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Owning A Restaurant: It Can Be Successful

Updated on July 19, 2011

Stop me if you have heard this one. You might know of a Husband and Wife, friends, life partners, any number of combinations of people who have started a restaurant and a year later or less, and have shuttered the place. Why, they knew how to cook, I mean they cooked for their family and themselves, so no reason to fail in a business that provides food to the public, right?

You just need to know how to cook?

Therefore, you know how to cook so naturally you need to open a restaurant and retire early to live the good life. Knowing how to cook is only a small fraction of what is required to succeed in the restaurant business, note I said business . Cooking for friends and family is all well and good but that is not who you will be cooking for. Aunt Clare may whisper to you about too much salt on the roast but a restaurant customer turns it into the crime of the century.

Money isn’t everything but without some for startup you will fail.

It takes capital to start a restaurant, under capitalization is the major reason restaurants fail. You need money to lease a decent place. You might say well, I will build a place. Let me say this if you have the money to build a place from scratch and put in all the equipment then you succeeded at something, which means you’re smart, too smart to invest that money in a restaurant building. You need to lease until you know you will be a success. Many restaurants fail according to research, and they fail at a rate close to 61 percent, and many experts put this figure a lot higher, I guess there is debate on what constitutes failure. There is no shortage of restaurant buildings to lease. Most of which will have the equipment in place, make a deal for all the leased equipment, many times the ice machine and soda fountains are leased so make sure the soda and the Ice machine Company are ok with leasing to you. You don’t need to show up ready for business and they are wheeling out half the equipment because the landlord failed to mention a few minor details.

My brother in-law does ribs that are out of this world.

Now that you have decent terms on your lease, and you made sure the lease covers the equipment that is in place. Make sure you had everything inspected, it may look clean, but does it operate correctly? Spend a few bucks of that capitalization to get a good inspector. The help has been running around for a week or so getting ready. Here is where the capitalization comes in. They need to get paid, first lesson here do not hire your nephew or nieces or sister in-law or brother in-law unless you pay them the going rate. Most business owners shy away from hiring all family. Everyone thinks they are in charge, and some may take you giving orders the wrong way. Hire experienced cooks and wait staff; you will be better off for it in the long run. If you have to hire family because you can’t afford to pay people you have no business getting in the business. Make arrangements with the health department for an inspection. You didn't think you can just start serving food did you. You have to be licensed and inspected by the state or local authority that has jurisdiction over your business. This is normally done by the local health inspectors.

Restaurants all pretty much serve the same food, you need to do it better, there are no new foods to invent, do better than the competition with what you have.

Don’t get cutesy with the menu, just because you and the family make a dish passed down from way back doesn't mean your customers will like it, make sure it passes the test of known ingredients. Can I make it like Grandmother did, and what exactly is the dish, make it a signature if you can but it has to be something everyone can recognize. Making up dishes on the fly will never work; you must have tried and true items that have clear recipes and preparation instructions. Nothing worse for you to have a customer come back after having a great meal last week and order something they liked only to find someone else cooked it and not having recipes and instructions made it different. Everyone must cook it the same way, no creativity while the customer waits. Make it the same way every time that is providing it was good to start with. This is where you need organization, make the menu, be creative you need a hook that no one else has, a catchy phrase, a one of a kind dish and so on. Keep in mind you are not cooking for three or four people, you will end up on a good day possibly cooking for hundreds. Get the menu done, do not over load it with items you have to inventory on the chance someone might order it once a month, you can’t afford too.

Just because you had it in Paris, doesn't mean it will go over back home.

To exotic can fail, no one will order it and you will be stuck with it. Inventory food items that have more than one use, if it doesn't sell as meatloaf you can do something else with it and so on. In a very competitive business you need something more than just being able to make a good burger and a blue plate meatloaf sandwich. Find your signature dish and stick with it. Not every dish will be that dish, everyone serves burgers and steaks, be creative without confusing people, if they have to ask what is it, you have a problem.

You are not catering to your friends who will tell it was good when it isn't.

Come up with something unique and always mention it when you market the restaurant, you cannot survive on word of mouth, and you must spend money and market your business. I know you would like to believe that everyone that comes in and seemed pleased will immediately run out and twitter it, face book it and take ads out on how good the burger was. Probably won’t happen, if you made them mad on the other hand, see where that gets you. People take being catered to for granted, in our society of people that are all about themselves it’s a given. So bad service gets you on twitter good service gets them back, and it is up to you to get others in the door.

You are the boss, cook, dishwasher, and problem solver.

First and foremost you’re the ambassador for the restaurant. If the customer never sees you unless they have a complaint then you have failed them. You must be pro-active, get out on the dining room floor. Small problems grow when the customer thinks no one is paying attention. The wait staff doesn't own the restaurant, so their way of handling a problem may be to ignore it. If I am not looking it will go away type of thinking. Customers like to get to know you, they think if they curry favor they will get special treatment, they need special treatment. Everyone does but a good manager can convey to repeat customers because of their loyalty they are getting something special. Rewarding repeat business is a way of getting more business; make sure people know that discounts may be available for the tenth meal in a month for example.

1. Make sure you have enough capital to get through six months.

2. Hire professional cooks and wait staff.

3. Just because the register is stuffed with money doesn't mean you have made it.

4. Don’t cook to suit you, cook to suit your customers.

The money from a good day in the restaurant is not all yours; you need to pay the grocery bill which should not exceed 30 percent of the gross. You have to pay the help, which should be around 35 to 40 percent of the gross. You are busier certain days so have more help and the percentage will stay the same, you will spend more on help but gain more in register sales. Supplies, lights, gas bill, and so on will be about 15 percent. Then providing you didn't have any major repairs, no one got sick eating your food, or any other host of things that could go wrong and didn't, then you can pay yourself. The biggest money drain in a restaurant is the help. You have to on slower weekdays make it clear to the cook they wash dishes in between, it has to be that way, or you do it. Don’t fall into the trap where you have to hire a “dishwasher” to wash dishes. Anyone can and everyone should. Busy weekends you put more help on. You can track menu costs break it down into what each green bean cost you but over all you need to stay at a budget you can afford. You will have insurance and all hosts of minor things. The saying in the restaurant business is “busy days cover all the problems”. You need money coming in the door every minute your open.

Already you have a calculator out figuring profits and costs. Profits and cost have to be evaluated along with days open and hours of operation. You cannot have the help working 15 hours a day so if the restaurant is open long hours you need to figure for more than one shift of workers. Figure for days off and vacations, sickness, the list is endless.

People make it in the restaurant business every day. They plan; they have experience, and have some money aside to cover the air conditioner breaks down kind of problem. They also work in the restaurant from open to close and for many months never take a salary out if that is what it takes. Many fail because they think the money stuffed in the cash register is theirs and are grabbing a few dollars here and a few more there. Next thing you know the cook is leaving because you cannot pay them.

One of the biggest headaches in a restaurant and there are many is scheduling the help. You pay them and they repay you by providing some loyalty and a decent day’s work for the pay. The problem arises when the help seems to think they are working too hard. Experienced cooks realize that today they may have a slow day, and the next day have a busy one, and you can't always predict so they know they cover it by themselves. You can’t bring in help in the middle of a busy time it doesn't work that way, you schedule as best as you can but if a tour bus pulls up at noon there is nothing to do but manage through it. Over staffing on slow days and under staffing on busy days will ruin you, over staffing drives down profits, under staffing drives away the customer. Good cooks are proud of their dishes and will in turn increase your business, poorly trained and under paid ones will drive you out of business fast.

Would you Consider Owning A Restaurant

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    • rex michaels profile imageAUTHOR

      rex michaels 

      7 years ago

      Thanks BukowskiBabe, I am addicted to the food network!

    • BukowskiBabe profile image


      7 years ago from Somewhere in the middle of it all.

      I enjoyed this hub. I love the Food channel and often watch Kitchen Impossible. There is so much that can go wrong. I admire the entrepreurial spirit.

    • rex michaels profile imageAUTHOR

      rex michaels 

      7 years ago

      Thank you very much applecsmith

    • applecsmith profile image

      Carrie Smith 

      7 years ago from Dallas, Texas

      I enjoyed reading your hub, great information here. Thanks for sharing - voted up and useful!


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