, or had a partner/friend who handled that part.
Seeing that in your case, the back of house would be handled by someone who does not know anything about the industry in my honest opinion - spells disaster, sorry to say

Would recommend the following:
Get experience in a restaurant (both front and especially back of house)
Start cooking for larger groups (either at home, or rent a kitchen) with the food/menu that you want to serve in the restaurant
How big is the current recipe collection? Enough for a menu change in 6 months?
Hygiene courses (unless you have these already, cannot stress how important they are. They will also teach you a lot about the proper storage which in turn can help you to plan the actual flow in the kitchen)

I had a regular a few years back
Absolutely loved to cook himself (and actually spent quite a few weekends in my kitchen helping out on the basics).
He decided to open his own restaurant back home
At the beginning he also wanted to run the kitchen himself - which lasted 3 months after which he decided, in the interest of business he needs professional help - he hired a head chef
His passion for cooking did not go away - he actually creates most of the new dishes together with his head chef....just saying...
 
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Worth mentioning that Heston Blumenthal started with two weeks of work in a nearby kitchen. After a couple of years of horror, he ended up one of the top restaurants in the world. Of course he's something of a genius, but my point is that it can be done. It's just exceedingly unlikely.
 
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My advice is no way. Only start if you have working capital for three years operation, and are willing to lose it. It would be helpful to see some of the details of his projections, then we could give specific advice. How did he come up with a family place that has an average check of 13 dollars? Not in most parts of the USA. Good luck whatever your decision.
 
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Joined Oct 9, 2008
My advice is no way. Only start if you have working capital for three years operation, and are willing to lose it. It would be helpful to see some of the details of his projections, then we could give specific advice. How did he come up with a family place that has an average check of 13 dollars? Not in most parts of the USA. Good luck whatever your decision.
$13/person is believable in the Boston area, but you'd never get rent at $3600!
 
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Joined Oct 1, 2006
Hi again hopeful,

Maybe you should have chosen "terrified" instead of "hopeful" for a screen name...

After reading your original post again it should be your husband, who thinks he has all the answers, posting his thoughts and concerns here. Maybe information from actual industry professionals may be of use...

Funny thing, one of my culinary instructors quit teaching to open a Family Restaurant and it closed 18 months later. But a person with no experience should have no problems at all!

Good Luck!
 
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