Food For Thought

There have been some really good pieces in the Monitor over the past couple of months about restaurants.  With the Cat ‘n Fiddle changing hands and the new late night restaurant review series in the Monitor I found it interesting that people posting to the site were “hungry” (no pun intended) for independent dining destinations.

I have worked in the restaurant / retail food industry for 33 years.  All of those years were in management, whether with a corporate chain, start up chain or independent.  I also owned several restaurants and learned the hard way what it meant to own a restaurant, be on top as well as crash and burn, losing everything. 

And the latter experience made me a stronger person, a student of my industry and reminds me every day that the restaurant business is a minefield.  Today I am in middle management and far removed from my entrepreneurial days, but , the principles of success and failure remain the same as they did 20 years ago.

Success is rare but in the restaurant industry it is more than rare, it is extremely rare; driven by economy, a great location, food people crave, a good value, a stroke of luck and ability to change with consumer tastes.

Yes, we need some cutting edge independents and some cutting edge chains in Concord.   

Just to give the layman an idea of the challenges that independent restaurateurs face,  I thought I should include a partial list of what these free spirits and brave souls face in becoming an independent restaurateur.

Working Capital-If restaurateurs do not have enough business or back up funds to keep things consistent then they are more likely to struggle and fail.  Never use your own money, never take a second mortgage on your house linked to the restaurant, never take money from relatives and never operate that restaurant as a partnership or sole proprietor.  Always incorporate and keep your finances seperate.

Consistency-Although some chains are inconsistent they stand a greater chance of providing the same quality of product and level of service to you on every trip.  Consistency and knowing what to expect from your destination restaurant, every visit , builds loyalty and hence, reliable revenue.  Independents struggle with this in a huge way.  They are often too close to the business and lose sight of the operational aspects of the business which are most important.

Buying Power-The buying power of “one” has no meaning to food suppliers.  Chains might be able to order those mozzarella sticks and pay $7.00 per case less than the independent restaurant, yet the independent can’t price themselves out of the market and charge more for the same product.

Standards-Standards are not a given, even at chain restaurants but most independents lack structure, process, procedure and systems.  Most fly by the seat of their pants and those who are successful don’t see the reason to “mess with success” and they have a point.  But, long term history shows that without these traits and a good game plan to ensure them, restaurants stagnate and their crispness, so to speak, slips.  It is difficult to maintain the spark that ignites the excitement in your clientele.  Some places can do this and rise and fall like the tide; especially chain restaurants.  With that said,  clientele migrates to other, newer and fresher concepts if your standards slip.

Innovation-One of the most common mistakes that a restaurateur makes is to fill the menu with food that he or she likes, thinking that everyone must love these items.  Another mistake is the drive to be too gourmet or creative.  In the latter case, often times you win critical review but do not have a large enough niche base to thrive and grow revenue.  Hint:  Your entire family may love Aunt Margaret’s rhubarb pie but that is not guarantee that your customers will!

Complexity-Many independent restaurateurs try to be everything to everyone OR they try to oversimplify their menu which limits the frequency of which guests will return and dine at their establishment.  Trying to be everything to everyone often times produces a mediocre result or results in items out of stock. (Due to that working capital thing I mentioned above)

Pricing-Many independent restaurateurs have no idea how to price items and they often times have no idea of the actual cost of the food that they plate.  They don’t include that pickle or garnish or free bread bar.  Many also over price their food based on competitors and they try to get top dollar.  Don't be ashamed to ask a price that is in line with what the food is worth based on your cost (a fair margin of profit) but don't get greedy.

Portions-This one is tricky because you want to offer value for price being charged but you DON’T want to establish the practice that every guest leaves with a doggie bag.  If tough times come along, it is also tough to cut portions and hold on to your clientele.  Your clientele may pass on your restaurant as a choice because the portions are too large in favor of lighter fare. This sets you up as a destination for them only when you are hungry.

Service & Training-Independent restaurateurs do not have the tools for training guest service that the chains do.  This is one of the primary causes of independent restaurant failure.  Training is a must and it is necessary to have a standard training process for all servers, cooks, managers, etc.  Go back to process and procedure.  Restaurants need to run a fine tuned machine to ensure consistency.  Throwing someone new into a position to just “wing it” will only result in poor service and hence loss of clientele.  Any independent restaurateur who claims that there is no time or money for training is short sighted.

Labor-It is amazing how many restaurateurs have no idea how to staff and schedule their team members.  Remember that labor costs include the need for accounting for taxes, any benefits you might offer.  Often times restaurateurs fail to understand that when it slows down…”send them home”.  And managing the personalities involved, replacing them if they call out sick and having policies for them to follow.  Most independent restaurateurs don't have rules or regulations in writing or anything resembling an employee handbook.  This is very dangerous and they open themselves up to liability on labor practices should a disgruntled employee complain to any labor board.

The Two Shot Rule- Guests will try you once when you are new and if everything is not right they will wait a week or two and try you again.  Then, if they have a mediocre experience again,  they will not return or if they do it will be a long, long time.  NEVER have a grand opening until you have been open for over a month and have the system working properly.  Yes, chain restaurants always do but independents don’t have a small army  of corporate support staff to back up the operations should something go wrong

There are so many more factors that make it difficult to establish, manage and make successful, an independent restaurant but there is one more point that is worth mentioning.

Ownership versus Management-A person interested in building and owning a restaurant, should be ready to go into this venture with both eyes open.  It is NOT glamorous, it requires long hours, attention to detail and a realization that the profit margin is small; dictating that to be successful you will need to do volume.

Many restaurateurs hire high priced chefs, a manager and staff,  allowing them, as the owner to ‘oversee’ the operation.  This rarely works and if the owner is not involved in day to day, hands on operations from the start, these restaurants often fail.  Get a chef with an attitude or independent idea that he knows best and you might as well close up your doors. The owner must manage his first independent restaurant and set the business up for success.

The most important points from this post are the following:

·         Be consistent.  The last meal should be as good as the first meal served.  The meal the guest consumed on the last trip should be the same one they will purchase on this trip.

·         Be capitalized.  Do not think that money will come flowing in and you can meet your bills in the first week. 

·         Work the business.  It will not be successful without your constant presence.

·         Run the place like it is a professional chain.  Day one should reflect a game plan of process, procedure, standards and systems.

·         Pray or if you are not religious…..meditate and take your heart medication should you be on a prescription.  The restaurant business is often times seen as “non-professional”, although most of those in ‘professional land’ could not last a day in the business. 

One more point, keep it clean and organized and follow sanitation guidelines set by your local community.   A clean and well kept space is more important than a design with Taj Mahal ambiance.  if you want to know if a restaurant is clean in the kitchen, check the restrooms.  If they are filthy, so is the kitchen!

Those are only a few ideas of why it is so tough to be an independent restaurateur.  Look for future posts about challenges of chains and franchises.