This is really something everyone who opens a restaurant should be prepared for. An overwhelming majority of restaurants go out of business within a few years. It's a really difficult profession to be a part of, and if you want to be successful you've got to make some serious sacrifices--even then that might not be enough.
There was a Wall Street Journal article a few weeks ago that said banks were being far too lenient about giving out loans to restaurants and pumping money into an essentially dying, unforgiving market. I actually thought the WSJ was a little hard on the banks, since restaurants are so notoriously hard, but I wonder if this is more of systemic issue.
Investment banks might not loan to individual restaurants, but they absolutely do loan to chains, as well as to PE firms trying to buy those chains in leveraged buyouts.
And yet it sounds as if his restaurant wasn't totally nonviable, he just didn't have nearly enough runway for all his first-time mistakes. He might even be successful next time with what he's learnt, if he had the stomach for another go … and another $200k starting capital …
Please do not encourage him. He lacks the proper budgeting skills. He starts thinking about expanding shuts down the place for a week and then everything falls apart.
An order of magnitude higher than 60k, if your goal is to compete in the market he was targeting. For 60k he could have opened a pizza or sandwich shop.
Low end estimate is $150k required up front, and high end of $320k. However, in that low end - $85k estimate for leasehold improvements. $15k for initial subway franchise fee.
Local sandwich shop opened up a few years back and... while I don't know all the numbers, he didn't put in $200k up front. I suspect it may have been more like $40-$50k, between initial lease, equipment, stock, etc. Small town, passing traffic, little competition, he's done well enough that he's expanding - doubling his size and moving a bit up the street. He's also a very pragmatic guy, and the sandwich biz has been in his family for a couple generations, so I have to think they're at least moderately profitable.
They recommend at least $30k in liquid assets, but I'm sure that depends on the market. $80-$310k minimum net worth.
I agree with your statement, though this was interesting.
>I contacted the banks to apply for a business loan, but I didn’t qualify. I looked into a few angel investor groups, but it turned out that they didn’t “do” restaurants. I even considered Dragons’ Den. As it turns out, no one invests in first-time restaurateurs, no matter how mind-blowing they think their cooking is.
I don't know much about running a restaurant, but I figured he'd be in big trouble as soon as I read that number after reading the condition of the place. I've done remodelings, and I'm pretty sure that just remodeling that place alone would eat up the entire $60k. I have to figure that bootstrapping a new restaurant would run at least that much on its own, between laying in food, kitchen equipment, hiring staff, doing marketing, permits and taxes, etc.
I know almost nothing about the restaurant business and I haven't even read the article, and my first reaction was still that this number must be missing a zero.
I recall stumbling across the franchise agreement for a frozen yogurt place once. They wanted proof that you were able to invest something like $400,000 in the venture, and that's a way simpler setup.
I had the same reaction. I was looking at investing in franchises and they range from initial cash investments if $400k to $600k for one restaurant. And, like you hint at, these are behemoths that have networks of fine-tuned resources. Also, this information is astonishingly easy to find, so getting the gist of what opening a restaurant costs is stupidly simple.
For example Dairy Queen requires:
Investment Range: $779,675 – $1,729,160
Liquid Capital Requirement: $400,000
Net Worth Requirement: $750,000
I'm surprised there isn't a big WeWork for restaurant start-ups. A large space converted into numerous kitchens, that can be rented for relatively inexpensively (no large upfront cost to buy equipment or the building, no large initial lease, etc). The WeKitchen owner would have its own inventory of kitchen equipment that could be rented and moved as needed, to facilitate a lot of various types of kitchen arrangements.
The idea would be strip as much cost out of the initial part as possible for the start-up (given their odds of early failure are ~97%). Most of them would still fail, the WeKitchen business would get paid their upfront monthly (or quarterly) fees as the restaurants come and go (and there's a perpetual supply of people wanting to try restaurant businesses, this would increase that supply by lowering the cost / risk; it could also accelerate experimentation). It could also enable a lot of other types of food businesses, such as tilt-up bakeries, rather than only restaurant-style.
The overall system would focus on orders to go, aligning with the increasing rise of food delivery services.
You're almost describing a high end twist on a mall food court. It's an interesting idea. I suspect this doesn't exist because the high startup costs (multiple full kitchen build outs would like push costs into the 7-8 figure range) would be too high given the inconsistency of restaurant rents.
With office rents working on fairly regular timelines, it's easier to get a new tenant before an old one has finished up. But if restaurants inconsistently go bust, that may mean that you can't look for new tenants until you're already dealing with a vacancy. Given that restaurants may be cyclical, there's a decent chance that you'll face multiple vacancies in parallel. I know you bring up vacancies, so I just mention this as a possible consideration.
I actually think this is a really cool idea, and would love if someone pulled it off successfully. I've seen it done with clothing stores and would love to see the food equivalent.
Do you mean like the Ferry Building in SF? If so, then I guess so! Although that may not be specifically what OP was picturing. May have been picturing something where each restaurant had their own dining area.
My assumption was it would take a very sizable amount of venture capital to do it properly, with a lot of red ink early on. There are an immense number of restaurants, bakeries, etc founded in the US every year, so I suspect there's potentially some kind of big market for this - especially as the order-to-go business gets drastically bigger over the next decade.
I considered that the large unit space / building could have a dining area, where customers could sit down and could then select from numerous kitchens that are local to that space. That pushes it even closer to the mall food court. My reservation on that, is that some percentage of the restaurants will be producing subpar experiences in terms of quality. So a successful restaurant in the space, wants its customers to eat in a successful atmosphere, where customers as a whole are happy; if half the customers in the dining area are unhappy, the enjoyment by the other happier half will suffer as well (people pick up on such things, it rubs off). Then I considered sub-divided dining areas, so each rented kitchen gets its own limited sit-down space, it just might be a stretch though and adds to the overall cost burden in the system with minimum gain (ie, it's probably just easier to focus more narrowly on food delivery).
To deal with the vacancies issue, you'd only build these in higher population urban areas, to maximize the potential number of restaurants etc. that you can rent to (maximize the potential start-ups due to population). You'd also seek to under-build versus demand, preferring to always have a waiting list (recession times might even trash that best effort). I don't know if it would work, but, I'd seek to get a modest upfront payment allocation from the waiting list, that covers the risk on vacancy turn-over. By keeping the demand above the space availability, you can probably get the start-ups to front the first month of rent to get on the list (with some terms of refund). It wouldn't be something you could start with zero capital, the idea would be to get it into the $5k (solo bakery) to $25k range to go from moving into the space to the time it takes to get the first customer.
Interestingly enough, those do exist, sort of. I toyed, long long ago, with starting a food business, and looked into commercial kitchens you could rent for a few hours a week; they do exist!
They're a great service for people who can go in and cook up a batch of, say, baked goods that they then individually wrap and take to coffee shops, or whatever.
The guy in the story did just about everything wrong, though, in kind of an amazingly thorough fashion.
There are commissary style kitchens around. I know a pizza place in Seattle that started up by making pizzas out one, and allowing people to pick up in the alley across the parking lot.
There is actually something like this in Pittsburgh: http://www.smallmangalley.org. Although it's more of a restaurant incubator than just a space to cook.
Yeah, you can't even open a Subway for $60,000. Opening a restaurant is generally a bad idea, but he obviously underestimated the cost of opening a restaurant.
Running a restaurant is hard and unsurprisingly its even harder if you never have run one before. Staffing, food cost, vender management and health code malarky: these are some of the first things that make or break a restaurant. Then maybe location. Quality of food clearly doesn't make the list, at least not disconnected from price as Dominos, McDonalds and Starbucks succeed with high probability. Sad to see a vanity project eat up someones life.
Gordon Ramsay is one of the most experienced and successful restaurateurs ever, and has had numerous failures along the way.
Before he became TV famous, he worked in his restaurant every day until 1 AM, and back to it 6 hours later...every day, for many years. People vastly underestimate the time and dedication needed to run a restaurant. If you aren't built for it like Ramsay, you will regret it.
For a lot of owners, it's a really good way to earn not a lot of money for a massive amount of work.
Right and with that much work you know how to fix a menu so your food cost is managed. You know how many servers you probably need for that day of the week and how likely they are to disappear. You know how your staff will steal your booze, pocket the tips, or kill you clientele with a food allergy. You know how many people will complain and you will have to comp their bill. You know you should stock pile supplies because the vendor will run out. For an industry that is terribly easy to get into as a bus boy/server, prep cook, its amazing to me that more people don't just start there. Or maybe they do, but they don't write hand wringing articles about how they failed.(hopefully because they'd didn't and are too busy working). I once heard a story about an area for wine production in USA that you could buy for reasonable amount of money. Every few years, a 50 year old man would come and buy it, and start to work it. After 10 years about the time he might be getting the hang of what it all entailed he would be tired and sell it to the next 50 year old. The locals just watched the same story play out over and over again...
I always thought Gordon Ramsey was a douchebag from a cursory glance. But after watching his shows and reading his books, he is pretty awesome. I think he is justified in being annoyed by amateurs asking for help then arguing/ignoring his advice.
> I think he is justified in being annoyed by amateurs asking for help then arguing/ignoring his advice.
Anyone who is an expert in their field should feel justified in being annoyed by people asking for help then ignoring or arguing with said help. Happens to me on a regular-enough basis that I can usually predict how a request for help is going to turn out. Not alway, but often enough.
A point that Gordon Ramsay makes is that consistency is more important than peak food quality for a restaurant. Occasionally serving bad food does way more harm than occasionally serving amazing food does good since many customers will not return after one bad experience and you won't establish regulars if your quality is not consistent.
What McDonalds and Starbucks do well is produce consistent (though not particularly high) quality at a price people are willing to pay and with staff who are not coming on board particularly well trained or talented. They also systematize / automate a lot of the other things you mention.
I worked in a few kitchens for a few years. I regularly read reviews on yelp and I would say that near half of the negative "reviews" that showed up on there that pertained to what I myself witnessed or pertained to the kitchen were mostly to totally unfair. The one's that were fair I owned. One of my favorites: one star review for not being seated without a reservation on mother's day. Another favorite review: "I've been a regular here for quite a while and love this place but my porridge was too cold this one time: one star." Another gem: "Food is A+, waiter only refilled our water once: one star." (Pretty much any negative review that centers on waiters can be disregarded; they don't want to eat, they want to be served). I also witnessed outright lies by apparently angry and, I assume, tortured miserable people who were looking to be displeased in every realm of their life. You find those kinds of people in fine dining a lot, rich entitled pensioner types with no respect whatsoever. Unless there's a major sanitation or corruption issue on yelp reviews I take them about as seriously as youtube comments.
Yeah, what's fascinating is that some non-trivial percentage of your customers are going to be unhappy. Pretending it won't happen is silly. You're just insuring you don't have a strategy for when they are displeased. Some complain to your face, and in a perfect world you can do something to remedy that. Others behind your back, which is worse and unsolvable. Porridge should be not "too warm" nor "too cold" but "just right" Great, where have we heard that before.
I can't wait for McDonalds to be robotized. The last two small towns I have lived in have been consistently bad and that's saying something for McDonald's!
Please god, if i had a choice between amazing food or consistency I would choose consistency. Too often I've had some absolutely amazing meals, and the next day the chief is different or the staff is different and that amazing meal is now sub-standard and pisses me off.
At some point in your life `Money` isn't really a problem anymore. What is more of a concern is the quality of the experience and the food. Considering if you've had a good, over-all happy meal then you don't think about the money and cherish the experience. On the other hand if the experience and food is sub-standard or poor then you hate it more because not only have you wasted your money but you've wasted your time and also other people time.
One thing I would say to restaurant owner's is procedures, standards, and having consistent meals is more important than anything. When taking my family out to a restaurant I just recently had a investor meeting with and the food is amazing and then the food is sub-standard then I feel cheated.
I'm taking (off topic) issue with the notion that Starbucks is not particularly high quality. Before Starbucks the options for coffee were almost universally limited to weak or burnt and stale bland Columbian beans. Starbucks is excellent at consistency (that was in the manual actually; I worked as a Starbucks barista for a year after college), to the extent that they replaced their skilled/training-required espresso machines with push button devices, but that does not diminish the overall more-than-acceptable quality.
Starbucks may be consistent at making coffee, but coffee elitists would claim that their coffee beans are over-roasted in order to hide the generally poor quality of the beans and used to burn out a lot of the flavors. If you buy a bag of coffee beans of freshly roasted coffee beans from a local coffee shop, and a bag from Starbucks, then make yourself a cup of coffee the difference is enormous. The predominant taste of the Starbucks coffee is bitterness, but the local coffee will taste fragrant.
Starbucks is much better than the average Folgers-type diner coffee (in that it's not both totally burnt and weak), which was the previous point of comparison for most Americans. At best, a cup of Starbucks is merely strong. However, it's not remotely as good as something from a coffeeshop which tailors the whole process to highlight the quality of the ingredients and attention to detail in the process.
Of course, I perhaps do not appreciate the challenges of managing a global supply chain and making it scale to the size of Starbucks, but I would agree with gp's assertion their coffee is not particularly high quality.
Agreed again. Starbucks coffee being over roasted is a common complaint, also I find the atmosphere unappealing usually. Most coffee shops I frequent have to hit the sweet spot of having decent coffee + price and being a pleasant place to work while having access to reliable wifi -- for me that turned out to be the local supermarket, I get real ambient noise as well without having music being blasted over speakers all the time. The trick I found is to look for places where people want to hold conversations in public; I often see Arab immigrants gathering to converse, local meetings proceeding, retirees conversing, and people conducting business at this location -- the defining feature is that nobody is really under the age of 30-35 usually if they use the venue for social functions. It changes from city to city, sometimes it's a local hipster cafe or a random 24h chain where interesting things happen outside the purview of what is mainstream.
I don't want to sound mean, but... he has a well-thumbed copy of Kitchen Confidential and did this anyway? Because one of the things I remember most strongly from that are the stories about people who imagine fondly they'd like to own a restaurant, and it always ending in tears.
(Also I'm bemused as to why the opener suggests red tape was a problem.)
Seriously. That and the sheer draining drag of chefing and Bourdain's desire not to die of a heart attack next to the fryer. The whole book portrays restaraunteering as a brutal, taxing business and even contains profiles of some clueless owners.
The first big red flag for me (besides that the whole thing pretty obviously started as a mid life crisis) was how little time it sounds like he spent working at his friend's bar in the three months he needed to put in to qualify for the liquor license. How could he not take that seriously as an opportunity to learn about the industry? I would bet money that the answer is he was afraid to learn that running a restaurant is actual work, not an episode of chef's table.
His lack of preparation is mind boggling, but completely deliberate: the less he knew, the more room there was for fantasy. Beware working with people like this, who want to skip straight to the end.
Yea, it doesn’t take long working a kitchen or bar to see how fast you can bleed money, employees, reputation—you really have to enjoy the work. You’re going to to into debt, you’re not going to get vacation, you’ll have constant employee turnover and drama (mood issues? Drug issues? Both common in a kitchen.), you have to do shady shit to pass inspection (throw the food out and hit the lights to scare the mice, the inspector is in the lobby!), you’re battling bitter customers who find your food fine but can’t get your accent so they give you a two star yelp review and call you rude—it’s fucking endless.
That said, the community is to die for. I can’t recall ever being close to my coworkers in that way since moving into tech. Nothing tastes as sweet as a cigarette, liquor, and stories after your shift. Kind of necessary with the hours you work!
It didn’t get the same coverage as the more “expose“ aspects of the book, but in Kitchen Confidentiall Anthony Bourdin gets into just what makes a failing restaurant, which is most of them. A particularly illuminating section of the book in my opinion, and one which got into just how difficult it is to run a successful restaurant, and how unprepared most owners are.
His lack of financial planning was the most astonishing part of the story to me, even more than the naive optimism around starting a restaurant which seems to be a trap lots of people fall into.
Chancing your family's meager nest egg on a long shot gamble when you have a wife, kids and a mortgage is shockingly negligent.
Agreed. His plan might have worked if he was a millionaire and hired an expert to do all the stuff he didn't know how to do, living off savings until the place got profitable.
Though honestly, the first big red flag for me was that he wanted to open a restaurant because he loves to cook. This is a little surprising, the way people don't distinguish between the art and the business. It's as if a screenwriter decided to open a production studio, or a guitarist decided to open a music venue. The only finally successful guy I know in the music business (he got into booking and organizing) loves to jam, but he's not very good. Me? I love playing music, but I know that opening a cabaret wouldn't be the way to fulfill that. Honestly, sounds like the best way to ensure I'd never have time to play music again.
The funny thing is, I actually kind of like the financial and operational concepts in restaurants. I studied industrial engineering and ops research, and I loved the examples of restaurant queuing, batch processing, methods to reduce lead time, even supply chains, the way one decision cascades through he others. The idea of discovering that the marginal cost of one dish is much lower than the average cost because it can be prepared using the idle time during the prep and machinery for expensive dishes, that interests me.
No, not that I should open a restaurant, ha. But the guy who wrote this article does mention that he had a copy of "kitchen confidential", and in that book, Bourdain specifically talks about this, recounting the successful restauranteur who lives for these sorts of operational and financial challenges, takes a kind of joy and fascination in them, kind of how a tax lawyer loves finding ways to profit in the details, and that's why he's well suited for the business.
But yeah, anyway, your "big red flag" raised a big red flag for me too. Phoning it in on the pre-reqs and a learning opportunity is certainly a bad sign.
I'm talking about this because the issues are fascinating - I don't want to harp on the dude who write this, though, cause he clearly paid.
I've known two chefs who've gone on to start their own restaurants over the years, and the one thing they have in common (other than smoking) is they are REALLY highly strung. I don't just mean a little anxious/fidgety - they quite literally don't seem to be able to sit still even for a few seconds. Even little actions like pulling out a chair to sit down happens as fast as they're physically able to do it. Noisiest people I've ever known!
Neither of them have actually worked as a chef in years, and one of them hasn't set foot behind the counter at a restaurant since 2004. I can't even imagine the constant time pressure chefs, and undoubtedly restaurant owners must feel for this type of behavior to manifest and basically never go away.
A bit of advice from someone who was in the restaurant industry for 7 years. Don’t start a restaurant especially if you work in tech. 80-100 hours a week for managers and owners is mandatory.
Tech is easy money compared to what it takes to create a profitable restaurant from scratch. The author made the same mistake I’ve seen people make before.
This guy did no research at all and sadly this is extremely common.
Breakfast prep starts at 6am, maybe 4am if you are baking. In a restaurant lights out might be midnight, later for a bar. Which staff do you trust with free access to the thousands of dollars of liquor, food and property? Do you stay closed for two days a week?
Is this really that a factor with 24/7 surveillance and legal repercussions for theft? I mean...you're making it sound like it is, and I believe you but it's just so hard to people employees are that stupid.
Yes it's a big factor. Walmart employees, watched by 37 cameras from right over their heads, will still steal cash from the purchase flow. For an organization their size, it's a big problem. You can guess the kind of people you often get for $11 per hour, when you need a million of them (ie 1% stealing means you've got 10,000 people stealing from you).
Not much has actually changed regarding this structurally, the surveillance has been there for 30 years and the legal aspect forever. Desperate and or stupid people, do desperate and stupid things. What has changed, is Walmart now has dramatically less cash flowing through it at the point of sales (due to cards or Walmart Pay et al). Merchandise theft is by far the bigger problem these days for Walmart. The same goes for places like liquor stores (which used to be an extremely cash heavy business, but now are mostly cards).
If you increase everyone's wages the quality of employees across the board won't change. If you increase your wages, while other employers' wages stay the same, you'll get better applicants.
I know a lot of really experienced bartenders, waitstaff, etc and was in the industry for years. No one you'd want to hire would work at a place that didn't do cash tips, unless we're talking super duper fine dining black tie stuff. And possibly even then.
EDIT: I've also known of places that switched to cashless have all their good staff quit, and be stuck with only completely useless people
Every study I've seen shows that people spend and tip more when they are using credit cards than cash. Do high and mid income earners walk around cash and use it a lot at any place but strip clubs?
I'd tend to agree at restaurants (anecdotally). But, when I tip at a bar with cash, it's a buck a drink, even when it's a 2 dollar coors light. If I pay with credit card, the 20% thinking kicks in and that's what I tip. 40 cents on a 2 dollar beer.
I've done both restaurants and tech. I had to think for a really long time which one to focus on. It just so happened that the startup hype kicked in around that time.
Tech is mentally exhausting. Really short but painful hours. Food & beverage is not exactly tiring, but the hours are very long. With tech consulting, you might be working 4-6 hours a day, with restaurants, expect around 14 hours/day. One involves a lot of slow, deep work, the other involves lots of rapid, shallow work.
With tech, you can get away with 0 employees, and everyone you hire is smarter than you. With restaurants, you regularly hire idiots who sleep while at work, don't show up, can't read simple instructions, steal from the charity jar. It's highly frustrating. It also drains a huge cut from your daily sales, which might seem like a lot until you look at profits.
It's really tempting to do a restaurant, because it's sort of "stable" source of income. But tech is much better and once you get tired of it all, you can just sell everything off at a higher price.
Sounds to me like he started his restaurant with way too little experience. He was an amateur cook who had never even worked in a restaurant. Even a bit of experience as a cook or waiter would have helped by giving him a sense of how things work. And ideally he would have had some experience on the management side too, maybe as an assistant manager.
Having started a software business with too much optimism and too little business knowledge myself, and failed, I seriously have no idea how people start successful restaurants at all these days. No matter what mistakes he made, I feel for the guy, and the thousands of people every year trying to get a restaurant off the ground and ending up bankrupt. Aside from marketing, the initial costs of getting a SAAS business running are almost nothing; people / dev time is far and away the main cost usually. The economics and risks and up-front costs of opening even a small restaurant are staggering to me, I doubt I'd ever attempt it. But I'm glad some people do, and make it.
> Having started a software business with too much optimism and too little business knowledge myself, and failed
I'd say trying in itself can be seen as a partial success, hope you didn't get too financially impacted.
Is there any books/resources you (or other HN readers who also started their businesses :)) wish you had read before starting? Or that you did read and consider essential?
Well I (and my family) was hugely financially impacted, as a result of my own choices, but I also had the best few years of my professional life. I made big mistakes, but I don't really have big regrets, if that makes sense, aside from losing angel investments and scaring my wife. I hope to do it again some day.
There are some great resources here and in books, but I can't think of anything I wish I'd have read earlier, and nothing I know of that would have changed my course. It might be out there, but I haven't read it yet. ;)
My team wasn't balanced enough, and we underestimated how much marketing we'd need. We were conflicted about raising VC money, so we wasted time dithering. We didn't figure out the right business strategy and our market until it was too late. All the books say to pay attention to this stuff, but none can really tell you how to do it in your case.
Great books I read include "Early Exits", "The Startup Owner's Manual", "Lean Startup", "Pitch Anything". I think I learned more about startups reading HN than in those books, but it's all good stuff. Seek out a wide variety of conflicting advice, find the best team, and go for it! ;)
Yes people start restaurants with their own money -- almost all restaurants are people taking personal risk, even franchise chains like Subway and McDonalds! And yes I started my business with (mostly) my own money. Your ideas of business risk vs personal are adorable but wrong. I don't mean that as insult, just gentle correction. Bank business loans are not separable from personal risk, they are usually completely backed by personal collateral, and people who's restaurants are funded by the bank and fail are getting wiped out every day. You're absolutely right -- it's a nightmare. The only people not risking their own money are startups that get angel/venture/grant funding, and loads of them are still personally invested too. Venture groups almost never fund new restaurants, because restaurants are way too risky, and they're way harder to scale than software.
It's amazing to me how many reatauraunts come and go. Even in a small town you know there's one spot that has been through 5 restaurants in 5 years. It seems like an extremely risky business to start, I don't get how so many people are brave/foolish enough to try it. I certainly don't have the guts.
I think it's a bit like being an artist or athlete. The pool of people who enjoy it is enormous compared to the demand. I personally know many people who enjoy cooking, playing music, and playing sport but nobody who would pay those people for their work. It's everyone's hobby so the competition is fierce. The odds that you are better than everyone else in that huge rabble are slim.
You'd think that you'd work at a restaurant a little while before trying to start one. Learn the ropes a bit, etc. That has got to help with your chances of success.
While I agree deeply, it's kinda hard to get the right sort of experience without just jumping in. Owning and running a restaurant is very different from working at one, right? Same with software; I worked in software for a couple of decades before trying to start my own, and while it did help me with the writing software part, it didn't help me with the running the business and marketing and pitching parts. If anything, one of the most important things I learned by trying is that I waited too long to try -- there's a ton of valuable experience you get by trying which can increase your chances of success. This goes right to your point, but I guess I'm just adding the caveat that you have to learn the ropes of restaurant management, as opposed to cooking or waiting tables or washing dishes. It has recently become very clear to me what the stark difference is between a product and a business...
I grew up working at a very successful family owned restaurant and landed in tech after college. The two can’t be any different.
Owning a restaurant is a lifestyle in ways that working in tech never would be. There is no free time, there is never a day off, there is no exit in sight. It’s 80-100 hours in per week, small margins, and frequent turnover.
Can it be profitable? Yes. But it requires as much, if not more domain expertise as anything else, including doing a startup. And, there are far fewer people out there talking about the valuable details of doing it correctly - very different from the startup world.
Pretty much every restaurant owner I know is in the same situation - maybe not quite as bad - but generally they have at least one total nightmare horror story about a restaurant they owned that burned down/got shut down/went bankrupt.
I find similarities to being a founder in a super risky high tech startup - but with higher possible payoff.
Yet, I don't hear a chorus of bar backs, dish washers, servers, hosts and chefs complaining about not having a life outside of the restaurant or needing "work-life balance." What gives?
Also, a lot of the people working these jobs have very few other options in life. Back-of-house food prep is one of the few industries that won't bat an eye at a felony on your resume.
> At work, I had trouble concentrating on spreadsheets and instead found myself scribbling menus on graph paper
Funnily enough, if he wanted to be successful, spreadsheets could've been the key to his success. He would've known his Cost of Goods Sold, he would've known his staffing costs, his rent, and how much money he had and could spend.
I know what you mean, but it’s only part of it. Plenty of restaurants fail despite excellent bookkeeping. Personally I’d posit that the ability to create, measure, and manage operational processes is far more important, because operations are where the (often invisible) opportunity costs wreak havoc on restaurants.
The fact that he managed to run out of money before he even opened shows that he had no idea of the cost involved in opening and running a restaurant. He then reinforces this by telling us that he was selling his food too cheap, so he was running at a loss.
It seems like he actually did have his processes in order in the end, he got to a point where he was running a bit of a profit, and was on track, until he decided to close for a week, which managed to quickly suck his funds dry and plunge him back into debt. This could've been easily avoided.
Obviously that wasn't his only problem, but it's one of many. The fact that the restaurant succeeds today, without him, is interesting, because it sort of proves that he was the failing factor in the restaurant. Often it's external factors that doom a restaurant, poor location for instance.
And it was the week before 'the slow season'? They came back to the start of a slow period. It's almost comical how little thought/planning he managed to put in to things, and after getting a 4 star review, and things picking up, he decides to close things down "for a week"? Closing down during a known 'slow period' - that makes sense. I know seasonal/tourist places that do that. This was just... yet another misstep that, as you said, could easily have been avoided.
It became painful reading this. And it makes me think... this whole notion of '80% of restaurants fail' stuff is partially due to just really poor planning or non-critical thinking ability by people up front. Of course, more planning and analysis up front may just stop people from opening in the first place, which may bring the % rate of failures down, but the overall numbers would be lower too. It's hard not to read this and think "I'd be smarter than that - I wouldn't make those mistakes" (having worked in restaurants, I wouldn't make those mistakes - I'd likely make other ones!)
I find this tendency in tech a lot: people don't seem to want to collect and analyze data about their software, check their budgets etc... For all the supposed "technical" ability, tech is awfully loose compared to people working in factories/logistics.
I wonder if some suffer from the same mistake people doing entrepreneur IT do. I fix computers at home, how hard can it be? I cook at home, how hard can it be?
I ran a business out of high school / college summers networking up college kids in dorms. This was before computers came with ethernet cards by default and while dorms were being wired. My biggest mistake was not charging enough and not doing enough marketing. The university offered a similar service for 3x more than me.. I offered a flat rate including the card (which I got cheap.. easy drivers etc..) but I should have offered a choice of cards (fast, faster, fastest) and charged way more than I did as well as up sell (or sell an extended warranty or something...) It was a flash in the pan business only viable for 2-3 summers.
To follow up I also did computer IT consulting.. later and I still charged too little!! I guess one issue is that there is a ceiling on what you can charge (since you can just buy a new computer) unless it's in regard to recovering some important data... even then and nowadays you can just take the hard drive out and stick it in a usb enclosure, tell them to buy a new machine and call it a day.
> so I doled out $3,000 to hire a lawyer to oversee my incorporation. He later told me that I could have done it myself online for a couple hundred bucks.
This guy is so raw that he is even missing basic stuff.
> We can barely afford the place, but I wanted my daughters to have their own rooms
From the sounds of it, his lawyer gave him a bit more advice then just how to incorporate. I'm more surprised that he didn't give him the advice that the corporate veil will not shield him from outstanding sales tax receipts.
maybe start with a food truck? seems like a less risky way of getting into the business. if you are successful and make a name for yourself, you could parley that into a restaurant.
Between this article and the article on people too poor to retire, I sometimes think we should have classes on financial planning in high school.
A lot of the mistakes he did came down to poor financial planning. He even gave a raise to his employees when he sold his home. As he describes it, there's no way he was counting, looking at his benefits, costs of goods, etc... Basic stuff but too many people seem to not know how to manage their money at all.
> In 2011, I applied to operate a booth at the Toronto Underground Food Market [...] my fingers cramping so severely from peeling 100 pounds of potatoes that I almost called 911. [...] I lost money
So his first experience was extremely painful, almost landed you in the emergency room, and you lost money on it. What valuable lessons he learned going forward?
> I didn’t care.
None.
> Eighty per cent of first-time restaurateurs fail. I knew this. Opening a restaurant was the least sensible, dumbest thing I could do. My wife, Dorothy, a daycare worker, was coasting toward the end of a maternity leave, and we had two kids to feed.
It's so rare to see people brag about being reckless, irresonsible, and wasteful of resources they cannot afford to waste.
> “Are you sure you want to do this?” he asked. “I don’t think you know what you’re getting yourself into.”
Friends who knew what they were talking about tried to warn him off.
> My shifts consisted of a few leisurely hours chopping veg and prepping salad dressings.
Any opportunity for experience is to be strictly avoided. "The law says I need to know how a restaurant works? I know better!"
> My role was largely symbolic anyway
No it wasn't.
> As it turns out, no one invests in first-time restaurateurs, no matter how mind-blowing they think their cooking is.
Man, I wonder why? More to the point, it's clear he never did.
> I realized it was far from the downtown foodie scene [...] Admittedly, I had an ulterior motive: the place was a 10-minute walk from my house and close to the girls’ school
He purposefully chose a bad location, knowing it was a bad location, because it was convenient for him.
...I've got to stop reading, this is actually enraging me. It's so dumb, and he seems so proud.
I think his behaviour is already well described by Carl Jung. His world view is skewed by mythology (like movies and hero worship) instead of by rational thought.
So was the world view of Richard Stallman in Richard Stallman's Sedentary, Physically-Debilitating Quest for the Gnolden Treasure.
I'm not saying that you imply his wasn't equally skewed. Just that when I read about Stallman or other people who rightly attract admiration this truism tends to be conspicuously absent. But the mythology is just as strong there too-- a rational person would not take years to find out from a specialist that their chronic hand pain was due to repetition caused by an unreasonable amount of typing[1].
Plenty of us dorks complain about Stallman's worldview and philosophy. I won't complain about the contributions he's made to computing, or even the world in general, but striking it lucky doesn't make you philosophically pure.
I don't think it's a strictly necessary attitude for success. Buffett seems like a good example of someone who manages to have a clear and rational mindset, yet with no trouble succeeding.
Every single successful entrepreneur in the food industry that I know, and most of the unsuccessful ones as well, work their asses off. I know this because I have worked in the food industry at every single level, from farming to sales to prep to cooking to event planning / catering to waiting tables to washing dishes. And for the most part, not established businesses but startups, where it is very easy to keep a close eye on the business decisions of the founders.
I've seen a lot of different people fill those shoes. Their roles aren't symbolic, and it is an impressively grand delusion for a founder of any business to think as such. They are supposed to set an example for everyone else.
Only one of my bosses could not understand this, and his business has sunk millions without turning a profit because, initially, he was lazy and would blame every problem on his workers, the industry, the weather, etc. instead of his own laziness and lack of planning skills. He didn't seek to eliminate his problems, he relished in them because they let him feel like things were out of his control.
The rest of them worked themselves to the bone to provide good service and a good product. They took responsibility for all decisions and gave at least some thought before making stupid, risky decisions.
Literally the first thing you do when creating a brick and mortar establishment is research the area and find where the most profitable location will be. This guy fucked up from day one, choosing laziness over rational thought, and then denies responsibility for it. This is downright pitiful and he deserves to lose every penny that he did.
Lol. Same here, I stopped reading after a while as it was pissing me off. How can someone be so dumb and explain it in excruciating detail. You brought up good points, there's a ton more. For ex. $3000 spent on lawyer to register a company, who later told him he could do it online for a couple hundred! This kind of information is just a few Google searches away these days.
To be fair, guys: find yourself in the right position in life and any act to try and enrich the thing you're calling life, enlighten yourself, and improve your lot will be considered irrational by somebody.
Best take a few steps back. He's brazen, and maybe a bit dumb. I'd probably get along with calling him too proud, mostly.
Now to reduce myself to platitudes: at least he did something. That's living. Who deserves in this life to try and come up with something new? I hope not only the few special people who were ever so lucky to be born into the right place, or have the right amount of money, or the timely and rational roadmap laid out before them like some kind of gospel whispered in their ear as if from above.
For all your favourite painters, scientists, theorists, philosophers, chefs, writers, musicians, actors, even just general stop-gap-role human beings (as the preceding rhetoric might lead me to classify them—after all what kind of animal would admire a labourer[/s]), remember: there are millions who died in obscurity, having lived more or less than this goofball, or you, and most of them didn't offer up (or didn't have the chance to offer up) any insight so that you might avoid the same mistakes. It's not that you're necessarily wrong in what you're saying outright, but maybe something else.
The unfortunate thing about social matters, is that social science is kind of trite—seemingly because it can't really be treated like science—the rules' changes depend on too many variables. I think that's the beauty of it.
You're not assessing a matter that is purely business or financial or scientific. You're reading it from the wrong perspective. Put his shoes on and just listen and learn from the experience. I think that's all there is to it. This is why we share experiences. I mean, unless you know everything and have done it all already—then I'd love to hear more from you!
On another note: if that's the response of an engineer, and their treatment of clients with a similar critique, let me know—I'll choose another bridge but those that such an engineer designed to cross any divide.
I mean no offense, because I do sorta appreciate what you're going for, but this is almost the most philosophically, semantically, and most sillily empty sentence that exists.
Everyone does something. People who do 'nothing' do something. We only praise people whom succeed publicly or fail publicly. Even then, we only praise the people who fail when we ideologically align with them. We don't praise people who go out there and try to start a hate group, nor the ones who succeed.
Trying isn't really something that should count to other people. I won't say it shouldn't count to the person who tried it; self-esteem is a very personal thing. Failure shouldn't necessarily be a bad thing personally either, but let's not pretend that it's usually a good thing. The vast majority of failures are just failures. Starting a bead store in 2017 isn't a good idea, and we shouldn't congratulate my mother-in-law for doing it and wasting 30k in investments, nor should we congratulate her investors.
Edit:
Also, can anyone tell me if I should have used 'who' or 'whom' here? I don't 'think' it's the direct object, but I will defer to someone else:
'We don't praise people who go out there and try to start a hate group'
Sure, sure—but you're cutting one small phrase out of my larger sentiment. I know it's a dumb platitude. I said as much. I'd prefer the focus of my comment be the rest of it.
I didn't think I had to break it down further, and I was trying to be cool and all that, but what I was trying to say is: [if you know that area of Toronto, the location he chose was not that out of the way business-wise, but it is a little bit and ] he was trying to bring growth and culture to an area of his city that needs it. He was trying to do something that would have a significant positive impact for his family and his community. That seems like a good thing to me, overall.
He didn't do everything wrong. The reviews he received, being rated higher at some point than Bar Isabel (one of the best, if not the, best Spanish restaurant in the city), and Cafe Boulud (one of the finest French restaurants in the city at the Four Seasons in Yorkville) are substantial.
Wasn't congratulating the guy. He's got a tough road ahead. I'm just encouraging the humanist understanding treatment vs. hard-analytical treatment of the article. He already knows he's screwed He's said as much. That might mean he wrote it for another reason, no? It certainly isn't encouraging charity. Maybe he just wrote it for people like himself to read? I think that's a good starting question.
I feel like this story really highlighted all the guy's flaws, and hopefully exaggerated them. As you say, he must've been doing something right.
The story seems like he took a terrible risk he couldn't afford, he didn't prepare or research things well, and his endeavor failed largely due to his own shortcomings. Sure, he learned something and has a story. He also borrowed and lost thousands of dollars from his friends, and severely set back his family - possibly for life. Given that he's unlikely to be a restauranteur again, his lesson doesn't seem that valuable either.
I did something. I failed .. well maybe not failed so much as just didn't find a way to sustain myself. But each time I hope I get a little better at it.
And yea ... at least I tried. One day I'll be dead. At least I got to see Singapore, feel the wind of New Zealand, ride through the deserts of Australia, do a radio poetry show on the 8am commute in Perth.
He made some bad decisions. We can see that in the retrospectiscope. I agree I had trouble reading it. But yea, respect for trying. He lost a ton of money? Well as long as he can save enough to pay for his kids' education, at least he has a story to tell and they can learn from him.
It's all relative. I can see the bad and see the good. You gotta try, or else you're just gonna die in your cube.
> Well as long as he can save enough to pay for his kids' education, at least he has a story to tell and they can learn from him.
I didn't get the impression that this was the case from the ending.
> I still have an outstanding HST situation, and I face the prospect of personal bankruptcy.
> We can barely afford the place, but I wanted my daughters to have their own rooms—like they did before I sold our house. I may have to moonlight as a bartender to make sure the rent gets paid, but my girls are worth it.
It sounds like he barely has enough money to pretend their status hasn't changed, since that's important to him. I don't want to rag on the guy, but nowhere in this piece does he seem to consider paying for his childrens education as a significant life goal. Playing restaurant seems like it was his dream, not seeing his children grow up successful.
The cost of education in Canada is much lower then the US. My undergrad CS degree (Earned in 2008) cost me <$30,000 CAD for tuition and textbooks. Decent university, no scholarships.
ehh if you're in state no that's not "much" cheaper, but it is like half off.
$12935.28 CAD / year for the university I went to, a four year degree would cost $51740 CAD.
> as long as he can save enough to pay for his kids' education
That sounds like a good thing but there's another story on HN where commenters are complaining that it's bad! Rich bankers paying for their kids' education and helping them become rich too. That it's unfair to poor kids. People have such arbitrary and inconsistent opinions. No matter what you do, people are going to believe it's wrong.
Unfortunately I agree with your intent (going after your dreams, trying to enrich your life or enlighten yourself in a way that may seem crazy to most) but disagree that it can be applied here.
He literally did nothing to prepare himself to fulfill his dream other than a mandatory 3 months of lazily being a line cook learning nothing, and a weekend cooking at a festival.
I'm not in the food industry, but off the top of my head here are basic things I would advise to prepare yourself for success:
1. Get yourself a year of runway so that you can spend 1 year being a restaurant owner's apprentice. Spend 3 months being a line cook, 3 months working bar, 3 months wait staff, and 3 months helping with the book.
2. Use this year network with restaurant owners. Agree to buy 10 them drinks so they can tell you about their biggest mistakes. This < $1000 investment probably could have saved him 10s of thousands.
3. Use this year to also network in the service industry generally, which tends to have high turnover and is good to have a network to find replacements.
This plan took me 10 minutes to think of and could probably be vastly improved. Instead he just hoped things would somehow work out. At some point you shouldn't applaud someone for following their dreams and instead just call it what it is, dumb.
Yeah, true. But...let's be honest, the thing he did was very destructive, dumb, and doomed to failure; he didn't get the outcome he wanted going in, he's not happy with the outcome he ended up with, and he's not articulated any lessons he learned from it.
There's a lot of things he could have done. He could have changed careers, gone back to university, backpacked across Europe, sold his house, put everything he owned in storage, and then circled the globe hopping from port to port on tramp freighters. Instead he cached out a chunk of his pension, sold his house, spent all the equity, borrowed money from friends, and basically spent every penny he and his wife had on pretending to be running a restaurant.
Commiting suicide is "doing something", so I guess by your definition that's living? That doesn't seem very useful of a definition. Meanwhile, I have a rewarding job I deeply enjoy, I spend time with friends and family, I have hobbies, I learn new things. Am I not "living"?
> Put his shoes on and just listen and learn from the experience.
That would be easier to do if he'd learned from it first. I think the point of making mistakes and "living life" is learning from those mistakes, and becoming a better person. What do I learn from reading about someone's fatalistic retelling of something he tacitly admits he knew was dumb? "Don't sell your house to invest in a project with no real upside and an overwhelmingly likely chance of 100% losses"? "Don't spend money you need to feed your kids on a vanity project which you've sabotaged for your own convenience?"
You're not all wrong. I live similarly to the way you describe. I'm certainly not setting him up as a model, or defending the subject of the story.
Do you know Toronto well? It might not be to learn from the lessons he has to offer, but may be something somebody (or many people) in this town need to hear.
Like I said, there are so many would-be anythings that fade into obscurity for one reason or another, for a cause that was their fault or not. Normally you just don't hear from them.
Everybody loves an unlikely success story, but are full of venom when shown the other side. Maybe nobody wants to believe it, and would prefer to believe that everything follows a perfect order and all you have to do is follow a prescribed set of rules and you'll be fine. I think the context is important—the story is a tragedy, not an ode.
Have you ever heard the expression hindsight is 20/20?
Yes, he made a lot of mistakes but it wasn't clear to him at the time. And of course he didn't know what he was bad at. We are all bad at several things.
It's good to keep these things in mind, whether it is for a restaurant or a tech startup.
He makes a lot of mistakes that are just inexcusable though. For example, just when fights through the painful start, he shuts the restaurant down to give everyone a week off. A week! I've never run a restaurant, but my guess is that it's difficult to make money while being closed.
He doesn't do simple math to figure out how much money he'll need, what runway he has, or what he should be charging for his food. He pays three grand to incorporate a business, when a Google search tells him it could be done for far less. When he gets the opportunity to work for a few months in a restaurant, he squanders it.
Sure, hindsight is twenty twenty, but a lot of these obstacles aren't hard to see coming. If you're going to gamble with your life savings, your friend's money, and your family's financial future, you should do the research and put the thought in to make sure you aren't throwing it all away.
You know the story of the FedEx guy right? He could afford to pay the staff or put fuel in the planes; riveting speech; gambled the money in vegas and kept the company going.
This guy is praised, but he was a fucking pyscho (literally). He didn't give a damn about his own staff and risked everything. He got lucky, made it big.
If this guy had made it, we'd see him as a "The Hundred Foot Journey" style success story.
Maybe the only lesson is that he wasn't ruthless enough?
The thing about the FedEx guy and his story is that, at least as the story goes, he had a 100% chance of failure if he did nothing, and a possible chance of huge success if he gambled. Betting his last funds was all upside for him, so he made a cold-blooded decision to maximise his expected outcomes, and it paid off.
The restaurant guy...not so much. He took significant assets (his pension, home equity, health, his relationship with his wife), and gambled them all on high downsides and very limited upsides.
> Maybe the only lesson is that he wasn't ruthless enough?
Ruthlessness is not a substitute for making very bad decisions.
Seems like this was his life's dream to do, and he got to do it. So, I'm not sure it was entirely a bust. But certainly it was a very expensive dream to follow. And how many really ambitious people fail and fail again, before finally succeeding at something? It is a common story. Not that failure is any guarantee of success.
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[ 2.0 ms ] story [ 206 ms ] threadhttps://www.nytimes.com/2017/10/31/business/too-many-restaur...
I don't think he did nearly enough research into how much it costs to start a restaurant.
Low end estimate is $150k required up front, and high end of $320k. However, in that low end - $85k estimate for leasehold improvements. $15k for initial subway franchise fee.
Local sandwich shop opened up a few years back and... while I don't know all the numbers, he didn't put in $200k up front. I suspect it may have been more like $40-$50k, between initial lease, equipment, stock, etc. Small town, passing traffic, little competition, he's done well enough that he's expanding - doubling his size and moving a bit up the street. He's also a very pragmatic guy, and the sandwich biz has been in his family for a couple generations, so I have to think they're at least moderately profitable.
http://www.businessinsider.com/what-it-costs-to-open-a-subwa...
>I contacted the banks to apply for a business loan, but I didn’t qualify. I looked into a few angel investor groups, but it turned out that they didn’t “do” restaurants. I even considered Dragons’ Den. As it turns out, no one invests in first-time restaurateurs, no matter how mind-blowing they think their cooking is.
Not without a ton of experience running profitable restaurants.
A year later, he is bankrupt, has lost his house and his marriage.
I recall stumbling across the franchise agreement for a frozen yogurt place once. They wanted proof that you were able to invest something like $400,000 in the venture, and that's a way simpler setup.
For example Dairy Queen requires:
Investment Range: $779,675 – $1,729,160 Liquid Capital Requirement: $400,000 Net Worth Requirement: $750,000
https://www.dairyqueen.com/us-en/Company/Franchise-With-Us/S...
The idea would be strip as much cost out of the initial part as possible for the start-up (given their odds of early failure are ~97%). Most of them would still fail, the WeKitchen business would get paid their upfront monthly (or quarterly) fees as the restaurants come and go (and there's a perpetual supply of people wanting to try restaurant businesses, this would increase that supply by lowering the cost / risk; it could also accelerate experimentation). It could also enable a lot of other types of food businesses, such as tilt-up bakeries, rather than only restaurant-style.
The overall system would focus on orders to go, aligning with the increasing rise of food delivery services.
With office rents working on fairly regular timelines, it's easier to get a new tenant before an old one has finished up. But if restaurants inconsistently go bust, that may mean that you can't look for new tenants until you're already dealing with a vacancy. Given that restaurants may be cyclical, there's a decent chance that you'll face multiple vacancies in parallel. I know you bring up vacancies, so I just mention this as a possible consideration.
I actually think this is a really cool idea, and would love if someone pulled it off successfully. I've seen it done with clothing stores and would love to see the food equivalent.
I considered that the large unit space / building could have a dining area, where customers could sit down and could then select from numerous kitchens that are local to that space. That pushes it even closer to the mall food court. My reservation on that, is that some percentage of the restaurants will be producing subpar experiences in terms of quality. So a successful restaurant in the space, wants its customers to eat in a successful atmosphere, where customers as a whole are happy; if half the customers in the dining area are unhappy, the enjoyment by the other happier half will suffer as well (people pick up on such things, it rubs off). Then I considered sub-divided dining areas, so each rented kitchen gets its own limited sit-down space, it just might be a stretch though and adds to the overall cost burden in the system with minimum gain (ie, it's probably just easier to focus more narrowly on food delivery).
To deal with the vacancies issue, you'd only build these in higher population urban areas, to maximize the potential number of restaurants etc. that you can rent to (maximize the potential start-ups due to population). You'd also seek to under-build versus demand, preferring to always have a waiting list (recession times might even trash that best effort). I don't know if it would work, but, I'd seek to get a modest upfront payment allocation from the waiting list, that covers the risk on vacancy turn-over. By keeping the demand above the space availability, you can probably get the start-ups to front the first month of rent to get on the list (with some terms of refund). It wouldn't be something you could start with zero capital, the idea would be to get it into the $5k (solo bakery) to $25k range to go from moving into the space to the time it takes to get the first customer.
They're a great service for people who can go in and cook up a batch of, say, baked goods that they then individually wrap and take to coffee shops, or whatever.
The guy in the story did just about everything wrong, though, in kind of an amazingly thorough fashion.
Before he became TV famous, he worked in his restaurant every day until 1 AM, and back to it 6 hours later...every day, for many years. People vastly underestimate the time and dedication needed to run a restaurant. If you aren't built for it like Ramsay, you will regret it.
For a lot of owners, it's a really good way to earn not a lot of money for a massive amount of work.
Anyone who is an expert in their field should feel justified in being annoyed by people asking for help then ignoring or arguing with said help. Happens to me on a regular-enough basis that I can usually predict how a request for help is going to turn out. Not alway, but often enough.
What McDonalds and Starbucks do well is produce consistent (though not particularly high) quality at a price people are willing to pay and with staff who are not coming on board particularly well trained or talented. They also systematize / automate a lot of the other things you mention.
At some point in your life `Money` isn't really a problem anymore. What is more of a concern is the quality of the experience and the food. Considering if you've had a good, over-all happy meal then you don't think about the money and cherish the experience. On the other hand if the experience and food is sub-standard or poor then you hate it more because not only have you wasted your money but you've wasted your time and also other people time.
One thing I would say to restaurant owner's is procedures, standards, and having consistent meals is more important than anything. When taking my family out to a restaurant I just recently had a investor meeting with and the food is amazing and then the food is sub-standard then I feel cheated.
Starbucks is much better than the average Folgers-type diner coffee (in that it's not both totally burnt and weak), which was the previous point of comparison for most Americans. At best, a cup of Starbucks is merely strong. However, it's not remotely as good as something from a coffeeshop which tailors the whole process to highlight the quality of the ingredients and attention to detail in the process.
Of course, I perhaps do not appreciate the challenges of managing a global supply chain and making it scale to the size of Starbucks, but I would agree with gp's assertion their coffee is not particularly high quality.
[1] https://www.quora.com/Why-is-Starbucks-considered-bad-by-cof...
(Also I'm bemused as to why the opener suggests red tape was a problem.)
His lack of preparation is mind boggling, but completely deliberate: the less he knew, the more room there was for fantasy. Beware working with people like this, who want to skip straight to the end.
That said, the community is to die for. I can’t recall ever being close to my coworkers in that way since moving into tech. Nothing tastes as sweet as a cigarette, liquor, and stories after your shift. Kind of necessary with the hours you work!
Of course, you almost never have enough capitalization.
But, I frankly can’t imagine a restaurant business not taking on some debt in some seasons, at least at first.
And then began borrowing money from family and in-laws.
Chancing your family's meager nest egg on a long shot gamble when you have a wife, kids and a mortgage is shockingly negligent.
Though honestly, the first big red flag for me was that he wanted to open a restaurant because he loves to cook. This is a little surprising, the way people don't distinguish between the art and the business. It's as if a screenwriter decided to open a production studio, or a guitarist decided to open a music venue. The only finally successful guy I know in the music business (he got into booking and organizing) loves to jam, but he's not very good. Me? I love playing music, but I know that opening a cabaret wouldn't be the way to fulfill that. Honestly, sounds like the best way to ensure I'd never have time to play music again.
The funny thing is, I actually kind of like the financial and operational concepts in restaurants. I studied industrial engineering and ops research, and I loved the examples of restaurant queuing, batch processing, methods to reduce lead time, even supply chains, the way one decision cascades through he others. The idea of discovering that the marginal cost of one dish is much lower than the average cost because it can be prepared using the idle time during the prep and machinery for expensive dishes, that interests me.
No, not that I should open a restaurant, ha. But the guy who wrote this article does mention that he had a copy of "kitchen confidential", and in that book, Bourdain specifically talks about this, recounting the successful restauranteur who lives for these sorts of operational and financial challenges, takes a kind of joy and fascination in them, kind of how a tax lawyer loves finding ways to profit in the details, and that's why he's well suited for the business.
But yeah, anyway, your "big red flag" raised a big red flag for me too. Phoning it in on the pre-reqs and a learning opportunity is certainly a bad sign.
I'm talking about this because the issues are fascinating - I don't want to harp on the dude who write this, though, cause he clearly paid.
Neither of them have actually worked as a chef in years, and one of them hasn't set foot behind the counter at a restaurant since 2004. I can't even imagine the constant time pressure chefs, and undoubtedly restaurant owners must feel for this type of behavior to manifest and basically never go away.
Tech is easy money compared to what it takes to create a profitable restaurant from scratch. The author made the same mistake I’ve seen people make before.
This guy did no research at all and sadly this is extremely common.
Not much has actually changed regarding this structurally, the surveillance has been there for 30 years and the legal aspect forever. Desperate and or stupid people, do desperate and stupid things. What has changed, is Walmart now has dramatically less cash flowing through it at the point of sales (due to cards or Walmart Pay et al). Merchandise theft is by far the bigger problem these days for Walmart. The same goes for places like liquor stores (which used to be an extremely cash heavy business, but now are mostly cards).
EDIT: I've also known of places that switched to cashless have all their good staff quit, and be stuck with only completely useless people
I'd tend to agree at restaurants (anecdotally). But, when I tip at a bar with cash, it's a buck a drink, even when it's a 2 dollar coors light. If I pay with credit card, the 20% thinking kicks in and that's what I tip. 40 cents on a 2 dollar beer.
Tech is mentally exhausting. Really short but painful hours. Food & beverage is not exactly tiring, but the hours are very long. With tech consulting, you might be working 4-6 hours a day, with restaurants, expect around 14 hours/day. One involves a lot of slow, deep work, the other involves lots of rapid, shallow work.
With tech, you can get away with 0 employees, and everyone you hire is smarter than you. With restaurants, you regularly hire idiots who sleep while at work, don't show up, can't read simple instructions, steal from the charity jar. It's highly frustrating. It also drains a huge cut from your daily sales, which might seem like a lot until you look at profits.
It's really tempting to do a restaurant, because it's sort of "stable" source of income. But tech is much better and once you get tired of it all, you can just sell everything off at a higher price.
... huh? Which tech company is this?
I'd say trying in itself can be seen as a partial success, hope you didn't get too financially impacted.
Is there any books/resources you (or other HN readers who also started their businesses :)) wish you had read before starting? Or that you did read and consider essential?
There are some great resources here and in books, but I can't think of anything I wish I'd have read earlier, and nothing I know of that would have changed my course. It might be out there, but I haven't read it yet. ;)
My team wasn't balanced enough, and we underestimated how much marketing we'd need. We were conflicted about raising VC money, so we wasted time dithering. We didn't figure out the right business strategy and our market until it was too late. All the books say to pay attention to this stuff, but none can really tell you how to do it in your case.
Great books I read include "Early Exits", "The Startup Owner's Manual", "Lean Startup", "Pitch Anything". I think I learned more about startups reading HN than in those books, but it's all good stuff. Seek out a wide variety of conflicting advice, find the best team, and go for it! ;)
Do people start restaurants with their own money? That seems like a nightmare.
How can you hire people or evaluate their work if you don't understand what they do?
Not if you have worked in a restaurant as a high level employee(eg exec chef) for quite a while.
(Exec chef here, 17 years experience)
Owning a restaurant is a lifestyle in ways that working in tech never would be. There is no free time, there is never a day off, there is no exit in sight. It’s 80-100 hours in per week, small margins, and frequent turnover.
Can it be profitable? Yes. But it requires as much, if not more domain expertise as anything else, including doing a startup. And, there are far fewer people out there talking about the valuable details of doing it correctly - very different from the startup world.
I find similarities to being a founder in a super risky high tech startup - but with higher possible payoff.
Yet, I don't hear a chorus of bar backs, dish washers, servers, hosts and chefs complaining about not having a life outside of the restaurant or needing "work-life balance." What gives?
Restaurants are ultra-competitive and have very thin margins, so people who work there can't.
Funnily enough, if he wanted to be successful, spreadsheets could've been the key to his success. He would've known his Cost of Goods Sold, he would've known his staffing costs, his rent, and how much money he had and could spend.
It seems like he actually did have his processes in order in the end, he got to a point where he was running a bit of a profit, and was on track, until he decided to close for a week, which managed to quickly suck his funds dry and plunge him back into debt. This could've been easily avoided.
Obviously that wasn't his only problem, but it's one of many. The fact that the restaurant succeeds today, without him, is interesting, because it sort of proves that he was the failing factor in the restaurant. Often it's external factors that doom a restaurant, poor location for instance.
And it was the week before 'the slow season'? They came back to the start of a slow period. It's almost comical how little thought/planning he managed to put in to things, and after getting a 4 star review, and things picking up, he decides to close things down "for a week"? Closing down during a known 'slow period' - that makes sense. I know seasonal/tourist places that do that. This was just... yet another misstep that, as you said, could easily have been avoided.
It became painful reading this. And it makes me think... this whole notion of '80% of restaurants fail' stuff is partially due to just really poor planning or non-critical thinking ability by people up front. Of course, more planning and analysis up front may just stop people from opening in the first place, which may bring the % rate of failures down, but the overall numbers would be lower too. It's hard not to read this and think "I'd be smarter than that - I wouldn't make those mistakes" (having worked in restaurants, I wouldn't make those mistakes - I'd likely make other ones!)
Especially cafe/restaurant owners.
I ran a business out of high school / college summers networking up college kids in dorms. This was before computers came with ethernet cards by default and while dorms were being wired. My biggest mistake was not charging enough and not doing enough marketing. The university offered a similar service for 3x more than me.. I offered a flat rate including the card (which I got cheap.. easy drivers etc..) but I should have offered a choice of cards (fast, faster, fastest) and charged way more than I did as well as up sell (or sell an extended warranty or something...) It was a flash in the pan business only viable for 2-3 summers.
To follow up I also did computer IT consulting.. later and I still charged too little!! I guess one issue is that there is a ceiling on what you can charge (since you can just buy a new computer) unless it's in regard to recovering some important data... even then and nowadays you can just take the hard drive out and stick it in a usb enclosure, tell them to buy a new machine and call it a day.
This guy is so raw that he is even missing basic stuff.
> We can barely afford the place, but I wanted my daughters to have their own rooms
And he doesn't learn.
So many startups are based on this very premise.
Reminds me of this poster: https://cdn.shopify.com/s/files/1/0535/6917/products/incompe...
It would be like wanting to start a restaurant because you like to eat, but don't know how to cook or what kind of food you should focus on.
So his first experience was extremely painful, almost landed you in the emergency room, and you lost money on it. What valuable lessons he learned going forward?
> I didn’t care.
None.
> Eighty per cent of first-time restaurateurs fail. I knew this. Opening a restaurant was the least sensible, dumbest thing I could do. My wife, Dorothy, a daycare worker, was coasting toward the end of a maternity leave, and we had two kids to feed.
It's so rare to see people brag about being reckless, irresonsible, and wasteful of resources they cannot afford to waste.
> “Are you sure you want to do this?” he asked. “I don’t think you know what you’re getting yourself into.”
Friends who knew what they were talking about tried to warn him off.
> My shifts consisted of a few leisurely hours chopping veg and prepping salad dressings.
Any opportunity for experience is to be strictly avoided. "The law says I need to know how a restaurant works? I know better!"
> My role was largely symbolic anyway
No it wasn't.
> As it turns out, no one invests in first-time restaurateurs, no matter how mind-blowing they think their cooking is.
Man, I wonder why? More to the point, it's clear he never did.
> I realized it was far from the downtown foodie scene [...] Admittedly, I had an ulterior motive: the place was a 10-minute walk from my house and close to the girls’ school
He purposefully chose a bad location, knowing it was a bad location, because it was convenient for him.
...I've got to stop reading, this is actually enraging me. It's so dumb, and he seems so proud.
I'm not saying that you imply his wasn't equally skewed. Just that when I read about Stallman or other people who rightly attract admiration this truism tends to be conspicuously absent. But the mythology is just as strong there too-- a rational person would not take years to find out from a specialist that their chronic hand pain was due to repetition caused by an unreasonable amount of typing[1].
[1] https://stallman.org/stallman-computing.html
I've seen a lot of different people fill those shoes. Their roles aren't symbolic, and it is an impressively grand delusion for a founder of any business to think as such. They are supposed to set an example for everyone else.
Only one of my bosses could not understand this, and his business has sunk millions without turning a profit because, initially, he was lazy and would blame every problem on his workers, the industry, the weather, etc. instead of his own laziness and lack of planning skills. He didn't seek to eliminate his problems, he relished in them because they let him feel like things were out of his control.
The rest of them worked themselves to the bone to provide good service and a good product. They took responsibility for all decisions and gave at least some thought before making stupid, risky decisions.
Literally the first thing you do when creating a brick and mortar establishment is research the area and find where the most profitable location will be. This guy fucked up from day one, choosing laziness over rational thought, and then denies responsibility for it. This is downright pitiful and he deserves to lose every penny that he did.
Best take a few steps back. He's brazen, and maybe a bit dumb. I'd probably get along with calling him too proud, mostly.
Now to reduce myself to platitudes: at least he did something. That's living. Who deserves in this life to try and come up with something new? I hope not only the few special people who were ever so lucky to be born into the right place, or have the right amount of money, or the timely and rational roadmap laid out before them like some kind of gospel whispered in their ear as if from above.
For all your favourite painters, scientists, theorists, philosophers, chefs, writers, musicians, actors, even just general stop-gap-role human beings (as the preceding rhetoric might lead me to classify them—after all what kind of animal would admire a labourer[/s]), remember: there are millions who died in obscurity, having lived more or less than this goofball, or you, and most of them didn't offer up (or didn't have the chance to offer up) any insight so that you might avoid the same mistakes. It's not that you're necessarily wrong in what you're saying outright, but maybe something else.
The unfortunate thing about social matters, is that social science is kind of trite—seemingly because it can't really be treated like science—the rules' changes depend on too many variables. I think that's the beauty of it.
You're not assessing a matter that is purely business or financial or scientific. You're reading it from the wrong perspective. Put his shoes on and just listen and learn from the experience. I think that's all there is to it. This is why we share experiences. I mean, unless you know everything and have done it all already—then I'd love to hear more from you!
On another note: if that's the response of an engineer, and their treatment of clients with a similar critique, let me know—I'll choose another bridge but those that such an engineer designed to cross any divide.
I think the right response is to ask a question.
I mean no offense, because I do sorta appreciate what you're going for, but this is almost the most philosophically, semantically, and most sillily empty sentence that exists.
Everyone does something. People who do 'nothing' do something. We only praise people whom succeed publicly or fail publicly. Even then, we only praise the people who fail when we ideologically align with them. We don't praise people who go out there and try to start a hate group, nor the ones who succeed.
Trying isn't really something that should count to other people. I won't say it shouldn't count to the person who tried it; self-esteem is a very personal thing. Failure shouldn't necessarily be a bad thing personally either, but let's not pretend that it's usually a good thing. The vast majority of failures are just failures. Starting a bead store in 2017 isn't a good idea, and we shouldn't congratulate my mother-in-law for doing it and wasting 30k in investments, nor should we congratulate her investors.
Edit:
Also, can anyone tell me if I should have used 'who' or 'whom' here? I don't 'think' it's the direct object, but I will defer to someone else:
'We don't praise people who go out there and try to start a hate group'
I didn't think I had to break it down further, and I was trying to be cool and all that, but what I was trying to say is: [if you know that area of Toronto, the location he chose was not that out of the way business-wise, but it is a little bit and ] he was trying to bring growth and culture to an area of his city that needs it. He was trying to do something that would have a significant positive impact for his family and his community. That seems like a good thing to me, overall.
He didn't do everything wrong. The reviews he received, being rated higher at some point than Bar Isabel (one of the best, if not the, best Spanish restaurant in the city), and Cafe Boulud (one of the finest French restaurants in the city at the Four Seasons in Yorkville) are substantial.
Wasn't congratulating the guy. He's got a tough road ahead. I'm just encouraging the humanist understanding treatment vs. hard-analytical treatment of the article. He already knows he's screwed He's said as much. That might mean he wrote it for another reason, no? It certainly isn't encouraging charity. Maybe he just wrote it for people like himself to read? I think that's a good starting question.
The story seems like he took a terrible risk he couldn't afford, he didn't prepare or research things well, and his endeavor failed largely due to his own shortcomings. Sure, he learned something and has a story. He also borrowed and lost thousands of dollars from his friends, and severely set back his family - possibly for life. Given that he's unlikely to be a restauranteur again, his lesson doesn't seem that valuable either.
http://khanism.org/perspective/minimalism/
When that failed I had to get a real job again, but got sick of it after a year and a half:
http://penguindreams.org/blog/leaving-full-time-jobs/
Then I took off on the road again and eventually had to return to the full time job/life:
http://khanism.org/perspective/a-tale-of-two-journeys/
I did something. I failed .. well maybe not failed so much as just didn't find a way to sustain myself. But each time I hope I get a little better at it.
And yea ... at least I tried. One day I'll be dead. At least I got to see Singapore, feel the wind of New Zealand, ride through the deserts of Australia, do a radio poetry show on the 8am commute in Perth.
He made some bad decisions. We can see that in the retrospectiscope. I agree I had trouble reading it. But yea, respect for trying. He lost a ton of money? Well as long as he can save enough to pay for his kids' education, at least he has a story to tell and they can learn from him.
It's all relative. I can see the bad and see the good. You gotta try, or else you're just gonna die in your cube.
I didn't get the impression that this was the case from the ending.
> I still have an outstanding HST situation, and I face the prospect of personal bankruptcy.
> We can barely afford the place, but I wanted my daughters to have their own rooms—like they did before I sold our house. I may have to moonlight as a bartender to make sure the rent gets paid, but my girls are worth it.
It sounds like he barely has enough money to pretend their status hasn't changed, since that's important to him. I don't want to rag on the guy, but nowhere in this piece does he seem to consider paying for his childrens education as a significant life goal. Playing restaurant seems like it was his dream, not seeing his children grow up successful.
That sounds like a good thing but there's another story on HN where commenters are complaining that it's bad! Rich bankers paying for their kids' education and helping them become rich too. That it's unfair to poor kids. People have such arbitrary and inconsistent opinions. No matter what you do, people are going to believe it's wrong.
He literally did nothing to prepare himself to fulfill his dream other than a mandatory 3 months of lazily being a line cook learning nothing, and a weekend cooking at a festival.
I'm not in the food industry, but off the top of my head here are basic things I would advise to prepare yourself for success:
1. Get yourself a year of runway so that you can spend 1 year being a restaurant owner's apprentice. Spend 3 months being a line cook, 3 months working bar, 3 months wait staff, and 3 months helping with the book. 2. Use this year network with restaurant owners. Agree to buy 10 them drinks so they can tell you about their biggest mistakes. This < $1000 investment probably could have saved him 10s of thousands. 3. Use this year to also network in the service industry generally, which tends to have high turnover and is good to have a network to find replacements.
This plan took me 10 minutes to think of and could probably be vastly improved. Instead he just hoped things would somehow work out. At some point you shouldn't applaud someone for following their dreams and instead just call it what it is, dumb.
Yeah, true. But...let's be honest, the thing he did was very destructive, dumb, and doomed to failure; he didn't get the outcome he wanted going in, he's not happy with the outcome he ended up with, and he's not articulated any lessons he learned from it.
There's a lot of things he could have done. He could have changed careers, gone back to university, backpacked across Europe, sold his house, put everything he owned in storage, and then circled the globe hopping from port to port on tramp freighters. Instead he cached out a chunk of his pension, sold his house, spent all the equity, borrowed money from friends, and basically spent every penny he and his wife had on pretending to be running a restaurant.
Commiting suicide is "doing something", so I guess by your definition that's living? That doesn't seem very useful of a definition. Meanwhile, I have a rewarding job I deeply enjoy, I spend time with friends and family, I have hobbies, I learn new things. Am I not "living"?
> Put his shoes on and just listen and learn from the experience.
That would be easier to do if he'd learned from it first. I think the point of making mistakes and "living life" is learning from those mistakes, and becoming a better person. What do I learn from reading about someone's fatalistic retelling of something he tacitly admits he knew was dumb? "Don't sell your house to invest in a project with no real upside and an overwhelmingly likely chance of 100% losses"? "Don't spend money you need to feed your kids on a vanity project which you've sabotaged for your own convenience?"
Do you know Toronto well? It might not be to learn from the lessons he has to offer, but may be something somebody (or many people) in this town need to hear.
Like I said, there are so many would-be anythings that fade into obscurity for one reason or another, for a cause that was their fault or not. Normally you just don't hear from them.
Everybody loves an unlikely success story, but are full of venom when shown the other side. Maybe nobody wants to believe it, and would prefer to believe that everything follows a perfect order and all you have to do is follow a prescribed set of rules and you'll be fine. I think the context is important—the story is a tragedy, not an ode.
I hate being sardonic, but we are on hacker news.
Yes, he made a lot of mistakes but it wasn't clear to him at the time. And of course he didn't know what he was bad at. We are all bad at several things.
It's good to keep these things in mind, whether it is for a restaurant or a tech startup.
He doesn't do simple math to figure out how much money he'll need, what runway he has, or what he should be charging for his food. He pays three grand to incorporate a business, when a Google search tells him it could be done for far less. When he gets the opportunity to work for a few months in a restaurant, he squanders it.
Sure, hindsight is twenty twenty, but a lot of these obstacles aren't hard to see coming. If you're going to gamble with your life savings, your friend's money, and your family's financial future, you should do the research and put the thought in to make sure you aren't throwing it all away.
This guy is praised, but he was a fucking pyscho (literally). He didn't give a damn about his own staff and risked everything. He got lucky, made it big.
If this guy had made it, we'd see him as a "The Hundred Foot Journey" style success story.
Maybe the only lesson is that he wasn't ruthless enough?
The restaurant guy...not so much. He took significant assets (his pension, home equity, health, his relationship with his wife), and gambled them all on high downsides and very limited upsides.
> Maybe the only lesson is that he wasn't ruthless enough?
Ruthlessness is not a substitute for making very bad decisions.