21 ms·
What happened when I opened a restaurant in Portland
- llukas 9y agoEntrepreneurship in a country without a safety net...
- latch 9y agoI 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.
- BigJono 9y agoHow is that opposite? The ideas aren't mutually exclusive
- RickS 9y ago"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 9y agoIn 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-can-be-a-hair-braider.html http://www.nytimes.com/2012/06/17/magazine/so-you-think-you-... (2) https://www.huffingtonpost.com/women-co/lemonade-stand_b_1753057.html https://www.huffingtonpost.com/women-co/lemonade-stand_b_175...
- DanBC 9y agoThere 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-may-call-me-monster-im-glad-girls-lemonade-stall-got-shut-down https://www.newstatesman.com/politics/staggers/2017/07/you-m...
- latch 9y agoNot everything that poses a danger needs to be regulated. You need to look at the benefit in relation to the cost. Not just the economical cost, but also the social one. “I know no safe depository of the ultimate powers of the society but the people themselves ; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true corrective of abuses of constitutional power.” Regulations (or the lack thereof) becomes a tool to serve the few (1) (1) https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture
- Turing_Machine 9y agoThere 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.
- NiklasMort 9y agoThe 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 9y agoThe 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.
- c3534l 9y agoPortland has an amazing number of unique, non-chain restaurants.
- marak830 9y agoI'd like to blame the system too, but that's just bot reality. Restaurants are hard, not only are you competiting with every other restaurant, you are also competiting with your last service. There is no way to upload a patch to fix your last service, there certainly isnt a way to delete the stress from your staff. It's one of the most cutthroat businesses in the world, and there isn't anything that will ever change that.
- gregmac 9y ago> 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 9y ago> 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 9y agoIndeed 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).
- gt_ 9y agoportland is a really small place, i live there, and never heard of this restaurant
- mixologic 9y agoThe article is from 2016, and when it came out I remember a ton of industry folks griefing the owner for basically failing to understand the market and understand what people were willing to pay for. Weird to see this on HN...
- tomcam 9y agoWould like more details on what industry folks said about them.
- mixologic 9y agoI realize now that most of what I was remembering was in the comments of the article. I had some other fb friends who run restaurants echo similar notions. But it all boiled down to "But then, of course, there are the people who complain that your $29 chicken dish is "amazing… but it's too expensive for chicken." "people complaining" means the owner didn't understand the market. At all. If you don't have enough people willing to pay 40$ for a dish that is only profitable at that price point, then you really shouldn't keep trying to sell a dish like that.
- gyardley 9y agoI'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.
- orbifold 9y ago
- Nate75Sanders 9y ago“”” 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.
- deleted 9y ago[deleted]
- rdtsc 9y ago> 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.
- audiometry 9y agoYeah, 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.
- dsshanley 9y agoThose are the real photos. That's of the breakfast bar side, not the dining room.
- tryingagainbro 9y agoThat 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: I don't care if you do it or not.
- mozumder 9y agoThe 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 9y agoA) 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 9y ago> 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?
- lazyjones 9y agoIf 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 9y agoI 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.
- ravitation 9y agoSeems 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...
- AndrewKemendo 9y agoNo 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.
- audiometry 9y agoI 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 9y agoA 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.
- dsshanley 9y agoI 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 9y ago>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 ?
- wheresmyusern 9y agothis 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.
- michaelbuckbee 9y agoMy 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.
- gyardley 9y agoWhile good advice in general, I'm not sure this applies in the Portland restaurant market. Renard was pretty boring - good French food, but the same food you've eaten at a dozen other French restaurants - and that, for me, was its problem. So many more interesting places to go! The cautious thing to do in the Portland restaurant market, as far as I can tell, is to do periodic pop-ups or a food cart and try to build up your repeat clientele to the point where you can justify a brick and mortar location of your own.
- evan_ 9y agoI think "boring" in the food service industry is something like, buy a Domino's franchise and hire a manager– and then never go near the place.
- gm-conspiracy 9y agoMaybe a Subway franchise, but having employees that require self-provided functional vehicles, of which the business owner is liable in the event of an accident during working hours, seems "stressful".
- marak830 9y ago
- cyberferret 9y ago> "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 9y agoIf 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 9y ago> 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.
- deleted 9y ago[deleted]
- tclancy 9y agoWell, it is and it isn't, because (at least to me) it's a lot easier to fail with a virtual product and no physical space or employees outside the founders. It feels a lot easier to fail multiple times in that way and keep trying when it's just you taking the loss. Having to let people go, watch stuff get sold at auction and wind up paying on a huge note or going through bankruptcy is a lot more painful[0]. I've been a dev for almost two decades as an employee and as a solo contractor and somewhere in the middle my wife and I with 3 friends started an event space. Even though it was a success, we suffered through a lot of the same issues. We found a fantastic, disused space in a mill building; the landlord was incredibly sketchy and his physical plant people were hard to deal with. Because we did weddings and similar events (birthdays, anniversaries) almost exclusively we wound up dealing with lots of outside vendors who varied wildly in quality. And we couldn't simply "Oh well" when an event planner was an idiot or a caterer screw up: the guests don't know anything about how the place works. Anyone who screws up is on us. There were a few things that made us a success: 1. We were good business planners and cheap. I had experience from helping my dad run his business, we got a mentor from the local business school and we had lots of connections in the area so we could work around the shitty level of quality we got from the internal craftsmen. 2. I am good at being tough. I don't like doing it and my non-spousal cofounders mistook my talent at it for liking it which led to conflict, but it saved us a lot of what the author seems to have run into in this article. I had a standard speech for vendors who were mistake repeaters that started, "I am fully capable of stepping on my own dick, I don't like it when people do it for me". 3. General business sense: we put together a fully-functional restaurant kitchen for the caterers. Not one item was new. We got lucky by running into a few pieces but most of the stuff was bought second-hand at an auction. I learned a lot of things at that auction (and if you are anywhere near Peabody, MA you should go as it is open-air theater[1]) but the main takeaway was, "A whole lot of restaurants and coffee shops fail". There had to be 20 espresso machines that month alone. [0] Not that you can't wind up in hock starting a virtual company, just guessing the average exposure is a lot less. [1] https://www.a1restaurantmarketequipment.com/ https://www.a1restaurantmarketequipment.com/
- NaOH 9y agoAs 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 9y agoThe 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.
- hartator 9y agoMaybe 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 9y ago> 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 9y agoThis 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/Hourly_Rate https://www.payscale.com/research/AU/Industry=Restaurant/Hou...
- jopsen 9y agoPrices are higher, and people eat out less often... At least that's the case in northern Europe, wages are much higher, but services that relies on humans a super expensive.
- shoo 9y agoThis is a good question. I haven't worked in the industry. I have no idea. With higher prices for restaurant/café meals? With less competition? With lower costs for other inputs? With greater demand for labour across the economy? By illegally paying employees below award / not paying superannuation payments?
- jpatokal 9y agoAll of the above (except lower costs, not a thing for anything in Australia). In particular, in essentially all (non-chain-fast-food) restaurants where you can get a meal for less than $10, nobody is making award rates. If you're lucky the staff is family, if not they're exploiting students or illegal immigrants.
- rangibaby 9y agoUnless you are careful it is quite easy to spend $20-30 on breakfast and a coffee in ANZ
- viraptor 9y agoI 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 9y agoThis. 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.
- 9y ago
- d--b 9y ago> 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...
- jasonkester 9y agoIt'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!
- iaskwhy 9y agoAnd we even get to tell others they are doing it wrong!
- einrealist 9y agoBut, unless you found a niche or have a really strong brand, ten other competitors can pop up at any time, using the same cloud infrastructure you do and undercut your prices. The worst case is that GoogleMicrosoftOracleAdobe will just put a small team together and outcompete you in no-time. It's almost unfair, how Software wins...
- jasonkester 9y agoThis seemed like a plausible fear when I first started 10 years ago. People have indeed cloned both of my rent-paying products over the years (possibly helped by the fact that I've released step-by-step instructions for building one of them). But then, as you say, software is easy to write. Businesses are less easy to duplicate. Is the kid who saw your Show HN and cloned your thing "in a weekend" going to stick out the years of work it will take to build a business off of it? Is Google really going to decide to focus on executing in the "Hook Twilio into a Calendar Scheduler and have it automatically robocall people so they remember to be home when the plumber arrives" space so that they can smoosh your little $10k MRR business? I hear your fear expressed a lot from people cautioning against building software businesses. But I'm skeptical that we should really be scared of it.
- deleted 9y ago[deleted]
- scandox 9y agoI 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.
- subroutine 9y ago"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
- distances 9y agoThat looks like a sleepy suburb to me, not a hot corner in a buzzing city. Or maybe I'm used to Central European city densities?
- Doctor_Fegg 9y agoFascinating looking at those Yelp reviews. Pretty uniformly positive: "Holy smokes- I can't believe this place wasn't bursting at the seams with a line out the door." But then look at https://twitter.com/renardpdx https://twitter.com/renardpdx. Just 62 followers, which even allowing for the passage of time (restaurant closed 2 years ago) is crazily low. In a crowded market you need buzz; you need to get those people through the door. I wonder if it wasn't the food, or the rent, but the marketing that did for Renard.
- jaclaz 9y ago>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 9y agoAmazing 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
- aaronaarzelbart 9y agoThis 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.
- jpatokal 9y agoIf 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
- nomass 9y agoSomehow 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 9y agoThat'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 9y agoSometimes 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.
- cletus 9y agoI'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
- ChuckMcM 9y agoSpending 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 9y agoIf 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 9y agoYup. Any spreadsheet can be manipulated so that somehow, your net is always enough to be successful. GIGO...
- crispyambulance 9y agoPhilly 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 9y agoI'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.
- notyourday 9y agoThe 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.
- greedo 9y agoThe 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 9y agoPeople 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 9y agoIt 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 9y agoThe 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 9y agoI'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 9y agoOwn a franchise, not be a franchisee. Sorry I wasn't more clear, you're correct.
- 9y ago
- nradov 9y agoOpening 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.
- jacquesm 9y agoIt'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.
- kelukelugames 9y agoStarting a restaurant is a bad business idea. Most fail. The exceptions are pizza joints and franchises.
- charred_toast 9y agoIf 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.
- DoodleBuggy 9y agoRestaurants 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.
- noonespecial 9y agoFrom 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.
- visvavasu 9y agoRegulatory hell
- aetherson 9y agoI'm not here to say that the permitting process that we have is a good idea. But I don't think that everything else is cake.
- dxhdr 9y agoThere 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/
- batbomb 9y agoIn SF this happened recently with Aziza. https://sf.eater.com/2017/6/8/15762820/aziza-closed-reopen-san-francisco https://sf.eater.com/2017/6/8/15762820/aziza-closed-reopen-s... >>> According to Lahlou, “Once we were closed past 60 days, the restaurant was seen as an entirely new business in the city’s eyes. They are asking for all kinds of upgrades.” Among them: a new fire wall and evening out the floors so that they’re all on the same level for ADA compliance. That last requirement might be debilitating. “Contractors have given me estimates and it’s cheaper to demolish the whole building than to level off the floors in the existing structure,” said Lahlou. Estimated cost for demolition is $3 million — a bill that Lahlou says he can’t take on “if he ever wants to pay investors back.”
- kyleblarson 9y agoBloomberg had a recent article about similar issues in San Francisco: https://www.bloomberg.com/news/articles/2017-10-05/michelin-guide-san-francisco-is-losing-inexpensive-restaurants https://www.bloomberg.com/news/articles/2017-10-05/michelin-...
- d_burfoot 9y agoRestaurants 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 9y agoI'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).
- antisthenes 9y agoThe 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.
- marak830 9y agoOkay 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 )
- brianwawok 9y agoSo is a random business guy hiring a chef to run his restaurant kinda the startup equivalent of a business guy hiring a dev to build his startup? Both seem in a similar boat. A restaurant is nothing without a good chef. A programming startup is nothing without a good developer. Both have cases where the chef/developer starts their own companies.. and many more cases where an outside guy with some money comes in and tries to make it happen. You can succeed in both paths, but it sure as heck seems a lot harder! I cannot image funding a software startup if each MVP I wanted took say 30k to make (instead of a few hours of time). It seems reasonable that cooking is similar..
- jimmywanger 9y agoI 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-burrito-shop-forced-to-close-amid-accusations-cultural-appropriation-stealing-recipes.html http://www.foxnews.com/food-drink/2017/05/24/portland-burrit... [2] http://www.oregonlive.com/business/index.ssf/2017/07/oregon_minimum_wage_hike.html http://www.oregonlive.com/business/index.ssf/2017/07/oregon_...
- simonsarris 9y agoMany 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 9y agoThere 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.
- nunez 9y agoDo former restaurant owners with the same experience go out to eat after running their own place?
- TheGorramBatman 9y agoRelevant article on pricing: http://www.seriouseats.com/2016/03/menu-pricing-vegan-vegetarian-meat.html http://www.seriouseats.com/2016/03/menu-pricing-vegan-vegeta...