
What happened when I opened a restaurant in Portland - phyller
http://www.wweek.com/restaurants/2016/09/30/heres-what-happened-when-i-opened-a-restaurant-in-portland/
======
dsshanley
I can personally relate to their struggles to get a business going, retain
staff, and to be one step ahead of everything when you're just trying to
survive.

And I lived right next door to Renard.

It's hard to imagine that during the planning, budgeting, and all the upfront
work that someone didn't caution him against the unscrupulous landlord. The
landlord was a guy that wrapped a chain around our neighboring building to
pull his building back onto its foundation. This is a guy that had public,
outstanding violations and complaints on his building and unpermitted work.

And they moved in to a microscopic kitchen to do white-tablecloth dining in a
local neighborhood. Yes, they moved in right after a hot restaurant, St Jack,
moved out, but St Jack had a marketing/advertising/buzz machine behind it.
They systematically created success, not the other-way around.

I guess the moral of the story is take this to heart:

>I told myself what I'm sure every single novice restauranteur tells
themselves: I'll be in the 1 percent that make it, by sheer will.

Take the leap, but you've got to do your diligence. Listen to the feedback and
concerns people voice about your endeavor.

~~~
Kurtz79
>I told myself what I'm sure every single novice restauranteur tells
themselves: I'll be in the 1 percent that make it, by sheer will.

I would be surprised if every single novice restauranteur tells themselves
that before starting a venue.

Most of them are probably tell themselves something like "If I build it, they
will come".

Still, 1% seems to me very low, we are not talking about startups, are there
actual statistics on it ?

~~~
Mz
From what I have read, margins are so thin in the restaurant business that
doing an energy audit and tightening up costs that way can be the difference
between running in the red and profitability. That doesn't leave a lot of
wiggle room for a greenhorn to learn the ropes, to figure out this isn't
working and pivot, etc. I imagine that's part of why franchises are so popular
in this space.

~~~
rfeather
Do you have a source on the audit thing? I'm genuinely curious about energy
use attitudes in small businesses.

~~~
Mz
The source I am remembering is specifically about catering, not restaurants
per se:

 _The energy used in catering facilities typically accounts for 4-6% of
operating costs. Many caterers work on a profit margin that is within this
range, so it is obvious that saving energy can directly increase revenue and
profitability without the need to increase sales._

[https://www.carbontrust.com/media/138492/j7895_ctv066_food_p...](https://www.carbontrust.com/media/138492/j7895_ctv066_food_prep_and_catering_03.pdf)

------
marak830
Okay it's time for me to chip in properly, forgive any typos I'm on a phone.

Preamble: I'm rated as an executive chef(my last 3 positions before leaving
the industry), and I had worked for over 17 years in hospitality (from
apprentice chef, to manager and executive chef - I also spent 4 years
traveling to different restaurants to try and save them from foreclosure).

"That chicken is a confit (with duck fat, aka $$), then served with a
stock/stew that takes days (of labor dollars) to prepare, plus cost of
employees to serve"

I sympathised with the author until this point. No it doesn't take days in the
way the author points it out, it takes minutes with a time to follow. (Eg you
don't have to actually do anything after you prepare and set it). That's akin
to saying a good jam or beer takes months - yes in pure time, but it doesn't
take staff time(and $$ as the author said).

As for the hours? The author is correct, hospitality is a slug fest, there is
no doubt about that.

What I take from this article? An unexperienced person tried to build a new
business in an industry that didn't have the experience in.

Would you try to start a software business, a cloud storage or a trucking
business without experience? No it would be foolhardy, and that's the biggest
problem with hospitality.

Frankly if you're not a chef - dont purchase a restaurant. Anyone can cook one
decent meal, now try doing 100 a day while managing costs and staffing.
(That's just the basics, there are hundreds of things you need to do just to
begin).

At the end of the day, I sympathise with the author, I have seen (and tried to
help), a lot of people in that situation, but you cannot just jump into
hospitality with money and assume that it will work.

Edit: typos ( thanks qwerty_asdf :-p )

~~~
dkrich
Yes, this to me was the most telling part:

 _That chicken is a confit (with duck fat, aka $$), then served with a stock
/stew that takes days (of labor dollars) to prepare, plus cost of employees to
serve, stuff to serve it on and rent to pay, not to mention the utilities (the
water bills on that cursed grease trap were the opposite of "the gift that
keeps on giving"). That damned chicken should be $40! But people won't pay $40
for chicken, so it's $29._

This seems to suggest that the author (who I sympathize with very much)
doesn't have much understanding of cost accounting, and therefore pricing,
which is near the top of mistakes inexperienced business owners make. The cost
of the chicken is variable. The costs of rent, labor, and utilities are fixed
on a per plate basis.

I'm friends with the owner of a very large and very successful restaurant and
he once told me that he basically makes no profit on food and that the food is
just a way to get people in to sell alcohol which is where the majority of his
profit is made. It's also true that some foods are necessarily more profitable
than others. People won't pay your costs for the chicken confit and you lose a
few bucks on every one that goes out? Fine, add a few dollars to your pasta
dish that costs far less to make and if you sell the same number you're even.
Or, if the chicken isn't profitable and you aren't selling many of them, just
accept that people don't want it and take it off the menu.

~~~
nathan_f77
It's a strange concept to have loss-leaders in a restaurant. If I were
starting a restaurant, I would probably just want to sell everything at a
profit. I don't have a burning desire to pay people to eat my food.

~~~
dkrich
It seems counterintuitive to me too, but when you think about it it makes
sense.

If you sell burgers, the food costs are pretty high. After all, good hamburger
meat, cheese, and whatever else you are going to put in it is pretty
expensive. If you charge your costs plus some fixed percentage to ensure
profitability on every item, but your customers are used to buying burgers at
similar places that charge for the food at cost and make their profits on
french fries and drinks, you will quickly earn the reputation of being
overpriced. If you can earn some sort of adoration that drives people to your
place regardless of price, like Shake Shack or In N' Out, then you have the
luxury of charging a bit more, but that's hard to achieve.

~~~
marak830
Side note: burgers are actually quite cheap to make (even top of the line
burgers: eg waygu pattie, day fresh iceberg lettuce, Roma tomatoes and a good
in-house made sauce will have a cost of less than $4 unless you are screwing
up your ordering), it's the incidentals that will actually cost most of the
income. (I have a post lower explaining more, but basically food should
_never_ cost more than 25% of your total sales price)

Adoration of customers is a nice theory. Never holds up in reality though.
Those customrs go there because they know the quality and quantity for the
price, and know that every time it will match that. If you have any doubt in
that point, watch what happens to any chain that begins to serve lower quality
or inconsistent quality food.

There is customer comfort from repition, but even a moss covered stone can be
moved for a good reason. Customers arnt moss covered stones though, they will
try something new and if the price/quality point is better, they will move.

~~~
NaOH
>...food should _never_ cost more than 25% of your total sales price)

I'm in the food industry, and this pervasive food-cost mentality is one of the
things I think people often do unwisely.

Here's a simple example with made-up numbers: The burger ingredients are $2.50
and the burger sells for $10. There's a 25% food cost. The filet of beef
tenderloin costs $10 and sells for $25. The food cost is 40%.

Focusing on food cost means the burger is a better item for the restaurant.
But I'd take the 40% food cost instead of the 25% food cost and then net $15
instead of $7.50. A percentage means nothing compared to cash in hand. That's
nothing groundbreaking to say, but that discrepancy is often lost on food-
industry people because they focus too much on the food-cost percentage.

~~~
marak830
Side note: if your paying that much for beef for a burger portion, your
getting ripped off.

Look the basic principle is: 25% to each: food, staff, facility, profit. Now
all experienced managers know that profit is a variable.

The point being, never sell for under, unless you can guarantee an over. Which
is difficult to say the least. Yes, if you have gaming section and can rip off
your customers from there, go ahead (nb: this is why I _never_ working in
venues with gaming facilities). _If_ you have an amazing wine selection or
just plain know your clients are going to order great pricepoint wine? Well,
just be careful.

Otherwise, you better be selling a lot of overpriced stock with low staffing
rates, otherwise son, your going to come undone(as was put to me during
training).

Look, all rules are made to be broken, but there are reasons why there are
general rules of thumb. At %40, how are your staff doing, with all that
running. Is the service good enough? Is your kitchen overstressed? Maybe no,
if so - I'm happy for you, but do you think every place can run at %40?

Focusing on _costs_ is the main thing. If you don't, you will find yourself in
water deeper than you can handle one day. I'm happy that you can run at %40, I
just hope it doesn't go over your head before you realise.

~~~
NaOH
I think we disagree that focusing on costs is the main thing. Figuring out
what to charge is something I find easy—it's largely a one-time exercise for
items—but executing on product excellence and even better service is where I
put much more of my time and energy. More specifically, I simplify my
employees' work down to five categories:

Great products

Even better customer service

Safety

Sanitation

Organization

I've set our rates so that staff can focus on those listed areas instead of
sweating every cent, a common industry behavior which I think inhibits the
customer experience and leads to lower-quality products. Certainly, costs
matter (to me and to employees), but I want their focus to be on what they
make and servicing our customers, and I'll do the bulk of the the economics.
So far, for my food business as a wholesaler, that's worked.

~~~
marak830
I don't actually disagree with anything you have said there.

I was talking from a cost management point of view. If you would like to talk
more about this(we're almost at the end of hn's threads haha), check my
profile for my email :-) I'm guessing you're in the us(most hners are), so I
can't exactly visit your place, but I would if I could :-)

------
NaOH
As someone in the food industry, I can appreciate the hardships and
frustrations shared by the author. I've worked for others in restaurants and
other consumer-facing food businesses, and now my company is a wholesaler.
Some of why my company is like that comes from what I learned in prior
industry experiences, but much of it is merely a reflection of my preferences
and strengths, both of which compel me toward direct relationships with
customers (wholesaling) rather than the fleeting, complicated interactions
that come in restaurants, bakeries, etc.

So I can appreciate the frustrations the author shared. Many of them remain a
part of my life—the crazy hours, bureaucracy, expenses, etc. Many of them are
the nature of the industry. It is, after all, a service industry, and that
means service to others. That’s typically a trying environment in the US, with
its individual-focused culture. So I’m sympathetic to much of what the author
described.

But it certainly reads like someone who didn’t know what he was getting
himself involved with doing. Sadly—not critically—I’d even say it sounds like
he (at the time of writing) only understands the symptoms of how things
happened, not the actual causes. Just one example: He mentions lease
negotiations covering four months but then describes the place as being in
shambles. That indicates thorough inspections weren’t performed. Many of the
self-described problems in the piece follow this pattern, him seeing what went
wrong instead of describing what should have been done differently.

Maybe in the intervening time since publication he (and his partners) have
learned from this. Obviously, what they went through came with high costs,
emotionally, physically, and economically. I can only hope they’ve ultimately
benefited from going through this and it improves their chances of success in
whatever else they do. It’s never pleasant to read about someone failing, but
it’s always great to hear when people turn disappointment into a stepping
stone to success.

~~~
philippoi
The story of the $29 chicken dish that should actually be $40 because of its
preparation cost...why pour your own money down the drain? There has to be a
market fit, and this is deliberately ignoring that. He writes that he didn't
want anything but to stay open, break even, etc. This indicates a major blind
spot to even attempting to implement that approach. Sounds rather like someone
who loved the idea of being a "startup" restauranteur without really having
any vision for what he actually wanted to do.

------
rdtsc
> That chicken is a confit (with duck fat, aka $$), then served with a
> stock/stew that takes days (of labor dollars) to prepare, plus cost of
> employees to serve, stuff to serve it on and rent to pay, not to mention the
> utilities (the water bills on that cursed grease trap were the opposite of
> "the gift that keeps on giving"). That damned chicken should be $40!

Maybe $60 even. But the restaurant has to look and feel like the restaurant
which serves $60 chicken. Maybe there is a marketing problem there, people
thought it was just plain chicken. Then yes, $29 is too expensive. If they
were eating chicken confit, with carefully crafted stock which took days and a
team of 3 chefs to make, and it came from some Sunny Mountain organic free-
range farm in the next county then $29 sounds like bargain.

But as they say, everyone in Portland wants to open a restaurant. Probably
anyone who could and wanted, already did. So there are plenty of options. At
least I remember lots of options to choose from.

There is another element I noticed. If there are just a few good restaurants,
and a plethora of other ones, people will just go to the ones they know. Not
just because it is easy and a default choice. But also because they learned
that trying new ones did not turn out as well, so they stop trying.

> bringing the plumbing up to code. $20,000 later we had a huge pit, filled
> with the gigantic, state-of-the-art grease trap the city now requires—all of
> which now benefit not us, but the landlord and his next tenant.

That sounds like they got swindled. They paid for an improvement to the rental
property, how come the landlord didn't split that with them. It just seems
unfair.

~~~
icebraining
_That sounds like they got swindled. They paid for an improvement to the
rental property, how come the landlord didn 't split that with them. It just
seems unfair._

Eh, as a landlord myself, unless we agreed upfront to cover that improvement
(usually by discounting on the rent), you're on your own. Renting to
restaurants seems like a pain in the first place; considering their low
expected lifetime, the property will have to be on the market again soon
enough, losing money during the transition. Plus who knows if they won't go
bankrupt with unpaid rent.

If this was prime location for restaurants, the grease trap would already be
there. As it isn't, chances are the next tenant won't even be a restaurant.

I wouldn't contribute either, frankly.

~~~
wiz21c
Oh I love it when a landlord and a restaurant owner, each facing competition
or "his own set of problems" just figure out that it's better to kill each
other rather than trying a little cooperation...

~~~
batiudrami
They can both go elsewhere though. If it truly is a great spot the landlord
has the upper hand.

~~~
wiz21c
Yep. I was making my comment because it relates to things I heard in my town.
Basically, there are many young people willing to open restaurants, shops,
bars etc. but the landlords own most of the city center. Given the rent, many
young starters just can't start. So the city center is closing more and more
shops, slowly asphyxiating. So I guess the landlords will reduce their prices
when nobody will rent anymore. One could say that it's a basic offer/demand
situation looking for an equilibrium. But it's not because everybody in town
pay the price of this missing equilibrium. So the landlords, while protecting
their assets, make life hard for starters, slowly kills the city center. So I
wouldn't call that a successful "invisible hand".

~~~
marak830
The landlord's positions are probably because restaurants and bars have to
make a lot of changes to existing facilities, and also generally go under
fairly quickly.

That can leave you with a large bill to retool your location to a more neutral
design.

Also, side note, lots of young people think starting a restaurant or bar is
easy. It isn't. (Fyi 17 years experience). It's brutal, difficult and requires
a lot of control/micromanagement. It's not something you can do when just out
of school.

~~~
wiz21c
>>> That can leave you with a large bill to retool your location to a more
neutral design.

make sense.

>>> Also, side note, lots of young people think starting a restaurant or bar
is easy.

Yeah, I sure don't think that. I always wonder how the chef make it : prepare
dishes for noon and evening easily consume eight hours. Then you have to check
your suppliers, the accountant, brief the employees, make sure the restaurant
is clean, handle bookings, handle taxes,... Or you have to hire a partner but
then you'll have to share the benefits/losses which may add another level of
stress.

But cooking under stress, damn, it's not like coding :-)

------
viraptor
I see a lot of comments concentrating on "maybe they didn't have a good
plan/experience/whatever". But having some experience close to non-fastfood
restaurant staff (in the UK though), I can only confirm a lot from the
article. That business is more messy and the environment can be more toxic
than anything I've seen in the IT.

The margins are way too small and staff is underpaid and overworked. Think
paid for 7.5h, but working whole week of split shifts (morning, long lunch
break, evening till closing) at close to minimum pay. Stockholm syndrome and
"that's what working means" thinking is rampant. Abusive staff, back/front
restaurant conflicts, etc. are standard. Rockstar developers are nothing
compared to chef who makes the service staff cry and can leave with their
kitchen staff to anther place when they want.

The lower management comes from people who survived enough of this to advance
- they already know this is how it works, so not much gets changed.

Just recalling this makes me really angry. If you get a good service -
appreciate it.

~~~
marak830
This. This so much.

Hospitality as a whole preys on, young people needing money and older people,
needing status.

(While I say our/we, I have left the industry after 17 years).

We hire the cheapest students to scrub dishes and carry food, for the lowest
possible we can. If they argue, then we replace them with the ever available
student market.

We will hire the lowest bidding chef's , from any region, as long as they can
cook the dishes, and if they argue or want a raise, we will replace them with
the ever available students/new visa holders.

I was lucky, I met people and got out of the direct cooking business. Despitr
getting out of the business, I had my first stomach ulcers at 24, a friend of
mine had a heart attack at 25, and too many friends to note have been driven
to drug use.

I'm resisting the urge to be bitter here btw :-p

Oh for the record, I worked (at a high rank), for some of the top restaurants
in Australia. Also it's not just aus, I see the same thing in Japan.

Abuse in hospitality, not sure I can actually say anything about this except :
yes, constant.

I have seen it from the female chef's, walking behind people with a wooden
spoon and trying to jam it in their arse, to kitchen hands having hot pans
thrown at them for being too slow. It's not a one off, and it's not
infrequent.

I just hope a few of you guys think about this, next time you order a meal.

~~~
kamaal
>>We hire the cheapest students to scrub dishes and carry food, for the lowest
possible we can. If they argue, then we replace them with the ever available
student market.

When I visited US I once has a small chat with a Indian student studying in
the US. From what I heard an entire range of restaurants and grocery stores in
the US run on super cheap slave wage labor, who work without complain. There
is no scope to complain actually because there is always the next batch of
those ever available student labor that could replace you.

------
crispyambulance
Philly is similar to Portland in that there's a huge restaurant scene here.
Yeah, there's a lot of failure, but some people seem to "make it" not just
once but multiple times as chef-owners who operate 2 or more restaurants. Yes,
if you look at overall failure rate for new restaurants it is very high and it
is sad to see first time owners fail, but there are some who enjoy serial
success (who also fail sometimes, but can afford it).

The ones which I know personally who are successful all had LONG histories of
working under-the-wing of a master, literally starting as a line cook and
progressing to sous-chef. Along the way they get savvy to the business, make
an enormous set of connections and learn their market intimately. When they
break out, they start very small and later take calculated risks to expand as
they're able to survive failures.

Other ways people have found success is by starting as food trucks or as
catering services or as suppliers (eg bakery, patisserie) to restaurants.

~~~
SmellTheGlove
I'm not in the restaurant business, so take what I say with a grain of salt
(heh), but from the people I know in that business there's a wide variance in
the actual business knowledge they possess.

You need enough capital to actually open the doors - that means not leasing
the space with knob and tube wiring, residential drainage and a leaky roof. If
that's all that's out there, you could simply not open yet and keep looking.
In the OP, it sounded like that money was burning a hole in the owner's pocket
and he had to open _now_. Patience.

Then once the doors are open, you need detailed, ongoing knowledge of your
costs. There is no $29 chicken if it costs out to $31. If no one is going to
pay $35 so that you can make a profit, it doesn't go on the menu. But you
don't, as the author put it, sell $40 in cost for $29 simply because no one
would pay $40. Then you get into ordering and spoilage, where even me as a
total outsider, could tell you there's often money rotting in the walk-in.
Point is, you must know your real operating costs before you ever even stand a
chance.

Then you have to go out there and not suck. For a chef opening a restaurant,
this is probably the part they're focused on. Problem is, you could be sunk
before you even get to this stage. The guys that are successful and worked
under successful people for a long time probably learned quite a bit about
running the business, and is why they have better odds.

tl;dr - Under-capitalization is a leading cause of failure for many
businesses. You can't make up your operating losses in volume. Don't open any
business if you aren't prepared to live and breathe the minutiae of your
costs.

~~~
crispyambulance
Well, there are good reason for selling stuff under-cost if the loss can be
more than made-up for in other charges. Doing this is as old as retail
itself-- a "sale" in the retail world. In the restaurant business under-cost
prices for a particular item can get more people in the door who then buy
drinks, appetizers and other menu items while enjoying the great deal of a $20
chicken. That's easier said than done, of course.

~~~
marak830
It depends on how you define loss leader.

Free breadsticks?(okay if you produce them in house or have a massive amount
of locations), $15 worth of produce sold for $14? Hell no.

25% - that's the sales price you can put towards food costings, this should
give you a rough idea of the unforseen costs.

If your kitchen isn't running at better than 25% food costings, your kitchen
isn't profitable. Some places you can take a cut from this if you are working
with another industry(such as gambling), but for a pure restaurant/cafe, don't
even think about not hitting that point.

~~~
jaggederest
I find it interesting how you can narrow profitability analysis down to
individual areas within a business.

As an example: Look at the walk in fridge as a business that 'buys' food from
grocers and 'sells' food to the chefs when they need it, 'losing' money when
food is wasted. Similarly front of house 'buys' food from the kitchen.

~~~
marak830
Hospitality is all about tracking minor costs.

You're argument would be akin to the keyboard buying from the user to write
code.

I _think_ I realise what you are leaning towards, and it is like that.

Any piece of equipment has a direct relation to the ROI, honestly it's not
pleasant to think of staff that way, but when the margins are that tight, it
has to be done. (that's one of the reasons I left hospitality.)

It's not like advertising where you can charge someone 20k for a dm campaign,
people will only pay so much for food, and the 'whales' arnt really there (at
least not enough to keep an entire restaurant running at a loss).

When you're profit margin is less than 25%, and you can't guarantee the number
of users per day, let alone per week, then you're damn eight everything is
calculated as a cost down to the cent.

~~~
notyourday
> When you're profit margin is less than 25%, and you can't guarantee the
> number of users per day, let alone per week, then you're damn eight
> everything is calculated as a cost down to the cent.

If you cannot project within your margin of error the number of covers you
would turn per day or per week then you do not have a restaurant business, you
have a hobby.

------
gregmac
> I remember clearly the day when the accountant showed me that we could
> effectively double our monthly sales and still not have enough to meet our
> eventual payroll obligations and that's about when you just finally sink
> into it: You're done.

The article doesn't really go into this part, but it does mention an extensive
business plan. Was it that the labor costs were not foreseen, or that the
revenue was much lower than expected? To be off by half is significant. It
would be interesting to hear with hindsight what could have been done
differently to avoid this (even if the calculation came out to "don't open a
restaurant").

~~~
SmellTheGlove
> The article doesn't really go into this part, but it does mention an
> extensive business plan. Was it that the labor costs were not foreseen, or
> that the revenue was much lower than expected? To be off by half is
> significant. It would be interesting to hear with hindsight what could have
> been done differently to avoid this (even if the calculation came out to
> "don't open a restaurant").

If doubling your sales wouldn't make next month's payroll, my first guess
without any additional info is that margins are too thin (or possibly
negative). Unless no one is coming in, it's not really a revenue issue, it's a
cost issue.

Whatever your business is, know your costs and the drivers of those costs. You
have to know whether the prices you can charge will cover the costs and
provide enough profit to keep going. It's not even specific to restaurants.

~~~
marak830
Indeed I'd argue that their margins were off by a lot. It's not uncommon for
non-hospitality trained people to screw that up (and in their defence, it _is_
a lot more complex than most people think).

------
audiometry
I sympathize with his difficulties, and don't want to shit on the guy. Trying
to read between the lines, I sense that one of his core problems was weak
negotiation skills, or the ability to have tough conversations. He negotiated
a lousy lease. He hired a chef who wouldn't do the necessary work.
Fundamentals that poison the whole downstream.

Like other commenters, also wondering how his elaborate business plans (made
w/ experienced restaurateur's input) could be so wildly inaccurate.

Maybe another lesson is, don't rush to the "hot spot." Maybe find a market
that has no good scene instead. Be an early gentrifier. By the time newspapers
are writing about "hot spots" "hot jobs" etc, it's almost always the high-
water mark.

Multiple times I've spotted tops of commodity bubbles by noticing when news
articles talk about the absurd wages being paid the labor force. Miners and
crane-operators being paid $250k/year during the initial Western Australia
mining boom. Low-level labor in North Dakota being paid crazily during the
initial part of the Shale Boom, etc. The news coverage is always breathless
and euphoric. Wonder if we could build some sentiment analysis that can detect
these sorts of articles in a generalized way?

Another way I've heard it described, "whatever industry the current class of
graduating MBA is racing to join--avoid it."

~~~
mozumder
A lot of is is that restaurants are largely built by wealthy people for their
own social niche. They aren't designed to be profitable businesses, but more
as a social device for their owners.

If you're wealthy in New York City, you will eventually be asked to fund a
restaurant.

~~~
chewz
Do you suggest that restaurants in NYC are sort of charity financed by wealthy
for public good?

~~~
88
I don’t suppose many restaurants are intended to make a loss.

Vanity projects, certainly. Some are fronts for money laundering, of course.
But charity, not exactly.

------
michaelbuckbee
My friends and I have a saying: "boring makes money". That it's really hard to
pull off the success of a Facebook, etc. but it's only moderately hard to do
consulting and spin off some kind of related product as a service, or micro
SAAS.

I'm curious what the "boring" food venture is?

\- trucks?

\- catering?

\- middle brow family style Italian?

I'm aware of a couple of food businesses that rent kitchen space in the
morning/evening from restaurants to make prepared paleo/keto meals that are
then distributed through gyms/fitness centers (genius resource utilization).

There's also a really interesting little business in the Outer Banks that
sells you a metal pot full of uncooked seafood that you then put on the stove
for an hour and let steam at your beach house. It costs something like $100
and I'm pretty sure it's about 50% profit for them.

There's always room for cleverness.

~~~
johan_larson
Are there boringly profitable restaurants? My impression is restaurants are
always skating on the edge of bankruptcy. It's wildly competitive because
everybody thinks they can run a restaurant (and a hefty number of them
actually can), there is significant regulation because of food safety issues,
and the labour force is ill-paid and therefore not entirely reliable.

~~~
Mariehane
I'd really like to know this as well. I have the same impression, but recently
someone here on HN, who had experience owning a restaurant, wrote that the
opposite is true.

~~~
johan_larson
Well, here's one account of running a coffee shop that gets into the actual
economics a bit:

[http://www.slate.com/articles/life/a_fine_whine/2005/12/bitt...](http://www.slate.com/articles/life/a_fine_whine/2005/12/bitter_brew.html)

~~~
namdnay
Slightly off-topic, but this article reinforced the impression that there is a
serious shortage of decent pastry bakers in the US. The guy was paying $1.25
wholesale for croissants? The _consumer_ price in France is around
$1.05-$1.25, and that's a country with very high labour costs.

It's an interesting dilemma - Croissants have a shelf life of a few max, so
they can't be imported. I'm guessing immigration rules + cost of expatriation
would make it hard to fly in french boulangers-patissiers? Then I guess the
money would be in opening "viennoiserie schools" in the US...

~~~
ido
I always wondered why pita bread is so stale/bad in middle-eastern restaurants
in Germany and Austria, being that baking pita bread is not that difficult
(almost every falafel/shawarma place in Israel have decent pita bread and they
can't all be genius bakers).

~~~
marak830
That isn't due to the lack of pastry chefs. At least it shouldn't be if they
have access to refrigeration.

~~~
ido
Right, and you honestly don't really need to be a pastry chef to make decent
pita bread (I'm a layman and i can make them just fine).

Which makes it all the more puzzling! It's not like it requires any exotic
ingredients either...

------
Nate75Sanders
“”” I remember clearly the day when the accountant showed me that we could
effectively double our monthly sales and still not have enough to meet our
eventual payroll obligations and that's about when you just finally sink into
it: You're done. “””

If you need your accountant to tell you this, you were doomed from the
beginning.

------
subroutine
" _I 'd worked several jobs in all kinds of food; I had capital from my
grandfather's estate_"

This sounds like a few of my friends, minus the capital. In fact, it sounds
like a fantasy every guy has probably had, at least once in their life; ohh to
have that feeling of walking into a place like you own the joint.

I wonder if the very high failure rate in the restaurant biz has anything to
do with this. Food is something everyone knows, and seems to be a common
fallback job for those without better prospects. When one of those people
happens upon a windfall of cash, it’s probably natural to think “I’m gunna
open up my own restaurant” - it’s perhaps something they have been daydreaming
about whenever their manager gives them any shit. Or maybe they see some
inefficiency and think “if i owned this place, I would do X different”. It’s
not clear that’s what happened here, and I do give this guy some credit for
his earnest attempt at due dillegence, but I wonder if things would have been
different for someone who could start an article with... "I had 10 years
experience managing restaurants of a similar niche, and was backed by
professional investors." At least the management part I think is key.

All that said, I hope the best for this guy. He just gained some very
expensive but invaluable experience, and I’m not sure this type of experience
can be gained any other way.

Also, for the interested...

Street view of Renard's "Hot Corner"
[https://goo.gl/1YSjpj](https://goo.gl/1YSjpj)

Yelp page [https://www.yelp.com/biz/renard-
portland](https://www.yelp.com/biz/renard-portland)

Best inside photo I could find
[https://i.imgur.com/a5LD2cN.jpg](https://i.imgur.com/a5LD2cN.jpg)

~~~
marak830
I agree with you saying

"I wonder if the very high failure rate in the restaurant biz has anything to
do with this."

It's a _massive_ reason of failure. Next biggest I would say is the inability
to realistically calculate costs over time compared to dynamic income. Eg
overspending on staff at bad times, the. I spending when required

~~~
subroutine
Yes I agree, the inexperience with balancing expences and revenue were
ultimately what led to the restaurant’s demise. He didnt leave himself enough
runway for this project to succeed. $20k for the grease trap installation was
a sunk cost that could have otherwise went a long way, better served on other
expenses. He fell in love with this particular location and that was it. He
went for the home run - a high end restaurant. I feel like he should have
started smaller, something less posh, somewhere people could afford to get
lunch every day, rather than a place where half the draw is based on ambiance
and the ‘dining experience’. This would have allowed him to figure out a lot
of important details - how to make $20 chicken for $5, finding good vendors,
crafting good tasting food with low cost ingredients, creating dishes and a
menu that dont require a team of chefs, building a buzz, managing a stock of
perishable products, etc. Master those intangables _then_ step into the big
leagues. Basically learn to crawl before you attempt to sprint.

------
jaclaz
>Mostly, it's labor. Not only does $9.50 hourly, plus tips work out to a fair
amount of money for front of house staff (my partner was horrified to learn we
could not do a tip credit). But the more the front of house makes, the more
our valuable back-of-house staff demands in pay (or tipshare tribute). At a
premium, you can't afford to lose your core cook staff, you have no room to
negotiate salaries down 'until we get stabilized,' and meanwhile they have
three other prime job offers waiting. The labor costs alone were enough to
sink us, especially once we got to the taxes.

It is not like overnight the average pay of waiters and kitchen people doubled
or increased 50%, more or less that pay has remained the same over two-three
years. Either the hourly pay was underestimated or more people were needed
than planned.

And the "we could not do a tip credit" coming out as a surprise?

Here:

Minimum Wages for Tipped Employees

[https://www.dol.gov/whd/state/tipped.htm](https://www.dol.gov/whd/state/tipped.htm)

2014 9.10 US$

2015 9.25 US$

2016 9.75 US$

2017 9.75 US$

And "surprise", the kitchen brigade wants some money to be on par with the
waiters?

And - again "surprise" \- you have to pay taxes?

The "unexpectedly expensive renovations"?

Hey, you took months of making business plans, negotiating and what not, no
matter how expensive is the renovation it cannot come out "unexpected", you
should have put some allowance (10%-20% at least in a project of this kind)
for unforeseeable added costs.

Anyway the business plan was "wrong" on the "other" side, the income, simply
it could not reach the target, either because it was set too high or because
you weren't capable (for whatever reason) to attract enough customers and
serve the intended number of meals.

~~~
marak830
Amazing how back of house would like a share of the tips, isn't it -.-

Side note over though, the owner was in over his head by the looks of it

------
lazyjones
If this was an IT story, it would be about someone with SAP skills only,
wondering why his startup wasn't turning in a profit like the Perl guy's next
door...

Running a company is always a compromise between stubbornly doing what you
think is best and trying to please everyone involved with limited means. If
you can't afford much of the former and can't stand the latter, it's probably
not for you.

~~~
marak830
I know, right. And yet you see so many people starting restaurants because
they think it's easy. I can't imagine the mess if I tried to start a software
company haha.

------
noonespecial
From the comments: _" I walked away not because of the lack of TIs, but
because it had a pizza hood and I needed a class 1 hood and if I put one in it
would trigger a building permit that would require a bazillion other upgrades
and possibly make that patio illegal."_

You want to know why its so hard? That. Everything else is figuratively (and
literally sometimes) cake.

You want local restaurants that aren't Chili's? Stop making them exist in some
kind of Kafkaesque Clown-world where an oven hood can make a patio illegal.

~~~
dxhdr
There was a recent Granola Shotgun blog post talking about a new wine tasting
room being stuck for months in a local board review process over the proposed
color of white for the building, and being required to have a parking space
for each bar stool. These kinds of regulatory hurdles really put into
perspective how good software developers have it.

[https://granolashotgun.com/2017/08/04/the-precariat-
shoppe/](https://granolashotgun.com/2017/08/04/the-precariat-shoppe/)

------
scandox
I grew up in the high-end restaurant business. It is a nightmare. If you have
friends or family that dream of doing this, it is your duty to prevent them.

The only people who succeed in this, in the long term, are what I call the
Artists.

The Artists have no choice. Restaurants and food are the only thing they can
do. They live or die there. Success of their own or a lifetime of working in a
subordinate position in the same business.

~~~
marak830
Just chiming in that the artists can eventually learn. I got out, but you are
100% correct.

It's an absolute fools game, and I hope that my children don't follow my
footsteps in that regard.

~~~
nunez
What about restaurant investors? Landlords seem to win big, too...

------
AndrewKemendo
No user lock in, no real possible moats, challenging staffing problems, razor
thin margins, heavy regulatory burden, very touchy customer base and extremely
dependent on logistics. How restaurants survive even a few months is beyond
me.

~~~
marak830
Frankly, insanely hard work, stupid hours and sweat.

That's why I left, I love cooking, but now I do a bi-monthly cook up for
friends and family. I make more money and I actually get to see my wife

------
cyberferret
> "I told myself what I'm sure every single novice restauranteur tells
> themselves: I'll be in the 1 percent that make it, by sheer will."

Sounds like every startup founder all over the world who builds a mobile or
web app these days. Many just see the 1 in 999999 success stories and think
that having an idea for an app is a licence to print money.

I would far rather see more stories like this, but from app founders. Not to
discourage or dissuade anyone from trying at all, but merely to set the
expectations at a realistic level.

~~~
jopsen
If you app is the next Facebook or tinder, or anything that relies on network
effect, then yeah you'll probably fail...

But I'm sure there is a lot of enterprise apps out there making a dime.
Whether through consulting or a spin-off service.

Restaurants aren't niche..

~~~
CM30
> If you app is the next Facebook or tinder, or anything that relies on
> network effect, then yeah you'll probably fail...

Unfortunately, that seems to be what many people want to create when they
start making an app. Or a website in general. Seen tons of people think it's
incredibly easy to replace the likes of Facebook/Twitter/Reddit/YouTube. They
then quickly realise it isn't.

------
notyourday
The owner of the restaurant was clueless. That's the real news.

If he or she did not grow up in a restaurant business, then the only way for
him or her to know about it enough not to lose the shirt is to go out for
breakfast, lunch and dinner, daily, for twenty years.

Yes, $29 dollar chicken dish is insane outside the market such as NYC. It is
definitely insane in a dump of a place pictured - yes, it is a dump if a
chicken is $29. If he actually went out daily he would have known that a place
with $1 cutlery can't get away with it while a place with $5 cutlery can. So
_buy_ $5 cutlery to be able to raise prices by $5 per dish, i.e. _forty_
dollars for a two top per dinner.

------
ChuckMcM
Spending much of my youth in Vegas and, at the time watched a number of
restaurants appear and vanish, a person I met at the culinary union said
something that my high school self didn't understand but later made much more
sense. "All the successful restaurants in this town were started for
laundering money for the mob."

------
dgudkov
If the author spent a few months just working for some restaurant it could've
helped him to estimate risks correctly and maybe stopped him from opening a
restaurant at all. People with experience are much less into super-detailed
business plans because they have the empirical knowledge. I suspect the desire
to have a super-detailed business plan is a subconscious replacement for
empirical experience.

~~~
greedo
Yup. Any spreadsheet can be manipulated so that somehow, your net is always
enough to be successful. GIGO...

------
DoodleBuggy
Restaurants rarely succeed, they are a notoriously tough business. The
successful restaurateurs I know are selling commodity products with high
margins; pizza, hot dogs, burgers, alcohol, etc, which is much less glamorous
than a boutique trendy eatery.

Also, despite being the trendiest city in America, Portland is still the most
overrated city in America.

------
kyleblarson
Bloomberg had a recent article about similar issues in San Francisco:
[https://www.bloomberg.com/news/articles/2017-10-05/michelin-...](https://www.bloomberg.com/news/articles/2017-10-05/michelin-
guide-san-francisco-is-losing-inexpensive-restaurants)

------
aaronaarzelbart
This is the path of most new business people.

Getting it wrong makes you really, deeply understand why NOT to do certain
things, and focuses you and what is important.

Many failed first timers never go back to business but I see initial fail as s
valuable first step.

Having said that, damned if I'd ever go into the food business, it doesn't
scale.

------
greedo
The restaurant biz is brutal.

I had been in the management side for 16 years, and my partner had sold his
software company so he had some money. He had always dreamed of owning a
restaurant, so he ponied up a large % of the money.

Our food was good, our location was okay, our service was pretty good as well.
We closed 3 months later.

~~~
ForRealsies
People get swept up with the idea of 'being your own boss' all the time, to
avoid working A Job.

Many business owners are working A Job in disguise.

~~~
argv_empty
It is perversely fun to read stories of people who started their own business
in order to not have a boss, only to realize that they suddenly have a dozen
bosses who don't even coordinate with each other to keep their combined
demands reasonable.

~~~
ForRealsies
The only way to escape A Job is to earn passive income. The only way to do
that in the Restaurant Industry is to own a chain/franchise.

~~~
greedo
I've never met a franchisee in the food business who was passive in any way.
Most worked very long hours, ironically, more hours as they became more
successful.

~~~
ForRealsies
Own a franchise, not be a franchisee. Sorry I wasn't more clear, you're
correct.

------
wheresmyusern
this is just a story of very poor planning and forethought. this guy not only
paid way too much for a building, but was also suckered into upgrading it.
this guy probably bought brand new furniture, and he probably bought really
nice quality furniture to boot. it doesnt sound like he ran the numbers to
figure out how much hed have to sell in order to pay taxes and payroll. i dont
want to sound mean but this guy was doomed from day one.

------
d--b
> Two and a half years ago, I put every cent available to me on the line to
> open a restaurant.

Ugh this painful to read...

------
charred_toast
If you've never actually worked in a restaurant, do everyone a favor and don't
try to open one. It's vanity a play, that's all.

Owning a restaurant for some reason has this prestige attached to it. I think
it's the media that has consistently portrayed kitchen life using an Instagram
lens, leaving out the day-to-day. The author is correct, it's horrible, but
some people actually thrive in that environment. Those that get that lightbulb
moment and think, "whoa, I should open a restaurant," should stop.

Eating at a dining location run by amateurs is like getting your haircut at
the vocational high school.

There are so many finer points that you have to collect with experience before
trying it yourself, the odds of succeeding for DIY restaurant owners is
hilariously low. It should say something that even world-renowned chefs
struggle to keep their doors open.

I love the restaurant business, it's difficult and I admire people that can do
it well—it's nearly impossible.

>"You have to love stress to work in a kitchen. Have you ever stared down a
line of Friday night dinner tickets after your sous just walked out of the
shift crying because her mom died? No? Then you don't know stress."

Case in point. Yes, that's stressful. You want to know what's more stressful?
Working Friday and Saturday nights every weekend for 5 years straight, taking
ticket after ticket, order after order. When you get good at being a
restaurant owner, it's a whole different kind of stress, exhilarating I'm
sure, but a stress that requires an incessant amount of detail and attention.
The author didn't make it that far.

------
jimmywanger
I would never open a restaurant in Portland, just for the following reason. A
couple of ladies went to Mexico, got interested in how the old grandmothers
made such good consistent tortillas and followed them around to try to pick up
and learn as much as they could.[1] They then came back to Portland and opened
up a burrito shop. Cue protests and cries of cultural appropriation.

If in Portland, that can happen to your restaurant on such a flimsy reason,
AND they're increasing minimum wages by 20% on such a low margin business [2],
the value proposition quickly changes from "risky gamble" to "credit score
suicide".

[1][http://www.foxnews.com/food-drink/2017/05/24/portland-
burrit...](http://www.foxnews.com/food-drink/2017/05/24/portland-burrito-shop-
forced-to-close-amid-accusations-cultural-appropriation-stealing-recipes.html)

[2]
[http://www.oregonlive.com/business/index.ssf/2017/07/oregon_...](http://www.oregonlive.com/business/index.ssf/2017/07/oregon_minimum_wage_hike.html)

------
simonsarris
Many people here saying something to the effect: "What a fool, going into this
sort of thing without knowing much about the industry."

What would be the best way for someone to learn about the restaurant industry
and gain the experience needed to open a restaurant _without_ quitting a (non-
restaurant) day job? [to work more hours at restaurants, etc]

~~~
marak830
There is no way to learn without actually doing it.

If you want to experince it, sign up as a dish washer, evening shifts. They
start after day shift work hours, and while you will get wet and sweaty, you
will see what goes on in a kitchen.

It wont give you the experience to purchase a restaurant, but it will give you
an inside.

If you want to go further, after a few weeks, tell the chef's you want to
learn to cook. Ask about prep specificly, you will hopefully get a few shifts
to prep vegetables before the dish shift.

Why prep and not cooking? Because you can't cook without knowing the basics of
the produce. Give it a few months and you will hopefully be able to cook on
quiet days.

Now this may all sound dismissive, but I don't mean it to be. I have trained
up one of my kitchen hands (fancy for dish washer), from there to the point
where I took him on as an apprentice and he was able to proove competency to
finish his first two years in as many months.

------
jacquesm
It's easy to spend money that you didn't earn on a business that has no legs.
If he'd earned that money the hard way I'm pretty sure that he would have made
damn sure he wasn't wasting any of it.

------
ravitation
Seems like pretty big mistakes were made from the start...

\- A city as suburban as Portland seems suboptimal, even if entry costs are
lower. Not to mention it's actually a fairly small city, with probably far
higher supply than demand. Even if it is growing.

\- Sounds like lots of mistakes were made in the real estate (landlord
situation, renovation costs, etc).

\- And, the ownership situation seems like it could have used some work... If
you want buy in from your chef, maybe have them be an owner...

All of that on top of the normal rate of failure, which isn't that bad for
restaurants. On average, they survive for a little less that five years...

------
NiklasMort
The system is not designed for normal shops/restaurant etc. anymore. It's
geared towards multinational corporations with enough money to pay fancy
lawyers and accountants to save them money on every corner.

~~~
nether
The immigrants running tiny ethnic places have done the sensible thing and
relocated to the suburbs. Of course, in time they'll be priced out of there
too. There's a new type of "food desert" emerging, maybe "foodie desert"
describes it. It's when the only places that can exist in central districts
are siege-type operations with extremely technical western cuisine that
eventually converges to some weird bouquet of (bland) "subtle flavors" and
vertical food in an empty white plate that everyone pretends is really good.
While the immigrant food with gusto that makes you feel alive migrates farther
away out of town.

------
d_burfoot
Restaurants just seem like an intrinsically bad type of economic activity. To
create the experience, the chefs and waitstaff and support people labor and
labor and labor. Then the customer eats the duck confit, drinks the wine, and
that's it. The labor isn't wasted, but neither is it invested for the future.
Compare the situation with a simple real estate construction company. Your
architects and construction workers and electricians labor and labor and
labor, and then you have a house that people can live in for a hundred years
or more.

~~~
twothamendment
I've never thought about it exactly that way, but that may just sum up why
eating out feels like such a waste of time and money to me. It is all a big
show. In the end, I leave with a full belly. I can do that at home for less
and have time left over for building something useful (physical or software).

------
nomass
Somehow I can understand his frustration, but I do wonder if he actually draw
the right conclusion from this failure. Because there is only one reason this
couldn't work: He was under capitalized. Maybe initialy he had an intuition
that there wasn't enough capital around but in the end convinced himself into
this miserable situation.

So the question is why didn't he invested more time and effort into raising
capital? He weakened his negotiation position right from start. The notion
that you can substitute the lack of money with skill is naive.

~~~
marak830
That's an interesting way of looking at it. I don't agree though.

No matter how much he invested, it wouldn't change the fact that he wasn't
profiting. You can't just throw money at restsurants, and expect a return.

For example: say he had paid off his bills then upgraded all the plates,
cutlery, glasses etc, to make it seem more upmarket. Notw throw more cash to
hire a trained high end manager, and build up his existing staff.

That doesn't change the fact that people were not spending what he needed to
profit.

From the whole bullshit confit chicken, that he either a)had a bad head chef
or b) was dictating what he wanted, based off of what he had seen, despite any
actual hospitality sense (this I think is more likely, from the articles
tone).

You can't just demand the highest quality ingredients, throw money as your
staff, and expect patrons to flock in.

~~~
greedo
Sometimes customers don't want what your selling, no matter how good you think
it is. Dreamers start up restaurants without being businessmen, then are
surprised when the customers don't show up, or don't return.

The fact that this guy switched chefs pretty early was a tell for me. People
aren't dumb, they know the price of chicken, and expecting them to pay $29 was
just dumb/naive.

It's hard to go through a failure like this, I can sympathize with him. It
took me 20 years to get over my restaurant, and I still daydream about all the
"what-ifs" and "wtfs" that I experienced. Then I look back and realize that I
was far better off getting out of hospitality and into IT. The burnout I was
already experiencing would have killed me.

~~~
marak830
Hmm I'm willing to give him a go-through on switching chef's - I have seen
some pretty bad head chef's haha.

$29 chicken is a . ... Difficult sell though.

Yeah I agree with the what-if's, i think everyone has them about their history
though, try not to let it get you down. (especially about hospitality!).

Any recommendations for an ex-chef by :-p. (and re:burnout, yeah I have my
collection of stomach ulcers :-p)

------
cletus
I'm always amazed at the naive optimism of people when I see them open
restaurants in "hot" markets. I see this in NYC where the first year failure
rate for new restaurants is something like 80%.

Gordon Ramsay has a lot to say about running a restaurant as a business. I'm
kinda amazed that there are people (this being a general comment, not directed
at the OP) who would actually learn something just by watching a few episodes
of:

\- BBC's The Restaurant Man [1]

\- Kitchen Nightmares (US or UK)

Gordon Ramsay has a pretty simple formula for a restaurant. When you divide up
your revenue you need to be looking at:

\- One third for food

\- One third for labour

\- One third for gross profits

If your plan doesn't look like that, throw it away and start again.

A few things stuck out to me, not just about the post but from several other
comments here:

1\. This is commercial rent. As opposed to residential rent, a commercial
lessor provides the property as-is where-is. The lessee is responsible for
maintenance and any improvements they want or need to do. If you didn't factor
in the cost of improvements then that's really on you.

2\. As someone else mentioned, you can sell $60 chicken but it needs to belong
in an area that can support it (eg in NYC terms, open such a restaurant in the
Upper East Side not Flatbush). Likewise the decor and the service need to be
to a standard that someone ordering $60 chicken demands.

3\. Gordon Ramsay really harps on the point about controlling food costs and
gives some pretty good examples of dishes that might have 2-3 pounds in
ingredients that people would pay 10 pounds for where the restauranteurs want
the "best ingredients" that might cost 15 pounds... for an appetizer. Now I
don't mean this in the sense that you use cheap/bad ingredients, just that not
everything has to be white truffles.

4\. Marketing is super-important. The UK Kitchen Nightmares has some pretty
good examples of this. Holding a sign up in a tourist area saying "5 Euro
Vegetarian 2 course lunch" generating hundreds of covers. Handing out free
samples at a commuter train station as people come home from work. I think a
lot of people play the "review game" and rely on an audience magically
happening. It's bizarre.

5\. Finding a good chef is hard. When you do, you want to keep them, even
build the restaurant around them. This isn't just about cooking good food.
It's about consistency, building the kitchen staff and managing a kitchen. You
probably want to give such a person, if you find them, a share of the
business. As in you want a cofounder not an employee.

6\. Boring is good. Another commenter mentioned this. Hot markets are high
risk but high reward. People get captivated by the high reward part. Years
ago, I came across a cafe in a suburban main street. No amazing location or
anything like that. Just a nice atmosphere, good food and a captive local
market where the residents liked to go there regularly. Friends of family
owned it and I was surprised to learn that place had a gross profit of
$13,000/week.

Anyway, this is the interesting part about working in tech. You see how much
money you can make either by working for one of the tech giants or even
working for yourself and it's nowhere near as stressful as running a
restaurant but the rewards are so much higher that it makes doing anything
else or running almost any other sort of business a complete financial
nonstarter and basically a lifestyle choice yet these can be really good
options for many of those outside tech.

[1]
[http://www.bbc.co.uk/programmes/b03t7vm5](http://www.bbc.co.uk/programmes/b03t7vm5)

~~~
nemo44x
Gordon Ramsay has so much experience and good advice in controlling costs. As
he says, you can make the best food in the world but if your restaurant can't
turn a profit how stupid are you going to look?

Back in his starting out days he was so concerned with portion control and
food costs he wouldn't even let the pasta dough that gets stuck to your
fingers go to waste. Just every little detail. He couldn't afford truffles so
he'd buy the broken pieces from the truffle dealer at a huge discount.

He talks about when he worked with Marco Pierre White at Harvey's that MPW had
to have the best of everything and the food was amazing. But that place never
really made any money despite being sold out every night.

He breaks the restaurant business into 4 weeks per month: Week 1 you make
enough to pay your staff for the month. Week 2 you make enough to pay your
food costs for the month. Week 3 you make enough to fund the operation (rent,
bills, etc) for the month. Week 4 should be your profit.

~~~
marak830
Exactly! That's the 25%.

When. I was an apprentice Gordon Ramsay was the man I looked too, his TV
series (sans kitchen nightmare), was so informative, especially his UK series.
It reinforced so much that I hadn't really paid attention to in college, and I
don't think I would have ever gotten anywhere near as high as I did without
his knowledge.

------
antisthenes
The fundamental misunderstanding of economics here is this:

The more competition in a market, the lower the profits. In perfect
competition businesses operate at marginal revenue = marginal cost, so the guy
was never going to make any money.

The only reason to run a restaurant in a market like this, then, is because
you are batshit passionate about food, like Gordon Ramsay or possibly even
more.

This guy obviously wasn't so the result is expected.

------
jpatokal
If you'd like to know _everything_ about opening a restaurant in equal parts
gruesome and hilarious detail (at least when only reading about it), Tyson
Ho's posts about opening Arrogant Swine in Brooklyn are a great read.

[http://www.seriouseats.com/building-a-bbq-
restaurant](http://www.seriouseats.com/building-a-bbq-restaurant)

------
TheGorramBatman
Relevant article on pricing: [http://www.seriouseats.com/2016/03/menu-pricing-
vegan-vegeta...](http://www.seriouseats.com/2016/03/menu-pricing-vegan-
vegetarian-meat.html)

------
nradov
Opening a restaurant in a "hot" market is mostly a zero sum game. To succeed
you have to wrest market share from other local competitors. A better strategy
might be to open in a "cold" market with a lot of unfilled demand.

------
hartator
Maybe an hastly judgment, but the guy doesn't seem to like food. Why open a
restaurant in a first place? Specifically "renard" (fox in french) is not a
good name for food.

------
esaym
> Mostly, it's labor. Not only does $9.50 hourly, plus tips work out to a fair
> amount of money for front of house staff

Oh ouch. I guess be glad you didn't have to pay them $15 an hour.

~~~
cyberferret
This is my question too. How to restaurants and cafes in Australia manage to
do it, with wages in the $17-$22/hr range, AND penalty rates (double time on
Sunday etc.)? [0] (PLUS 10% superannuation etc.)

[0] -
[https://www.payscale.com/research/AU/Industry=Restaurant/Hou...](https://www.payscale.com/research/AU/Industry=Restaurant/Hourly_Rate)

~~~
jen729w
I’ll take the lady friend to the local (nice) pub and buy us both a steak &
chips, half a pint (to drink while we wait for the food), and a bottle of
house Shiraz (to drink with), and it’ll be $110.

I’m lucky that I can do that, because I work in IT, but every time I do I
think “holy shit, $110 for a pub meal”. That’s just what it costs.

~~~
jen729w
(The Napier in Fitzroy, if anyone local is reading. Best scotch fillet you’ve
ever had.)

~~~
brianwawok
How much is the qine2, $60?

$50 for a decent meal out w a beer isnt that far off. Rule #1 of eating out on
a budget is to limit booze, wine for example is often a 10x markup for the
same product you can buy at the store.

~~~
jen729w
$40, I think. The steaks are $30 each but it’s a bloody good steak. $5 a pot x
2 brings us to $110.

I want a steak now.

------
jasonkester
It's amazing how much better we Software folks have it when it comes to
starting a business.

Last I checked, the profit margins for my single-player SaaS business were
somewhere around 90%. And the interesting thing about that isn't even the
number. It's that SaaS is so profitable that _you don 't even have to
calculate your margins_. To an order-of magnitude, every dollar a customer
pays for the service can be considered profit.

Real Businesses have expensive office or retail space. We have "wherever we
happen to be living at the moment".

Real Businesses have employee salaries. We have an industry where a single
person can plausibly run every aspect of the business from writing the code to
marketing to racking servers to high-touch Enterprise sales. That single
"employee" can have his "salary" set to (Total Profit) / 1.

Real Businesses have equipment and other recurring costs. We have those too,
but they're _tiny_ compared to other types of business. Like, single-digit-
thousands per year tiny. All in, for servers, software, dev hardware, etc.

It's almost unfair, how Software wins in pretty much every category against
pretty much everything else.

Nobody tell anybody!

~~~
autokad
one interesting thing is how people are trying to operate a business and hire
local people to do things are assaulted by taxes out the wazoo, and software
companies like apple hide their profits overseas and avoid taxes almost
entirely.

~~~
yellow_postit
I'm not sure a comparison between a multi national and a local business is
apt. Granted they could probably be treated more similarly but multinational
software and multinational hard goods seem to get similar tax treatment...No?

~~~
autokad
i dont think so. tech companies somehow get off the hook by claiming all their
profits occurred in places like ireland.

However; I would say this is a hard goods / software thing, but apple somehow
does it with iphones.

------
kelukelugames
Starting a restaurant is a bad business idea. Most fail. The exceptions are
pizza joints and franchises.

------
nunez
Do former restaurant owners with the same experience go out to eat after
running their own place?

------
gt_
portland is a really small place, i live there, and never heard of this
restaurant

~~~
gyardley
I'm guessing you just don't follow local restaurant news (Renard's opening got
quite of coverage because it was in St. Jack's old space) or live in that
neighborhood.

Portland's a pretty local place. I walk by where Renard used to be almost
every day, and can tell you about every restaurant along all of Clinton Street
(on that stretch, Burrasca is clearly the standout). But apart from a few very
well-known places I've got no idea what's up on, say, Alberta.

~~~
gt_
Yeah I don't really follow restaurant news. I am just a terrible cook, so I am
always looking for new restaurants to eat at, and while I live in SE, I will
drive anywhere for the food I want.

------
llukas
Entrepreneurship in a country without a safety net...

~~~
latch
I see it as the opposite: Entrepreneurship in a country full of government
meddling.

Regulations, zoning laws, and massive subsidies that mutate the consumers
concept on how much food should cost.

~~~
RickS
"My restaurant could have been successful, if only we could have been less
safe!" is not an encouraging sentiment from the people who make my food.

~~~
latch
In the US things are pretty extreme (1, 2). It doesn't seem like a stretch to
suggest that some food-related regulations don't add value to justify their
cost. This was part of the problem the owner felt was unjust.

You can also compare it to other countries. A number of affluent countries
with high quality of living are comparatively lax, and it doesn't seem to be a
problem.

With respect to food, Japan seems like an ideal country to learn from. I know
for a fact it has great (and so simple) national zoning laws, and I believe it
is much simpler and cheaper to open a restaurant (you still pay some fees, and
you need to do some yearly training). And if it isn't smarter zoning laws and
more supportive government, then it's something else worth emulating.

(1) [http://www.nytimes.com/2012/06/17/magazine/so-you-think-
you-...](http://www.nytimes.com/2012/06/17/magazine/so-you-think-you-can-be-a-
hair-braider.html)

(2) [https://www.huffingtonpost.com/women-co/lemonade-
stand_b_175...](https://www.huffingtonpost.com/women-co/lemonade-
stand_b_1753057.html)

~~~
DanBC
There have been food poisoning outbreaks traced to lemonade stands, so it's
not surprising those are regulated.

[https://www.newstatesman.com/politics/staggers/2017/07/you-m...](https://www.newstatesman.com/politics/staggers/2017/07/you-
may-call-me-monster-im-glad-girls-lemonade-stall-got-shut-down)

~~~
Turing_Machine
There have been cases of people falling and injuring themselves in the bathtub
too.

That doesn't mean we need bathing licenses, a corps of parasitic "bathing
inspectors", and constant live streaming video from every shower stall.

I'm not sure how the idea that everything should be (or even _can_ be) 100%
safe at all times gained dominance, but it needs to go away.

------
mozumder
The only way to offer the middle-class non-commodity non-factory foods is to
reduce labor costs. It's impossible to do so otherwise.

You can't get the sort of service they're trying to provide for the middle-
class without having a lot of poor people. This is where neoliberalism free-
movement-of-labor is needed, where we can import a class of low-paid labor
because Americans don't want to do that job for a low a price. (Obviously
raising prices means no more business, so that's not happening.)

But first, Americans have to decide if they want to spend all their money on
food or not. And then they have to decide if they want to eat commodity
factory food or not.

And the people that say labor costs should remain high are basically saying
"Poor people should never eat at restaurants" and that "Poor people should
always eat factory food".

~~~
jopsen
A) labor costs in the US is very low (compared to other industrialized
countries)

B) the real question is whether you want servant class of citizens who are
essentially exploited?

Personally, I prefer only going out to eat on special occasions, paying well,
and knowing that the people serving me makes a living.

Note: in some utopian world restaurants would automate the kitchen and reduce
labor requirements, without having said automation impair quality. Maybe one
day :)

~~~
mozumder
> B) the real question is whether you want servant class of citizens who are
> essentially exploited?

It's absolutely necessary. We are being harmed economically because we don't
have enough of an unskilled servant class.

Right now, women can't effectively work a job if they have a baby. You can see
a situation where every household could have one servant, just to allow a
woman to work - never mind all the other segments of the economy that could
use low-skilled servant class. This may total to about 30-40% of the
population.

Meanwhile, only about 10% of the US population doesn't graduate high school.
So, where are we expected to gather the rest of our unskilled labor force?

We need to import this class of labor because America can't provide it, and we
need to provide basic human services for this class of labor as well - health
care, retirement, etc..

Inequality serves a useful function in any economy. When everybody is a high-
skill worker, economies breaks.

If everybody is a PhD computer scientist, who raises babies while they are at
work?

~~~
jezclaremurugan
If everyone is a PhD computer scientist - then the wages of babysitting will
rise to the true value of that service, and a babysitter will earn as much as
a computer scientist. Currently due to abundance of availability of low skill
resources - their wages don't depend on the value of the service and instead
on their willingness to work for whatever amount to get the job, but once the
resource scarcity becomes inverted their wages will be tied to the value.

~~~
mozumder
Great. Since everything costs as much as a high-skilled computer scientist, no
one can afford anything.

We're now back to limiting the economy because we don't have enough low-
skilled workers. People are now forced to work suboptimal jobs for their
skillset, and our economy stagnates because we're now fixing broken windows we
broke.

~~~
junkcollector
Child care at least has an intrinsic value that will create wage equilibrium
because it directly frees up someone else's time for high value labor. It
should track closely to the income of the people you are serving, and it
mostly does even in the US. This is ignoring the educational and social
benefits that good childcare services can create which act as a future labor
multiplier.

