Dear Restaurateur

Welcome to Dear Restaurateur! We have created this website to empower all restaurateurs, chefs, managers, FOH & BOH Team members, Foodies, Influencers, Journalists, and anyone who is involved in restaurant business! What makes someone a good Restaurateur? This is a very tough question that everyone asks and this is the million dollars question! It is hard to sum it up in one sentence but a good restaurateur we define it as “Person who is able to provide an amazing foods and excellent services to guests while taking care of his/her own team”. Sounds simple right? Yet so many people and restaurants struggle! Here we try our best to provide you with an information and resource as much as possible so that you can thrive whether you want to run a successful restaurant, or just simply working in hospitality and food business!

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Love Triangle Drama
Chad is a server, early 30’s who studied computer science and because of his personal situation, he was unable to work in a office so he ended up working in a restaurant. He is a quite handsome man, muscular, not much of a banter but he would be very nice to customers and always have been popular with ladies. On a regular basis, female customers would either ask for his number, Instagram, or leave their contact info on a receipt. He wasn’t pretentious or anything, but he was quite horny, and he was single, so he was quite active on dating. Susan is a server who went to graduate school majoring in art, volunteered abroad to help poor people, and somehow ended up working in a restaurant as a server to meet her ends. She was not the prettiest one, but she was very, I mean very popular among older men. I still cannot exactly tell what it was, perhaps it was the way she was smiling at them, but she was definitely popular among men who were 40+ years old. Some older guys would sometime offer her to come out with them for dinner or come back to see her. For some reason she had depression and had a very defensive characteristic. Andrea is a server who studied marketing and because her allowance was cut off from her parents, she had to work as a waitress to pay for her nice bags and clothes. She was very perky, fun, lovely but she was really like a little troublemaker. She was a bit clumsy as well, either she would forget something or make a mistake daily. Funny thing is she would look like a completely different person on her Instagram. She claims that she gained a little bit of weight, and she did not put on her make up, but you would not be able to recognize her. So, what was the deal with these 3 people? While they were working together in the restaurant, they developed complicated relation – Love Triangle! Susan was in love with Chad, she tried not to show it but she was fairly easy to notice. Especially after work when several people got together to eat and drink, the moment she gets tipsy she would be very obvious. On the other hand, Chad was interested in Andrea. He was originally very much interested in Andrea’s sister after seeing her Instagram but eventually the two of them ended up getting closer to each other. Did they actually hook up? Unfortunately, it was never explicitly revealed so we will have to leave that to your imagination. Problem started happening when they would get together including other people to eat and drink. Susan was not happy how Chad was getting close to Andrea. There were several incident where Andrea, even after she quit she would come to restaurant and wait for Chad to hangout after work. One day both Susan and Chad came to work hung over (Although it happened frequently!) and they were arguing with each other over very small things. At one point they started to argue, Chad claimed that Susan was doing something wrong, and Susan was arguing that Chad is not the manager so he should mind his own business. This started making other co-workers and the environment toxic. It seemed, and also rumor was going around that Chad hooked up with Susan briefly after getting drunk and their initial hook up did not progress further unfortunately. Eventually Andrea hooked up with someone else, but Chad and Susan relationship did not get repaired and just made everyone else’s life miserable. Lesson from this drama As a person managing a restaurant, you must remember that you cannot intervene in an employee’s personal life and that includes love relationships. You can set company rules explaining that dating in the same workplace is not allowed and one of them either leaves or be transferred to a different location if there is another location. But this is very tricky since it’s not easy to prove unless very explicit. You can say there is a conflict of interest but that applies to a lot of different people as well, including friends at the workplace. You may pull them on the side individually and let them know that drinking, coming to work hung-over, and underperforming during their shift will affect negatively on their performance, possibly a write-up for serious underperformance, but in the end, they have their freedom to date who they like. Hence you must remember that you can discipline them for work-related issues but without very solid evidence, you would be wise not to bring it up at all as they can make it false-accusation and HR issues.
Opening your Restaurant – Part 2 – Creating a Projection – Budget
Before we move on to creating a projection, let’s start with creating a budget. First question you should be asking yourself is “Do you have a enough budget?” and this matters. Many people do not fully understand how much it would cost to open up a restaurant or maintain it. So many unknown issues can come up, for example, construction could be delayed, equipment problems, gas and electricity connection problems, permits can be time consuming, violations with different departments, and more. One of the biggest hurdles you will face is having a opening team. It is very difficult to keep opening team members, especially if for some reason your opening is delayed. Not many people will stay without getting compensated while you are preparing to open the restaurant. If you already have a business then you may be able to get some team members to come in and help you during opening but without it, you are starting a new team and most of the time, more than 25% leave before opening, and less than 50% stays after opening. Also, you must think about the rent, utilities, and other expenses while you are preparing to open. Without officially opening your business, you are incurring a loss every day. That being said, let us review some of the items that should be included in your budget: The Opening Budget would be the amount that you would need to open the store, from the moment you decide to start your restaurant business to the grand opening of your restaurant. This budget will consistently change every time you seek different locations, design, or any parts of your restaurant including menu. You need to have a template that will help you quickly assess the total amount of budget needed just to open your restaurant. The One Year Budget would be the amount that would be needed to keep the business open for at least one year. Some restaurateurs run short on budget and before their restaurant is well known to the public or starts to generate a profit, they end up closing down the business which is very unfortunate. Therefore, it is very important that you have a budget to survive for at least one year. To be clear, that does not mean you build a budget to pay for entire expense for whole year. You will have to create a realistic budget with P&L projection so you can safely estimate how much money will be needed to keep your restaurant open. During this stage, it is important that you consider many different scenarios and even consider the worst case of scenario so that you are prepared. All business starts with a dream, and it is good to work towards success, but you must remember all business comes with a risk although success will reward you handsomely.
Opening your Restaurant – Part 2 – Creating a Projection
Part 2 – Creating a projection If you have a promising product/restaurant concept, let’s create a projection! P&L Projection & Profitability Ok, so let’s say now you have the right product for the right market, is your product going to be profitable? This is probably one of the biggest questions you must ask yourself. There are many “great” products that will make people happy. But would it be profitable enough for you to make you successful? What if it causes a loss? Are you financially stable enough to bear the losses in the beginning? If so, for how long? The truth is that many newly opening restaurants do not do so well. According to The National Restaurant Association, they estimate a 20% success rate for all restaurants. About 60% of restaurants fail in their first year of operation, and 80% fail within 5 years of opening. There are numerous reasons why this is happening. One of main reasons why they fail within 1st year of operation is because they do not have right budget and P&L projection. This is very important because while you are creating a P&L projection, you come up with many different scenarios and actually see whether you will make money or not. Many people who start restaurant businesses only think about how great their food tastes but do not think carefully about all the expenses they have to pay, all the expenses before they open, daily expenses, and even closing expenses if things go wrong! After managing the hospitality industry for numerous years, I have come to understand that many inspiring restaurateurs end up closing their dream restaurants because they did not have realistic understanding of budget and P&L projection. The reality is, unless you managed the restaurant business for a long time, you would not be so familiar with it. Hence, it is critical that you have the right budget, P&L projection, and the right person to help you with it. Even with careful planning, there will always be something you did not take into consideration, therefore you must remember to have extra buffer while you are planning for it. Here, my goal is to advise everyone to carefully plan their budget and P&L projection. Let me remind you, every location and every restaurant budget will vary but with experience and careful planning you can get close to it to minimize the difference to help you succeed. Unless you are a non-profit organization, you must produce profit in order to sustain your restaurant business or grow your business as a successful restaurateur. Below is one of the P&L projections I created a long time ago for one of the new restaurants opening project. Again, it is important that you refer to the information below only to use it as a reference and guide you, but numbers will change completely based on your situation. Hope this information helps you! Weekly Monthly Sales $ 25,543.50 $ 110,688.50 Food cost $ 7,663.05 30.0% $ 33,206.55 30.0% Gross Margin $ 17,880.45 70.0% $ 77,481.95 70.0% Salary $ 1,346.00 5.3% 0.0% Labor $ 6,544.00 25.6% $ 28,357.33 25.6% Total Payroll $ 7,890.00 30.9% $ 34,190.00 30.9% After Labor Margin $ 9,990.45 39.1% $ 43,291.95 39.1% Expenses Admin $ 200.00 0.8% $ 866.67 0.8% Licenses & Other taxes $ 83.33 0.3% $ 361.11 0.3% Credit Card Fees $ 766.31 3.0% $ 3,320.66 3.0% Supplies Supplies $ 500.00 2.0% $ 2,166.67 2.0% Janitor/Laundry Laundry $ 95.00 0.4% $ 411.67 0.4% Sanitation $ 500.00 2.0% $ 2,166.67 2.0% Hood Cleaning $ 92.31 0.4% $ 400.00 0.4% Utilities Utilities $ 766.31 3.0% $ 3,320.66 3.0% Management fees Professional Fees $ 750.00 2.9% $ 3,250.00 2.9% Repairs & Maintenance $ 255.44 1.0% $ 1,106.89 1.0% Rent $ 3,500.00 13.7% $ 15,166.67 13.7% Advertising/Promo $ – Insurance $ 275.00 1.1% $ 1,191.67 1.1% Worker’s Comp $ 242.31 0.9% $ 1,050.00 0.9% Property Taxes $ 383.15 1.5% $ 1,660.33 1.5% Payroll Taxes $ 236.70 0.9% $ 1,025.70 0.9% Principal payment $ – $ – Total Exp $ 8,645.85 33.8% $ 37,465.33 33.8% Net Income $ 1,344.60 5.3% $ 5,826.62 5.3%
Opening your Restaurant – Part 1
Opening your Restaurant – Are you ready to open your own Restaurant? Part 1 – Evaluating your product, market, profitability Let’s start by evaluating your product first Do you have a product that is ready to sell to customers? As I have discussed in previous blog post Product, as a restaurant you will be selling 3 things as a Product to customers – Food, Service, and Ambiance. Most of the time, Food will play the biggest part although it will vary. So let’s evaluate it! Evaluating your product Is your product so good that people will buy it? How confident are you? Have you tested it? If so to who? Average or subpar items won’t do, even with an excellent product, poor execution can lead to failure so let’s make sure we start off with higher probability by making sure we have a great product that people will be interested in! To get an opinion, you should have your family, friends, fiancé, and possibly co-workers. But make sure they give you an honest opinion! Just because they want to encourage you, they should not be saying “it’s great” just to be nice, if they do not think it’s good, they should honestly say so and you should take their advice humbly to re-evaluate your product. For example, there are lots of hamburger places opening, and anyone can make a “hamburger” but is it a great one? Is it good enough so that a minimum of 75% of people who try your burger will say it’s great? You cannot possibly think that you will be able to satisfy every single person, simply because of their preference. Some people like a juicy and fat patty burger whereas some people like it smashed and crispy patty burger. Therefore, don’t get discouraged if your trusted person says it’s not good because they tend to like “different version” of your product. If you can make them like it, then that is amazing. If not, let another trusted person try it who tends to like the type of product that you are trying to sell. Market Once you confirm that you have a great product, you must do market research. For the sake of an example, we will stick with a burger example. So let’s say you created a great burger that any burger loving person will like your burger. Well, what if the neighborhood you open your store is full of vegans and vegetarians? What is suddenly there is a wave of healthy food trend that crushes demand for burgers? These would be extreme situation but it can happen. A more realistic example would be your burger store opening in a student focused neighborhood, but your burger is a premium product that is usually beyond their budget. Or your physical store is located in the middle of the block where people usually do not pass by (it does happen!) There are many things that can cause problems, so let’s do some market research and make sure your product belongs to the right market to increase the probability of your success!
Fundamentals – People – Manager
People Let’s start with people Lot of people forget that in the end it is people running the restaurant. No matter how good your food or system maybe, if your team does not have right mindset and perform, it will not work. As a restaurateur, you must keep in mind that your team must be on a same boat heading towards same direction. Let’s discuss one by one starting from most important position. Manager – This can be in a several different titles such as Owner, Manager, or a Chef. Sometimes owner like to manage the restaurant themselves, in that case they are effectively Manager of the restaurant even if he/she hires a manager(s) or chef(s). Sometimes Chef owners actively manage the restaurant and makes a final call on important decisions. Most of the times, it would be Managers actively managing the restaurant with different titles such as Director, General Manager, Assistant manager, etc. It is important to emphasize that this Manager position is most critical. This applies to any business, depending on who is the manager managing your business, they can make your business very successful or simply break it and cause a bankruptcy. So what is a Bad, Good, Excellent manager? Bad Manager – This person would prioritize his/her own benefit even if it causes damage to the restaurant or his team. Furthermore he/she would have poor discipline, not punctual, show laziness, and lacks leadership. Good Manager – This person would show good amount of discipline, responsible, punctual, and show leadership to his team. He/she would be focused on performance of the restaurant, focuses on training his team, and be responsible for his action. Excellent Manager – This person is like a partner, he/she will show strong leadership, leading by an example to his team, and most importantly show genuine care for the restaurant. He will demonstrate willingness to be hands-on, one of the first or last person to be in the restaurant, care about restaurant sales and profitability, service, reputation, and his team. Many managers or team members tend to have an attitude such as “it’s not my job” which is not desirable. Having a team that truly cares about your restaurant will make your restaurant successful and it all starts with your manager because he will hire your restaurant team members and guide all of them.