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I was in the restaurant business for a long time. You are definitely on the money. So many businesses I went to, were not able to understand the basics. Hospi

I was in the restaurant business for a long time. You are definitely on the money. So many businesses I went to, were not able to understand the basics. Hospitality, while it can be profitable, is a game of small numbers. The smallest overlooked number can be your downfall. The margins are slight, but with the right team they can pay out well. What I mean is: take for example a simple bistro style meal of beef steak, vegetables and salad. Let's use for example the following costings: Beef: $3.00 Salad: $0.50 Vegetables: $0.40 So that gives you a base plate cost of $3.90, the standard practice is (at the lowest level) $15.60. (this - on a well run bistro will just cover your bills including staffing costs). What a lot of first time restaurant owners don't realise is the side costs. I'm not talking staffing, rent or anything like that(which is a whole nother issue to keep an eye on), I'm talking the incendentals - broken objects, garnish, facility repairs and upkeep. These are just a few of the things that I have seen (many times) not accounted for. Add on top of that a few weeks of unexpected less covers (clients basically), and you have a recipe for disaster. While hospitality seems like an easy business to purchase (I have rescued/helped sell a lot of business whose owners thought it was), it is actually a massive investment in micromanagement. If you don't micromanage, it will fail. If you overdo it (re pushing staff too much) you will lose your best staff, and fail. As you stated, if you arnt willing to live and breathe your restaurant, don't do it. Which is why I left the industry, why would I lose out on my time with my family, just to make less money than I could doing anything else?

tixocloud 9y ago
I've always wondered this and hoping you can answer - what's the biggest cost driver on restaurants and can the lease rates play a significant impact? I wonder how much high lease rates are killing our local establishments and replacing them with giant franchises.
- marak830 9y ago
  As always there is a big differential as to location and rent. That aside though : Yes rent can be a killer, the lease can have a lot of effect on a restaurant, I'd say more so than any other business. As for the biggest cost? Assuming the owner doesn't try to rent a bad location(eg high competition with long term customer base), I would say it is staffing. But that is a double edged blade. Hiring top quality may be necessary where you are located, or may break the businesses back, if in a different location. Hospitality is such a locale based business there isn't a specific rule that can cover everything. A lot of people will look at their food costs as the biggest cost, (and it can be if not managed properly), but I have seen more businesses fail from bad staff management than anything else. This isn't to say it's an easy thing to control though, you are talking about an industry where you won't actually know the number of covers within a large percentile from day to day. (yes you can estimate, but a table of 30 walk-ins without reservation isn't as rare as you would think).

tixocloud 9y ago

I've always wondered this and hoping you can answer - what's the biggest cost driver on restaurants and can the lease rates play a significant impact? I wonder how much high lease rates are killing our local establishments and replacing them with giant franchises.

marak830 9y ago
As always there is a big differential as to location and rent. That aside though : Yes rent can be a killer, the lease can have a lot of effect on a restaurant, I'd say more so than any other business. As for the biggest cost? Assuming the owner doesn't try to rent a bad location(eg high competition with long term customer base), I would say it is staffing. But that is a double edged blade. Hiring top quality may be necessary where you are located, or may break the businesses back, if in a different location. Hospitality is such a locale based business there isn't a specific rule that can cover everything. A lot of people will look at their food costs as the biggest cost, (and it can be if not managed properly), but I have seen more businesses fail from bad staff management than anything else. This isn't to say it's an easy thing to control though, you are talking about an industry where you won't actually know the number of covers within a large percentile from day to day. (yes you can estimate, but a table of 30 walk-ins without reservation isn't as rare as you would think).