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Posted: 7/23/2013 8:07:18 PM EDT
[#1]
I think it's mostly the rent takes a HUGE gouge out of profits and they're not expecting that.
Most strip centers list the rent, but you also have maintenance fees and other bullshit fees that are kind of like HOA fees that tack on a few thousand more. |
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Posted: 7/23/2013 8:07:28 PM EDT
[#2]
There's an old saying in the restaurant business: How do you end up with one million dollars from a restaurant? Answer: Start with two million. |
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Posted: 7/23/2013 8:07:55 PM EDT
[#3]
Like many here have said. People don't have a clue to running running a restaurant. If your not prepared to put in a hundered hours a week. You probably won't make it. keeping cost down is another factor. Getting somebody who can cook is essential. Knowing your market , who you want for customer's. The restaurant business is a feckled business. A lot of slow times.
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Posted: 7/23/2013 8:10:35 PM EDT
[#4]
All the above, plus, when you don't sell the food, you throw a lot of expensive food away. Every day. Every week. Every month.
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Posted: 7/23/2013 8:10:40 PM EDT
[#5]
Quote HistoryQuoted: Most people know fuck all about business management. Your grandmas recipes aren't going to get you far if your restaurant is run like shit. Also, not enough initial capital is common I'd imagine. Plus, as stated, some food sucks.  Yeah the well capitalized ones take longer to burn through all the money. The restaurant business is tough. You have a lot of overhead costs, a perishable product, relatively low margins, and staff that's made up of people who often just don't give a shit, and at worse know 101 ways to rip you off. I believe successful independent restaurateurs are the best businessmen alive. They have to be smart and ruthless, managers. They have to be good at inventory management, accounting, logistics, marketing, sales, security, human resources, trainer, and motivator. |
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Posted: 7/23/2013 8:13:22 PM EDT
[#6]
Quote HistoryQuoted: I think it's mostly the rent takes a HUGE gouge out of profits and they're not expecting that. well, if that's unexpected, then the guy shouldn't have gone into business in the first place. rule of thumb is that your fixed costs (rent, permittage, etc.) should be around 10% of your expected monthly revenue. if a guy can't do simple math, or won't bring in someone who can, then he was never serious to begin with.
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Posted: 7/23/2013 8:15:37 PM EDT
[#7]
Just to let you know how things can kick you in the nuts...
We had our walk in cooler go down last year. Threw out $3,000 in product. So not only did we not make any money off of those items, we had to restock them. Could have been worse, at least the freezer was still kicking and we were able to freeze a lot of the more costly items. Hurricane Ike had us throw out $20,0000. |
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Posted: 7/23/2013 8:16:00 PM EDT
[#8]
Sometimes a place that has a small but good menu tries to grow too fast. A bbq joint close to where I live did that. The owner decided to expand the menu and the quality of his original menu suffered. The regular customers stopped coming and the business died.
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Posted: 7/23/2013 8:26:37 PM EDT
[#9]
Quote HistoryQuoted:
SAP and/or Radiant.
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Thieves. Restaurant employees will rob you blind unless you spend 25 hours a day there. wrong. good hiring, good training, and good business practices will take care of this. Plus there is software that allows you to match up the cash you brought in with the inventory that has gone out. This allows you to make sure that everything is accounted for. If there differences in cash and inventory out then you know you have employees that are fucking around and you can figure out who it is.
SAP 
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Posted: 7/23/2013 8:31:48 PM EDT
[#10]
Quote HistoryQuoted: SAP Quote HistoryQuoted: Quoted: Quoted: Quoted: Quoted: Thieves. Restaurant employees will rob you blind unless you spend 25 hours a day there. wrong. good hiring, good training, and good business practices will take care of this. Plus there is software that allows you to match up the cash you brought in with the inventory that has gone out. This allows you to make sure that everything is accounted for. If there differences in cash and inventory out then you know you have employees that are fucking around and you can figure out who it is. SAP Yes, I do need 87 different reports that could realistically be broken down into 5-6 since they are all showing the same metrics anyways. |
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Posted: 7/23/2013 8:32:12 PM EDT
[#11]
An area can only support a certain number of restaurants.
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There was a BusinessInsider.com article about the restaurant business I found really interesting. There were ratios and volumes you had to keep at certain levels or your operating costs would get out of hand. Let me see if I can find it. The LiberalInsider.com
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Posted: 7/23/2013 8:33:56 PM EDT
[#12]
Watch Restaurant Impossible and it will become very clear.
Restaurant Stakeout is another if you like New York Style.... Bot of those shows make it so obvious why so many go out of business. |
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Posted: 7/23/2013 8:35:33 PM EDT
[#13]
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Yes, I do need 87 different reports that could realistically be broken down into 5-6 since they are all showing the same metrics anyways.
We use NCR-Radian Aloha Table Service and it's fantastically easy. But if you have an issue, expect to be raped by their payment office. Had to replace the BOH server and only like 20% of it was hardware, 25% software upgrade, and the rest was the install. 
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Posted: 7/23/2013 8:38:05 PM EDT
[#14]
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Half of all small businesses fail. Far higher with restaurants. Bad opening and bad staffing they are really variations of the same thing. Most investors/owners lack sufficient start-up capital, most restaurants do not turn a profit for months if not the first year. Bad or uninspired or indistinguishable from other brands food. |
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Posted: 7/23/2013 8:45:14 PM EDT
[#15]
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Being a part owner of a restaurant, I can tell you there are a million reasons. The biggest is under capitalization. Then there can be opening in a bad market, not controlling food costs, labor (also two big ones), poor food and service obviously, bad bookkeeping and accounting, poor legal advice, etc. There are a million reasons, but yea most people don't have enough operating capital to get them through the learning phase of determining how to price the food and how much labor is needed. This is the answer. There are a million things and most of them can be overcome if you have enough money to keep trying while you are learning what does and doesn't work. Even large chains fail at certain locations and someone else will open there and succeed. Know what to do and doing it are too different things as well. |
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Posted: 7/23/2013 8:49:09 PM EDT
[#16]
1. There are a shitload of new restaurants opening every damned day. Even if they suck and fail, they're pulling people off your tables.
2. People are fickle. Restaurants are more of an entertainment industry, but many restaurant owners don't treat them as such. 3. There is a big difference between slinging hash and running a business. You can be a fantastic cook/chef and a shitty restauranteur. Similarly, you can be a good business man but have no clue what you're doing running a kitchen or formulating a menu. There's a lot to it. 4. It's a low margin business. You have to keep that in mind constantly. Controlling cost and creating a quality product is a tough balance. 5. Fucking rent can kill you. 6. It's a fucking grind. The hours are lousy. It will wear your ass down. |
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Posted: 7/23/2013 8:52:39 PM EDT
[#17]
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Location, location, location. But according to arfcom if you put a mcdonalds in bum fuck egypt, as long as you know math youre ok 
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Posted: 7/23/2013 9:02:45 PM EDT
[#18]
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But according to arfcom if you put a mcdonalds in bum fuck egypt, as long as you know math youre ok Quote HistoryQuoted:
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Location, location, location. But according to arfcom if you put a mcdonalds in bum fuck egypt, as long as you know math youre ok Have any idea where the original David Beard's Catfish Village is? I know a shitload of really great successful restaurants that are in BFE. Location isn't as important as other factors when discussing some restaurants. All things being equal, location is certainly important, but people will drive to a great restaurant so it isn't the end all be all. 
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Posted: 7/23/2013 9:12:41 PM EDT
[#19]
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Have any idea where the original David Beard's Catfish Village is? I know a shitload of really great successful restaurants that are in BFE. Location isn't as important as other factors when discussing some restaurants. All things being equal, location is certainly important, but people will drive to a great restaurant so it isn't the end all be all.
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Location, location, location. But according to arfcom if you put a mcdonalds in bum fuck egypt, as long as you know math youre ok Have any idea where the original David Beard's Catfish Village is? I know a shitload of really great successful restaurants that are in BFE. Location isn't as important as other factors when discussing some restaurants. All things being equal, location is certainly important, but people will drive to a great restaurant so it isn't the end all be all.
Yup. The Salt Lick is a icon in Texas que and has been featured nationally many times. And it's in the middle of fucking nowhere. 
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Posted: 7/23/2013 9:17:03 PM EDT
[#20]
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Just to let you know how things can kick you in the nuts... We had our walk in cooler go down last year. Threw out $3,000 in product. So not only did we not make any money off of those items, we had to restock them. Could have been worse, at least the freezer was still kicking and we were able to freeze a lot of the more costly items. Hurricane Ike had us throw out $20,0000. OUCH!!!!! |
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Posted: 7/23/2013 9:19:49 PM EDT
[#21]
Quote HistoryQuoted:
OUCH!!!!! Quote HistoryQuoted:
Quoted:
Just to let you know how things can kick you in the nuts... We had our walk in cooler go down last year. Threw out $3,000 in product. So not only did we not make any money off of those items, we had to restock them. Could have been worse, at least the freezer was still kicking and we were able to freeze a lot of the more costly items. Hurricane Ike had us throw out $20,0000. OUCH!!!!! A local favorite restaurant has a 75kw generator on a trailer and a great hurricane plan. 17 days without power during Hurricane Wilma and they never closed. |
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Posted: 7/23/2013 9:52:06 PM EDT
[#22]
Quote HistoryQuoted:
these places are successful because of consistency. you know what you are going to get at these places, so there is very little risk for the guest. and they are usually run exceptionally well. for example, the nightly cleaning checklist at the olive garden or houlihan's is far more severe than most cities' health inspections. they have well-structured training programs, and are not shy about firing unsatisfactory employees because they need to protect themselves against lawsuits. the result is an unspectacular but consistently adequate dining experience, targeted at a demographic who wants exactly that. Quote HistoryQuoted:
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It's interesting to me that places like Olive Garden, Applebee's, Chili's etc mostly seem to be busy all the time. Now I'm not saying their food is bad, because it's not and I eat at places like that a few times a month, but the food never really "wows" me. these places are successful because of consistency. you know what you are going to get at these places, so there is very little risk for the guest. and they are usually run exceptionally well. for example, the nightly cleaning checklist at the olive garden or houlihan's is far more severe than most cities' health inspections. they have well-structured training programs, and are not shy about firing unsatisfactory employees because they need to protect themselves against lawsuits. the result is an unspectacular but consistently adequate dining experience, targeted at a demographic who wants exactly that. Don't forget the bar. It's hard not to make money with a decent bar and honest bartenders. |
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Posted: 7/23/2013 10:11:07 PM EDT
[#23]
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But according to arfcom if you put a mcdonalds in bum fuck egypt, as long as you know math youre ok Quote HistoryQuoted:
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Location, location, location. But according to arfcom if you put a mcdonalds in bum fuck egypt, as long as you know math youre ok You must've missed the part about the Islamists burning them down after the fall of Mubarak. |
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Posted: 7/23/2013 10:17:14 PM EDT
[#24]
My family and I just got out of the restaurant business in December. 12 years is long enough. The stress in my life has been reduced significantly.
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Posted: 7/23/2013 10:24:04 PM EDT
[#25]
Bad management. If an owner owns one business, he/she needs to be there 90% of the time until you're in the black.
Then the owner needs one or two managers, who can be trusted for when the owner is gone. |
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Posted: 7/23/2013 10:45:29 PM EDT
[#26]
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Most people know fuck all about business management. Your grandmas recipes aren't going to get you far if your restaurant is run like shit. Also, not enough initial capital is common I'd imagine. Plus, as stated, some food sucks.
This. LOTS of profitable business fail due to tied up capital and lack of cash. Lots of people have dreams of opening a restaurant because they like to cook and make good food. At the end of the day, it has to operate efficiently and be well managed like any other good business. |
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Posted: 7/23/2013 10:45:43 PM EDT
[#27]
I have always heard that tons of new restaurants fail every year, but I never realized the scale of it until I went to NYC last year.
While shopping on Canal street for general tourist crap and fake watches, I strayed two streets over to Bowery Street (I think it was Bowery). There I saw dozens of used restaurant and kitchen equipment stores, chock to the gills with everything from huge stoves and ovens down to forks and knives. These guys will sell you everything you need to start your restaurant (on credit of course), then when it fails they come in and offer you cut rate price to buy all the stuff back just to sell it again. Its like some weird circle of life. |
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Posted: 7/23/2013 10:46:59 PM EDT
[#28]
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I think it's because people who start restraunts are people that love food, or are good cooks. The people who should be starting restaurants are people who love math, and are good at accounting. I think this is a good portion of it, many years ago a business man told me "if you want a business, don't do something you really love" His reasoning was if the business is your passion you will be worried about the work and not the business. He gave me an example "if your a mechanic / love working on cars you will spend your time working on cars, when as the owner you should be focused on the books, deal with vendors, make sure your workers are keeping the customers happy" Also, lack of sufficient funds, I believe most businesses operate in the red for at least a year, you need to have a stash of money to keep it running until it becomes profitable As far as restaurants specifically, I never managed one, but I worked in many kitches as a youngster. What I learned is- there is alot of work involved in food production, and many people may not grasp how much is actually involved |
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Posted: 7/23/2013 10:48:12 PM EDT
[#29]
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Posted: 7/23/2013 11:27:20 PM EDT
[#30]
Lots of people open a restaurant because they are people type people and think it's going to be great talking to people and bs'ing all day and know jack shit about business.
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Posted: 7/23/2013 11:32:24 PM EDT
[#31]
Quote HistoryQuoted: But according to arfcom if you put a mcdonalds in bum fuck egypt, as long as you know math youre ok Quote HistoryQuoted: Quoted: Location, location, location. But according to arfcom if you put a mcdonalds in bum fuck egypt, as long as you know math youre ok There's a steakhouse here that has been in business at least 40 years and continues to be very popular and is probably 25+ miles from the next nearest stop sign. Another is a seafood restaurant at a pass that the next exit in either direction on the interstate is 20 miles in either direction. It's pretty famous around here and they rebuild after every hurricane and have been in business at least 60+ years. |
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Posted: 7/24/2013 4:25:00 AM EDT
[#32]
Because they are started by folks who's only marketable skill is being a cook in a resteraunt.
They do not know how to run a business. |
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Posted: 7/24/2013 5:26:55 AM EDT
[#33]
The ones that have failed here have usually done one of two things. Either they:
- Start off great, then cut corners on the ingredients and think people won't notice (they do!) or - They don't pay attention to the quality of service. One of the busiest, most successful filled-to-waiting-at-lunch places near here is a family run Mexican place. Not only do you get your food fast in a clean and pleasant courtyard-like setting with fountains indoors, but they have an expediter who scans the tables for any signal from a patron they need something, and sends a server over. I have never had an empty tea glass for more than five seconds in the place before someone appears to fill it. That's how it's done. |
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Posted: 7/24/2013 5:31:01 AM EDT
[#34]
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Because everyone thinks they cook like a Iron Chef and their food is heaven on earth. Also most don't know crap about the logistics, their only experience of getting supplied is buying groceries from the supermarket. This. People don't understand the required volume to stay out of the red. They think, this tastes so good I can sell this, and make a bunch of other simple recipes to sell. Meanwhile they are turning over employees at record pace and the employees are stealing as well. It's a shit-end field and unless you're in the.01% of famous cooks, forget about it. |
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Posted: 7/24/2013 5:51:18 AM EDT
[#35]
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Most people know fuck all about business management. Your grandmas recipes aren't going to get you far if your restaurant is run like shit. Also, not enough initial capital is common I'd imagine. Plus, as stated, some food sucks.
My parents were into the restaurant business. It takes more than just good food. Mom and dad didn't have a lot of business acumen, were unwilling to change with food fads, and were suckers for every sob story that came along. I don't know what's so appealing about the restaurant business that makes people want to go into it. It's a lot of work and risk. Posted Via AR15.Com Mobile |
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Posted: 7/24/2013 5:55:31 AM EDT
[#36]
Cooking is a common knowledge skill. After all everyone has to eat. This means there is a perceived low barrier to entry. Lots of people know how to make tasty food compared to say custom machine part manufacturing.
I have ideas for inventions or products that are no longer made, all the time. I don't really have the first clue as how to get in touch with a factory to make a prototype. But I know how to make many tasty dishes. Hey, I should open a restaurant! |
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Posted: 7/24/2013 5:56:10 AM EDT
[#37]
Read this:
 It lays out a lot of reasons new restaurants fail. It's also just a good read. |
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Posted: 7/24/2013 5:58:32 AM EDT
[#38]
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Read this: http://prochef360blog.com/wp-content/uploads/2011/05/kitchen-confidential.jpg It lays out a lot of reasons new restaurants fail. It's also just a good read. It was also pretty much summed up in Pixar's "Ratatouille" with the whole pirate crew in the kitchen sort of thing. 
I've seen Bourdain in person, he does live appearances. He's freaking hilarious. |
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Posted: 7/24/2013 5:59:15 AM EDT
[#39]
Because cooks generally make shitty businessmen.
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Posted: 7/24/2013 6:12:14 AM EDT
[#40]
Have you ever noticed those buildings that constantly have businesses open for six months before folding?
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Posted: 7/24/2013 7:20:07 AM EDT
[#41]
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Don't forget the bar. It's hard not to make money with a decent bar and honest bartenders. Haha you funny guy! But seriously, finding or developing them takes work. |
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Posted: 7/24/2013 7:22:36 AM EDT
[#42]
The restaurant industry is saturated too.
Within 10 miles of my house there are probably 100 different restaurants to eat at.
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Posted: 7/24/2013 7:31:30 AM EDT
[#43]
Quote HistoryQuoted:
I think it's because people who start restraunts are people that love food, or are good cooks. The people who should be starting restaurants are people who love math, and are good at accounting. Yep. If a great cook/chef wants to open a restaurant, they are almost always better off hiring a business manager to run the numbers side. |
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Posted: 7/24/2013 7:40:55 AM EDT
[#44]
because people are usually dumb as rocks - they will open up yet another pizza parlor in AZ when in the right location a sushi bar will make you rich
also great huge burritto for 10 bucks I'd rather pay you 5 for half of it - especially since the other half is going to get tossed |
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Posted: 7/24/2013 7:42:52 AM EDT
[#45]
I can tell you from my experience is that many restaurants fail because they use poor quality food. In other words they buy the cheapest food ingredients and try to pass it off as higher quality food with a higher price simply by adding a higher end atmosphere. You cannot fool people on food quality. Many restaurants buy all their food from a company that specialize in providing restaurants with all of the food ingredients they require. They provide chicken salad, tuna salad, frozen burgers, frozen fish, frozen steaks, salad dressing and everything else. The food quality is low and if a restaurant serves this crap and tries to overcharge for it, then they will not make it.
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Posted: 7/24/2013 7:45:12 AM EDT
[#46]
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The answer is simple; Very few people are adept at running a business. It's essentially the Dunning-Kruger effect played out in real time with real consequences. When you don't work for yourself, your delusions remain someone else's problem. |
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Posted: 7/24/2013 7:50:44 AM EDT
[#47]
Quote HistoryQuoted:
SAP and/or Radiant.
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Thieves. Restaurant employees will rob you blind unless you spend 25 hours a day there. wrong. good hiring, good training, and good business practices will take care of this. Plus there is software that allows you to match up the cash you brought in with the inventory that has gone out. This allows you to make sure that everything is accounted for. If there differences in cash and inventory out then you know you have employees that are fucking around and you can figure out who it is.
EE buddy of mine in college was one of the first employees for Radiant (assuming you're talking about the software). He semi-retired in his early 40s. |
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Posted: 7/24/2013 7:56:21 AM EDT
[#48]
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I can tell you from my experience is that many restaurants fail because they use poor quality food. In other words they buy the cheapest food ingredients and try to pass it off as higher quality food with a higher price simply by adding a higher end atmosphere. You cannot fool people on food quality. Many restaurants buy all their food from a company that specialize in providing restaurants with all of the food ingredients they require. They provide chicken salad, tuna salad, frozen burgers, frozen fish, frozen steaks, salad dressing and everything else. The food quality is low and if a restaurant serves this crap and tries to overcharge for it, then they will not make it. Restaurants like Red Lobster, Olive Garden, etc. prove you wrong. |
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Posted: 7/24/2013 7:59:00 AM EDT
[#49]
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Many restaurants buy all their food from a company that specialize in providing restaurants with all of the food ingredients they require. They provide chicken salad, tuna salad, frozen burgers, frozen fish, frozen steaks, salad dressing and everything else. The food quality is low and if a restaurant serves this crap and tries to overcharge for it, then they will not make it. I assume this is a Sysco reference? For some reason, GD has this impression that Sysco is just some big faceless company that makes cheap frozen dinners for restaurants to microwave and serve to people. It seems to pop up in every restaurant thread. Restaurants that serve low quality food do it because they choose to, regardless of the supplier. Sysco is just a commercial food supplier, and they have high quality fresh food, and lower quality frozen food. It's just like a big grocery store. You can choose what to order and they deliver it. Just because a restaurant uses a commercial food supplier like Sysco does not automatically mean the food quality will be low, or that everything is frozen. |
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Posted: 7/24/2013 7:59:17 AM EDT
[#50]
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Restaurants like Red Lobster, Olive Garden, etc. prove you wrong. Quote HistoryQuoted:
Quoted:
I can tell you from my experience is that many restaurants fail because they use poor quality food. In other words they buy the cheapest food ingredients and try to pass it off as higher quality food with a higher price simply by adding a higher end atmosphere. You cannot fool people on food quality. Many restaurants buy all their food from a company that specialize in providing restaurants with all of the food ingredients they require. They provide chicken salad, tuna salad, frozen burgers, frozen fish, frozen steaks, salad dressing and everything else. The food quality is low and if a restaurant serves this crap and tries to overcharge for it, then they will not make it. Restaurants like Red Lobster, Olive Garden, etc. prove you wrong. People who generally eat at Olive Garden don't care that the food is produced in a factory in the midwest, shipped frozen, and reconstituted with tons of salt. It's what they eat. They never claimed to have "gourmet" food, just all you can eat salad and breadsticks for one and "deals" on MSG-soaked seafood for the other. (Red Lobster uses a LOT of MSG.) People who appreciate a flavor other than salt do notice the difference, and they're not the clientele for those as-much-as-you-care-to-shovel chains. |
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