> 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.
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 very much feel for this guys plight and what he's going through. He says the whole story right at the top. The venue is what screwed him. He didn't know all the things he learned about the food after he opened the place, but what he REALLY didn't know was about the operations of a building and the cost of the corner he wanted to end up on. That fucked him from the jump.
I know he's frustrated, as anyone would be, but the deck was stacked from the get go and it's no one's fault but his. Not the landlord or the grease trap. That was writing on the wall about unknown unknowns.
He starts by saying how "hot" the market is, like that's a good thing for his persuit. He starts with talk of it being saturated. The landlord doesn't need to take any risks on that hot corner for your grease trap or electrical.
I've taken a bath on a few things where I over invested in fixed costs. I've had to take a couple years off after a six year startup struggle because of burnout. I will say that when I've come back around, after really fucking kicking myself and licking all wounds, it was a VERY expensive lesson. Emotionally, fiscally, and socially. Usually cheaper than a masters degree though and infinitely more applicable to future runs at the real goal.
You want to get free and run a creative operation? Great. The world does not give a shit. Worse than that, it hates you and wants you to fail. The path to real freedom is paved with bloody miserable failure. Bad leases will eat you, which is not the landlords fault. If you want to make money, buy a Chick-fil-a franchise. They have a great track record and financing. If you wanna make art, be prepared to suffer for it and have no one give a flying fuck about how much it hurt to try.
The desire to blend art and commerce is something that very few people succeed at. Just because you have worked in a kitchen and scored a half million in inheritance doesn't mean anyone needs to care. No matter how much you spent. You could have put the cash in an account and get so good at cooking that someone else will take the ops risk to open your counter or take the risk yourself and learn hard what you don't know. The world sheds no tears either way.
Bunk Sandwiches in Portland didn't start with a $40 chicken. They started with a hole in the wall and a Cuban Sandwich that would make you slap your grandma. Also they could make them fast for $12 and had a line out the door. Eight years later they have several locations and a concert venue. The sandwich isn't as good anymore, but they made a legacy out of thing that could support itself and can continue to grow. I don't know anything about their owners, but I bet they can tell you some shit about surviving upside down leases and kitchen costs.
I seriously wish this guy the best. I'm sure some days that chicken was one of the best things anyone has ever tasted.
> but what he REALLY didn't know was about the operations of a building and the cost of the corner he wanted to end up on. That fucked him from the jump.
However, his family investor 'with nearly a decade in the biz' should have known this stuff from the outset. The same goes for the lopsided income vs outgo. Was that investor just not worth it? Was their advice ignored?
I know people that work in the high end restaurant business in Portland and I've heard them talk about how and why they have had to close things they really cared for.
He's right about the razors edge in the biz he chose to get into. Also, with the judgement he shows about other things in the article, I'm not sure if his family investor is the actual utility he says he is. Propping up 'family' and '10 years' doesn't really say anything about track record. I've got family that have been in things for 10 years and they are still middling or just straight up bad at their jobs. Some of them have even made a lot of money at jobs they are bad at.
This is a high stakes and risk endeavor that not only is OPs dream, but it's a dream he's stapled his name to. To me, it sounds like he took himself on a ride with an inheritance and had poor cherrypicked counsel or he ignored them because he was 'the leader of the band'. Even if they were good, the entire article is about how the environment he chose is the problem, not his own judgement. I think he'll come around to what really happened eventually and I bet he's going to try hard/weird shit again because this is a really crazy idea packed full of hubris. The guy dreams big dreams.
To say his family investor 'with nearly a decade in the biz' was an insulator against failure is like saying that having the best Wingsuit Skydiver in the world showing you how to jump the first time will keep you from turning into a crater.
I think it's good practice to almost never work with family on building commercially melded creative dreams. Their goals, by relation, are inherently stacked against you because what you need in a hostile creative operation is sober and careful partners that challenge you to stretch your abilities. Family cannot, by definition, be that. They care to keep you safe and similar.
If you do engage with family on that level, you really have to be aware that you might permanently damage an important relationship that you might not get back and treat it with that respect. Close family and friends are something you can't recreate by meeting a replacement. You can always start another biz. Any family that might engage in a business/passion idea with a caviler attitude could be taking your familiarity for a ride that you don't want to go on. Intentionally, or more destructively, ignorant as fuck to the consequences.
I think it's good practice to almost never work with family on building commercially melded creative dreams.
> One counterexample would be Stoneyfield Dairy. In a recent Startup podcast the owner talked about repeatedly borrowing money from his mother-in-law against the strong objections of his wife.
Contextually my point is that what family is should be weighted correctly by all parties before taking the risk. Good practice and almost never. Like anything, if you've got a handle on your fit, then you can run with it. But family/friends are more often an albatross than not when trying to do something radical.
I can't think of a more terrifying loan shark than a mother-in-law. I also can't fathom risking my marriage over a loan for an idea. The only reason you bring it up is because it worked. There's not a book on failed mother-in-law loans, but if there was it would be a sad fucking book.
"This is a high stakes and risk endeavor that not only is OPs dream, but it's a dream he's stapled his name to"
It wasn't his dream, bot in reality. If it was, he would have actually researched. Then he would have actually worked in the industry.
Instead he thought throwing money at a problem would make it work. Not in this industry. You can't fake running a restaurant, (at least I have never seen it, I'd love to be proved wrong!), and if you don't have the experience, well, guess what? You're shit out of luck and there is no way you can do it profitably.
To hazard a guess: a supportive angel investor who wasn't deeply involved in the day-to-day and gave a considered thumbs up to the early plans that were a bit more grounded in concept yet totally untethered from the real-world costs?
I mean... a decade working at the airport is not a decade spent building airports. Even a successful floor manager at a restaurant could be miles away from the issues of ownership and entrepreneurship.
Plus, and we all see this in young devs, it can be haaaaard to sprinkle sense into someone in love with an idea.
I honestly doubt that decade was actually working in a restaurant. Every restaurant owner knows how tight the margins are.
Either that or it was a money throw to sate some other family member, (seen that before, a 100k thrown at someone to give them something Todo - a little too common in hospitality unfortunately).
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...
The funny part is, he(the author), wasn't actually facing any problems. He just straight up screwed up on his property rental.
There is no excuse for not looking up the relevant laws, and comparing them towards the property. If he did that, well then he has nothing to complain about, as he went into that ;ntract knowing the facts.
Either way, in my opinion, he just screwed himself from day one.
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".
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.
>>> 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 :-)
Either this guy didn't get his contractor on site before signing a lease, or the contractor is at fault for not mentioning this $20k problem. This is what happens when you skip your due diligence, because any contractor who should be building out restaurants would have known about the grease trap regulations off the top of his or her head.
For anyone else thinking of renovations, it's really worth it to get a contractor onsite before you commit. Any competent one will be able to tell you things like hey, widening those door frames 2 inches to bring you up to code is going to be far more expensive than you think it ought to be. etc etc etc. And just wait until you see how much a bit of asbestos on your ceiling is gonna cost you to remediate...
The mistake you are making there is assuming that those improvements add any value to the landlord or property. They don't. That $20,000 grease trap is an anchor that the next tenant has to have pulled out at great expense. They probably want different lighting so the electrical will have to be redone as well.
In any commercial property I have ever dealt with the tenant is responsible for any renovations because every tenant is looking to outfit the space differently. If the market is heavily in the favor of the renters at the time, I have seen landlords offer discounts on the rent to help cover certain renovations, typically expanded electrical service and the like, but even that has it's limits as landlords typically have costs associated with ownership they need to cover out of the rent.
Malls and (high cash flow) retail spaces will often provide tenants with money for renovations upon lease signing. For a 10 year lease on a proven business, it's not uncommon to have $20,000 - $100,000 build out on the space. This is, of course, priced into the lease.
Yeah, I don't know if the photos were stock or pictures of the real premises. But I wouldn't be very keen on 40-50$ entrees in a restaurant serving things in styrofoam cups.
> They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.
In business, the landlord is renting a space, and the company renting fits it out. You could spend more than several years' rent on a fit-out, why should the landlord goes halvsies in that case?
The difference between "the rent for this space" and "the rent for this space plus a new grease trap" is going to be nowhere near recouping money on the trap. Like a car, expensive upgrades generally mean very little to future worth.
It also works in reverse though - when you leave a premises, you don't have to strip out your custom fit-out and put the space back into how it looked before you left. The landlord can't say "I never liked your choice of lighting, so put it back the way it was", for example.
Sounds like an opportunity to educate them (before the city inspectors show up, at least)
Though, yeah, depending on the area I don't expect adherence (or enforcement) to be much effective, which doesn't seem to be the case for where this restaurant was located though
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.
Landlord splitting a cost with the renter? I about spit my coffee out.
While that’s true with residential housing (where the landlord pays all of the bill) it is not at all like that in commercial real estate.
I’ve worked at a number of startups where we needed an improvement. Electrical, computer wiring, knocking down a wall between two adjoining units that are now one. Not once has the landlord even offered to pay for any of it.
They can do this as they hold all the cards. Employers or shopkeepers need a physical space. There’s a limited amount of it in a desirable area. Ergo they can get away with it.
This isn’t true in residential as there is always more inventory coming online. Plus people will decide to move farther away. You can’t easily do that with a business.
What this does mean is that when opening a restaurant look for a place that previously had a restaurant in it and use their improvements. You’ll probably get a deal from the previous failed one to buy the movable equipment.
Maybe $60 even. But the restaurant has to look and feel like the restaurant which serves $60 chicken.
However margins on high end fine dining are reportedly even worse than most of the sector. If they're selling you $40 chicken it's probably still at a loss, counting on you making it up on wine and pastries.
Leasehold improvements aren't always split; it's better to negotiate those during the lease discussion. In our restaurant, we got ZIP back from the landlord for leasehold improvements.
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.