In fact, two of every three new restaurants, delis and food shops close within three years of opening, according to federal government statistics, the same failure rate for small businesses in general. Its very easy to fail if you know what youre doing, and even easier if you dont, said Lipsky, president of Linda Lipsky Restaurant Consultants, a firm based outside Philadelphia that has advised restaurant owners and chains for 20 years.
While restaurants have long been a dream for the hospitality-minded, the industry has never had such a high profile, thanks to the Food Network and celebrity chefs whose restaurants have become launching pads to marketing empires.
The allure is easy to understand, said Peter Rainsford, the vice president for academic affairs at the Culinary Institute of America and co-author of The Restaurant Startup Guide.
So many people love to cook, they like food, and they think, boy, Ill have a job where Ill do what I love, Rainsford said. They dont realise how hard a job it is, both financially and physically.
Charlita Anderson learned, but it was a painful and expensive education. Anderson, 47, went to law school at Cleveland State University, and has worked in the legal field for 20 years, most recently as a judicial magistrate in suburban Cleveland, hearing cases involving juvenile crimes and traffic violations. But she always longed to run a restaurant that would feature her mothers recipe for gumbo.
So in 2002, she opened Pepper Reds Blues Cafe in Lorain, Ohio, a Cajun restaurant and nightclub. She did everything at the cafe, from making gumbo to scrubbing the floors and singing torch songs, while still putting in a full day as a magistrate.
Today her restaurant is no longer in business and she is back to her previous career, where she has paid off the debt she incurred during her 15-month foray into the hospitality business. Lipsky has repeatedly seen restaurant novices make the same costly mistake: vastly underestimating the money it will take just to break even. She counsels them to have enough money to cover every aspect of a business for the first six months, including food, salaries, benefits, kitchen equipment, rent and utilities.
Indeed, Barry Sorkin and his four partners were well aware that the odds were tough for Smoque, a Texas-style barbecue joint they opened a year and a half ago on the northwest side of Chicago. But they were determined to beat those odds, with both research and financing. The partners Sorkin; two former co-workers at a technology firm; his uncle, who works in the building materials business; and a lawyer were all barbecue fanatics who frequently met to grill in each others backyards. They spent more than a year analysing the business.
Sorkin quit his job in 2005, and visited restaurants all over the country, including North Carolina and Memphis, Tennessee. After tasting samples, the partners settled on Texas barbecue, known as low and slow because it is cooked at a lower temperature for a longer period than other styles. It was a variation they felt had been overlooked by Chicagos numerous rib spots.
Sorkin, who has a degree in journalism, wrote a detailed business plan that ran for more than 40 pages, comparing his concept to the menus of his potential competitors. It featured a heartfelt essay, Our View on Q, that set out the groups philosophy on barbecue; a version of it is posted at the restaurants website, www.smoquebbq.com. Along with a simple menu of ribs, brisket and chicken, the plan also included an extensive analysis of the expenses the restaurant expected in its first three years.
Determining that the North Side of Chicago lacked sufficient rib outlets, the group zeroed in on a storefront on North Pulaski Road, about 15 minutes north of the Loop and 10 minutes from Sorkins house. Two members of the group pledged their homes to secure a $440,000 Small Business Administration loan to get the restaurant off the ground. In the months just before and after Smoque opened, Sorkin and one of the partners spent 120 to 130 hours a week tying up loose ends.
Since Smoque opened, Sorkin has scaled back to a relatively relaxed 90 hours a week. Now, he is at work by 7 am, for a day that starts with stocking wood in a smoker, accepting an order from a meat deliveryman, checking the previous nights receipts and supervising as kitchen assistants chop peppers and prepare peach cobbler. He is on his feet all day, and rarely gets home to see his two toddlers before their bedtime. He can only occasionally catch a beer in a bar near his house. But he is not complaining, because Smoque has served many more customers thousands more than the business plan forecast. My old job was challenging, even interesting at times, but I never got the same buzz from knowing that someone got their e-mail fixed, Sorkin said. I love barbecue. I love to feed people barbecue, and I love to watch them enjoy it.
NYT / Micheline Maynard