Chef’s Corner-Bits and Bites, by Chef Michael Hutchings
So, you want to open a restaurant!
Many people dream of opening a restaurant. We all know the failure rate is pretty high, some say 50% in the first year. There is an old saw that goes, “If you want to make a large fortune small, open a restaurant.” This is not a business for the faint of heart or unambiguous. It is work with long hours, high stress and margins that can erode very quickly. You deal with customers who can be cranky because of hunger, a complicated supply line, staff that can be difficult and a product that spoils fast. Just getting open is a major undertaking.
Finding the right location for the style of restaurant you want is the beginning. There are then the hurdles such as legal structure of the business, financing, kitchen and interior design, contracting of construction, permits, regulations from city, county, state and federal agencies to follow, food and beverage menu planning, point of sales systems, sound systems, equipment purchasing from small wares to ice machines. Just a reminder, all these permits and inspections have a fee attached to them. Getting past the building inspector, fire inspector, health inspector and complying with all the codes may give you pause to question your sanity.
You will face inconsistent application of regulations. Why are you the only restaurant on the block to be required to have underground electrical utilities, cost $20,000 or an area to wash your floor mats, cost $5000? Oh yes, a neighbor called the Air Pollution Control and you are now facing fines over $10,000 a day for asbestos abatement. Never mind the city waived that requirement in the permitting process.
Getting a liquor license means a trip to the Alcoholic Board of Control for fingerprinting and posting notices so the neighbors can object to you selling alcohol. By the way, the license can cost over $100,000 in some areas.
You will need to contract for linen service, trash removal, maybe valet parking service, fire system service, flue cleaning, grease removal, utilities, and grease trap servicing. Hiring the crew and complying with all the legal requirements from document verification to W-4 and setting up payroll are all vital. Have you done an employee manual? Can you afford group insurance? Don’t forget the training of staff, PR and advertising, menu printing. Was that the 8th call this week for a donated dinner for four and you are not even open?
You will need accounting systems and computers to run them, point of sale systems, alarm system, a safe, inventory controls, schedules, pro formas, business plans, banking arrangements, credit card processing. You need to protect the dream with insurance for liability, theft, business interruption, workers compensation and key man insurance.
You will face all of this and more just to get open. Now the task of preparing great food and wrapping it with service becomes the challenge while insuring that you are profitable.
So, do you still want to open a restaurant?
Tastefully yours,
Chef Michael Hutchings
Resources: http://www.restaurant.org/business/start.cfm
