What are the unknown unknowns of opening a restaurant?

June 23, 2016 3:30 AM

I may be part of a team opening a new restaurant and bar.....

While I've been a bartender at a brand new place, and I've been in restaurant management to varying degrees, I've never been been a fully 'responsible party' / management in a brand new place. The owners would be essentially friends / former co-workers; I'm in no way concerned about being screwed over. I am, however, worried about being responsible for a ton of new things to tackle. I grow increasingly worried about the stuff I might be failing to anticipate.

General background - I've been in restaurants for 10 years. 2 years BOH, 8 FOH. Only job functions I have not done are GM and chef. The co-owners have been in restaurant FOH roles only, mainly related to hotel/resort places and are looking to me to provide some experience. Concept is likely to be neighborhood bar with plenty of typical bar games. We are at this point 50/50 on building-out a new leased space or rehabbing former restaurant.

None of the money on the line is mine. I'd likely be considered senior/upper/GM level management once the ball is rolling. Control of the kitchen and menu will hopefully be taken care of by a rockstar chef who is a relative who I hope to bring on as an employee.

The business at this point will likely be somewhere in the Portland, Oregon metro area.

Hit me with your best shot. 'Don't do __', 'You're going to fuck up __', bring it on. I will try to respond to any comment.

posted by efalk to Work & Money (30 answers total)

What happens on the third or forth week of utter emptiness, a Friday night with two couples each at the far side whispering "should we go across the street"?
posted by sammyo at 3:36 AM on June 23, 2016 [1 favorite]

Response by poster: Beyond opening day there should be 200k working capital / COH
posted by efalk at 3:39 AM on June 23, 2016

The invisible killer of restaurants is high fixed costs, meaning rent and taxes. A place that seems busy and prosperous can be losing money if too much is going to the landlord.
posted by SemiSalt at 4:16 AM on June 23, 2016 [2 favorites]

If none of the money on the line is yours, then be prepared for what might cause either of the money-contributors to just decide "that's it, I'm out". You might not be concerned about being 'screwed over', and that depends on your scale of what being screwed over is, but an investment is an investment and nobody's going to keep throwing money into a losing proposition just for fun.

Now, that's not saying what you're in charge of is automatically a losing proposition -- but if you're the one in charge of causing expenses (hiring people, ordering inventory, scheduling employees), you've got the reins for what will make or break the place.

Also: in setting up a new business, everything, and I mean everything, will cost something -- window decals, chairs, kitchen utensils, a sticky door that doesn't close right, business cards, toilet seats, receipt printers -- and probably more than you expect. Remember advertising, don't skimp on it, restaurants/bars are not something a town only has one of, you need to be in people's minds. Also, if you haven't found a location yet, remember Hotelling's Law.
posted by AzraelBrown at 4:29 AM on June 23, 2016 [7 favorites]

Best answer: Tyson Ho's Serious Eats feature How I built a barbecue restaurant in Brooklyn was pretty eye opening.
posted by zamboni at 4:48 AM on June 23, 2016 [4 favorites]

Since I see nothing even vaguely related to rate of return on investment I am assuming this is a should I take this job question. Sure, why not. It's with friends. They would not be willing to hire you if they didn't think you could do it. I'd be most concerned that this job will be stressful because new businesses often fail.
posted by Kalmya at 4:59 AM on June 23, 2016 [1 favorite]

Get all of your (health and safety/inspection/city government/OSHA or whatever applies in your area) ducks in a row. Nothing kills momentum like being shut down a couple of weeks after opening.
I've opened a lot of bars and restaurants, send me a private message if you have any non-location specific questions and I'll offer my two cents.
posted by conifer at 5:17 AM on June 23, 2016 [4 favorites]

Ok, 200. What's the burn rate? Will that keep a full staff running for two years?
posted by sammyo at 5:19 AM on June 23, 2016 [2 favorites]

This advice is not specific to restaurants.

Make sure you have an attorney and an accountant. I know these things are expensive, but they can prevent much more serious problems. My current business partner ran a restaurant in Texas for almost a year. He failed to make deposits for payroll taxes, and that ultimately cost him his business.

These things need to be done. If you can't pay someone to do them, then you need to do them yourself.

1) Payroll Taxes
2) Sales Taxes
3) Income Taxes
4) Salaries (this includes employee health insurance)
5) Licenses and other governmental paperwork, such as Form I-9, liquor license paperwork and so on.
posted by Colonel Sun at 6:17 AM on June 23, 2016 [4 favorites]

Please have vegetarian options that are substantial and not terrible for you (so, not a bunch of pasta). Please _also_ do not get on the very popular bus of "must make vegetarian dish spicy to avoid boringness". Every single chef seems to have this same thought. For heaven's sake, squeeze a lemon on it or add some vinaigrette, or look into mild honey-mustard sauces.

A marinated and baked tofu slab can be a wonderful centerpiece of a dish -- or a truly awesome start to an epic sandwich. (I also wish chefs would experiment with thinly slicing tofu and treating it like filet of sole). TVP -- which I believe is very cost effective -- could make an excellent base for a mild chili or stew, with a house hot sauce served _on the side_. Bonus - if the hot sauce is popular, you could bottle and sell _that_. Also, you could conceivably use a commercial veggie burger patty, marinade it, and make a signature veggie burger. Also look at making bean purée cutlets.

There is no substitute for a chef with time and space and interest to be creative. We had an amazing Italian restaurant open here last year, with an awesome homemade mushroom ravioli with lemon butter sauce. The restaurant didn't take off immediately, the chef/owner decided to focus on other things, and they brought in a new chef and (I believe) focused on cutting costs. The time-consuming ravioli dish is gone, as is the amazing homemade pound cake, and instead less-intense but _very_ thematically familiar dishes are now on the menu. It's disappointing. Maybe if there'd been more attendance or attention to the restaurant early on, or if the new chef were less constrained or more passionate (how could he be as passionate as the chef who also was an owner, though), things would have stayed amazing.
posted by amtho at 6:20 AM on June 23, 2016 [4 favorites]

Best answer: Even though these are friends, this is business first. You should get your understanding of your role in writing so there's no issue down the line as to what you were all thinking.
posted by *s at 7:21 AM on June 23, 2016 [7 favorites]

Best answer: Get a bookkeeper to do the books that you trust that is experienced. Do not do them yourselves no matter how easy you think it is you need someone a step back from everything to keep an overview. Keep the figures up to date. Read the damn reports & know what they mean. React to the info given. If the bookkeeper suggests something is hinkey in an area look into it, I've never worked in an industry as ripe with thefts & staff helping themselves to things thinking it's a job perk as the hospitality industry.

If you can't say reel off your major costs & food & drink percentages when asked, get in the habit of knowing that info. If you don't set those percentages & stick to them you are asking for trouble, don't assume the numbers know them. Too many restaurants worry about how many covers they did, & don't worry about how much they were making on each cover.

Stock control is more important than you think, even more important if you are selling alcohol, don't overlook it.

I say this as a bookkeeper that has done nothing but hospitality bookkeeping & stock control all her working life. Yes the paperwork is boring, but it will help you more than can imagine if you let it, having the best chef & atmosphere in the world means nothing if you're throwing out half your stock every week & undercharging.

Also have an accountant & legal advice that is experienced in Hospitality.

Get good staff, pay them what they are worth.

Find out your friends definition of "success" it may well differ from yours.
posted by wwax at 7:36 AM on June 23, 2016 [16 favorites]

We are at this point 50/50 on building-out a new leased space or rehabbing former restaurant.

Whichever way you go, you should double the time estimate given to you by contractors or your own pen-and-paper calculations. There will be delays, things will take longer than expected, and not all of your dependencies will fall in line - and the more dependencies you have, the longer it will take.
posted by Lyn Never at 8:06 AM on June 23, 2016 [5 favorites]

Best answer: If you make improvements to the space, make sure that the terms of the lease make it worth it. I've seen way too many naive restaurant owners put tons of money into their space only to have the landlord jack the rent up, drive them out, then turn around and rent it to someone else at the new, higher rate.

rehabbing former restaurant.

If you're taking over the space of a failed business, be sure to understand why it failed so you don't repeat the same mistakes.

Concept is likely to be neighborhood bar with plenty of typical bar games.

Some of the hip neighborhoods near me had one successful bar like that which turned into four or five moderately successful ones and are now ten slowly starving businesses. What are the chances that a slew of like-minded people are going to open very similar restaurants right around you?

Please, for the love of all that's holy, make your website not require flash or use PDFs and be mobile friendly, fast, and easy to use.

Explore whether there's a market for delivery of your food in the area and the best way to handle it.

If things go poorly, are you willing to lose your partners' friendship?
posted by Candleman at 8:25 AM on June 23, 2016 [6 favorites]

Whichever way you go, you should double the time estimate given to you by contractors or your own pen-and-paper calculations. There will be delays, things will take longer than expected, and not all of your dependencies will fall in line - and the more dependencies you have, the longer it will take.

This is totally crucial. Double or triple the time estimate given to you by the contractor. Don't increase your scope because you "might as well" since "the walls are already open" - that way leads to a path of lots and lots more money and time being spent.

re: building-out a new leased space - are you going to be working with an architect and a health code consultant who can advise you on proper or ideal design for a restaurant? Indirect floor drains, grease traps, etc.

How are you going to hire people? How are you going to have people on backup? What is your plan for when one of your crucial staff quits at the last moment? How can you figure out a hiring schedule so that you have multiple people knowledgable about what's going on and knowledge isn't lost when someone leaves?

Put your contract and agreement down in clear writing. Whether or not you trust your friends, you will forget the terms of that agreement sooner or later, and it will help make things easier if everything is clear.

How are you going to control costs, and what's the decision-making process? Can the chef calculate costs? Are you going to calculate costs, research suppliers, figure out how much profit each food item is making? Is that the job of the owners?

Why should I go to your bar instead of any other bar? What puts you apart other than just being another neighborhood bar with bar games?
posted by suedehead at 9:11 AM on June 23, 2016 [1 favorite]

Portland, Oregon? You had better make your bar amazing and more than just a typical bar with typical bar games and food. The bar is set very high in Portland for restaurants and bars so make sure yours is special in some way and has fantastic food. My husband and I routinely leave our Portland neighborhood to go to the most fun and tasty places. So, for a new place, you will need it to be pretty compelling for people to go there instead of one of the other many fantastic eateries in town.

Do you have a backup plan in case of failure?
posted by FireFountain at 9:44 AM on June 23, 2016 [3 favorites]

Nthing get a good accountant.

Part of my job is to track all of the businesses that open and close in my local area, every year. We do that by boots on the ground, walking the neighborhoods. I see the same addresses turn over every year, while the joint down the street has been there 20, 30.years. One of the differences, aside from the cost issues mentioned above, is so simple you wouldn't believe it. It's parking. You can have the best food in the world but if you have crappy parking (and here I include ingress and egress, ie, the ability to get into the parking lot from any direction) you are just not going to get the business that your competitor does. Try to avoid street parking unless it's an area with a shit-ton of foot traffic. Try to avoid "Parking in the back!" locations. I've been doing this for about 15 years now and I can tell you from the moment that I see a place whether it'll be open in a year, just based on location and parking.
posted by vignettist at 9:46 AM on June 23, 2016 [5 favorites]

Best answer: Is there a McMenamins near your location? If yes, what are you going to do to stand out? If no, why not?

Is there already a neighborhood bar with games near your location? If yes, what are you adding to the community/potential patrons that they don't already have. If no, why not?

Portland has no shortage of bars and is fairly saturated. Luckily there are a lot of drinkers, but I suspect that opening a bar in Portland is nearly a zero-sum game, meaning that every beer that you sell means one less beer sold at another restaurant. That could be bullshit, I'm not an economist, just my impression as a frequent Portland bar goer.

From a supply side, make sure you have accounts set up with your beer and liquor distributors (and food vendors). Sometimes that first delivery can take longer than expected.

Make sure your OLCC permits are good to go. Make sure your servers, FOH have their OLCC training documented.

Have a strategy of how people are going to be able to get to your location. Driving, is there parking? How close are you to a Trimet Bus stop? Does this stop have late service or is it done after commuting hours. How close is it to a Max stop? Or does your plan hinge on people being able to walk in and walk home? How densely populated is the area near you? What is the average income of the people within walking distance. Are there sidewalks or at least unbusy streets that people can use to get home.

Get good glassware.

Also, learn how to clean taps, lines or get an outside company scheduled to do it regularly. I've had chunks of black crust floating in beers before. I'll never go back to those places.
posted by TomFoolery at 9:53 AM on June 23, 2016 [4 favorites]

General SMB advice from years in working in SMB marketing: don't waste too much time on social media, especially stuff like twitter and Instagram. Unless you have special events that's often a distraction rather than a true value add. Instead pay attention to SEO, updating info across platforms like Yelp and Google Places, and having attractive, recent photos available on Facebook and Yelp. Don't underestimate local press either--particularly blogs. Getting a review might be a lot harder than buying cheap google display ads that will display on Wordpress or something.
posted by Potomac Avenue at 10:23 AM on June 23, 2016 [2 favorites]

And don't hire your friends. The biggest drain on bars I've worked in is bartenders/waiters giving away free product. I know you know that and I know you have former coworkers that you trust--but still take a second and imagine yourself firing them for giving away a shot. Can't do it? Hire qualified strangers instead.
posted by Potomac Avenue at 10:27 AM on June 23, 2016 [2 favorites]

Portland has no shortage of bars and is fairly saturated. Luckily there are a lot of drinkers, but I suspect that opening a bar in Portland is nearly a zero-sum game, meaning that every beer that you sell means one less beer sold at another restaurant. That could be bullshit, I'm not an economist, just my impression as a frequent Portland bar goer.

Not to derail but when former employers have polled huge numbers of bars and venues the #1 agreed on competition is Netflix, not other establishments. I think that's important to keep in mind--differentiating yourself is important but concentrating on getting people who like you and plan on going out to actually show up is actually a way bigger opportunity than stealing new customers.
posted by Potomac Avenue at 10:33 AM on June 23, 2016 [1 favorite]

Permits, inspections, plumbing, and electrical work will all take longer than expected, even if you build in extra time because you know that already. Expect at least one absolute showstopper which pushes back your opening. One new place opened by a friend was delayed at least four months, if not six, due to a permit issue. There are two new places in our neighborhood (on the same street, even) delayed at least a month by the local electric utility's utter inability to deliver an upgrade on time. And I'm not at liberty to discuss events at another place I know about.

Some restaurants never recover from big opening delays because they can't do enough business to service the debt they open with.
posted by fedward at 10:45 AM on June 23, 2016 [1 favorite]

General background - I've been in restaurants for 10 years. 2 years BOH, 8 FOH. Only job functions I have not done are GM and chef. The co-owners have been in restaurant FOH roles only, mainly related to hotel/resort places and are looking to me to provide some experience.

Get someone who has opened a restaurant on your team or at least in an advisory role. If none of you have opened a restaurant before, and you're considered the "expert"? I'd really worry about this. There are so many hidden pitfalls that you're going to be totally gobsmacked by if you don't try to anticipate them, and the best way to anticipate them is to find someone who has been through it.
posted by xingcat at 10:49 AM on June 23, 2016 [2 favorites]

You might benefit from reading something like The Ten-Day MBA.

If you haven't already: think clearly about who your customers will be; what they like, what their lives are like, what times and days they are most likely to come out, what they're not interested in eating/drinking, what they care about, how they will learn about your existence, etc.

A book like I recommend will help you consider other issues like that one (it's essentially marketing).
posted by amtho at 11:11 AM on June 23, 2016 [2 favorites]

Best answer: Start with a small menu that you can manage perfectly, rather than a large menu that you can't.

If you read through review sites, it's clear that people very frequently complain about the food presentation being slow. While there are plenty of sour grape people on review sites, you can also spot trends. Sometimes reviewers call it a slow waitress, but it is more correctly called a slow kitchen. Being unable to execute in the menu in the kitchen is also the reason courses come out of order or that one person is served while another patron waits for their entree.

Do a soft launch with a very limited menu and add new dishes as the kitchen becomes capable of consistently hitting their table times - even during rush periods. If you don't have enought cash on hand to sustain you through a soft launch, then you don't have enough cash to open a restaurant.
posted by 26.2 at 11:43 AM on June 23, 2016 [3 favorites]

I am not a restaurateur, merely an observer of the urban scene.

Do not open a new place in a spot where some other restaurant failed, let alone more than one. People are creatures of habit. Even if there's nothing apparently wrong with the spot – it may even be in a good location based on other factors – there may be something you can't see that makes it difficult, but more than that, people will have mentally mapped the location as non-viable.

Anything making access to the front door tricky in any way has to be dealt with. I saw friends of friends try to open a restaurant in a space that had been an art gallery of some kind, somewhat closed off from the street and with a heavy door. Call it feng shui or human nature, it didn't feel approachable, and although the space was nice enough inside and it was on a lively street, it closed.
posted by zadcat at 12:25 PM on June 23, 2016 [2 favorites]

Best answer: Instead of starting from scratch, trying to gather the information piecemeal yourself, look at industry best practices. First, go to RestaurantOwner.com and get their free How to Open a Restaurant Resource Guide. Also sign up for a free subscription to their magazine Restaurant Startup & Growth while you're there. If that information seems useful to you, get a copy of their book So, You’re Thinking About Owning, Operating or Investing in a Restaurant….

(I have no connection with RSG, I've just been reading the magazine for a while and think the book has a lot of good information.)
posted by Lexica at 3:39 PM on June 23, 2016

Best answer: How accessible is your restaurant? Are your doors wide enough for wheelchairs, do you have a ramp installed and at least some accessible seating?
posted by Tamanna at 5:03 PM on June 23, 2016 [1 favorite]

Best answer: Do you have a partnership agreement and a formal business plan? I write business plans for local entrepreneurs sometimes and once they see everything laid out in writing and the full financials, they often decide to retool their idea, wait until they have more capital, or just not go ahead.

I haven't looked but there might be services for entrepreneurs and small business provided by the local government. You absolutely want someone who has successfully opened a restaurant to be on hand for advice at least.

Assume everything will cost at least double and take twice as long. Figure out exactly what your financials are. How much does it cost to produce each dish, staff costs, etc. Then figure out how much you need to bring in per month, week, day, hour and track that obsessively.

In my town, a write up in a couple places will get people in the door. One is the local paper, another is a blog. Start cultivating contacts early and if you have a star chef get them front and centre.

If I were you, I would go to the library and literally check out everything related to opening a restaurant as well as a business in your state/city. There just so much that you need to know. Ask the librarians about small business workshops and other resources too.

Be prepared for the friendship to not survive the stress, even if everything goes well. It's not your money on the line but how will your partners feel they disagree with a decision you made and it costs then money?
posted by betsybetsy at 4:12 AM on June 24, 2016

Best answer: Insurance? Effective comprehensive insurance that you can trust to pay expeditiously? After looking at this, out for a walk, I past by a popular spot in a great location that's been closed since the middle of winter with fading signs "reopening in spring". I read it had to do with burst pipes, does not look like they'll recover.
posted by sammyo at 8:04 AM on June 24, 2016 [1 favorite]