11 ms·

I poured my blood, sweat and life savings into my restaurant. It ruined my life.

203 points by moonka 9y ago

briga 9y ago
This is really something everyone who opens a restaurant should be prepared for. An overwhelming majority of restaurants go out of business within a few years. It's a really difficult profession to be a part of, and if you want to be successful you've got to make some serious sacrifices--even then that might not be enough.
- Top19 9y ago
  There was a Wall Street Journal article a few weeks ago that said banks were being far too lenient about giving out loans to restaurants and pumping money into an essentially dying, unforgiving market. I actually thought the WSJ was a little hard on the banks, since restaurants are so notoriously hard, but I wonder if this is more of systemic issue.
  - acchow 9y ago
    I really don't think banks give loans to restaurants. I'm gonna need to see a citation here.
    - photoJ 9y ago
      huh? https://www.fundera.com/business-loans/guides/restaurant-loans https://www.fundera.com/business-loans/guides/restaurant-loa...
    - Top19 9y ago
      Fair request and it was actually the New York Times so my mistake: https://www.nytimes.com/2017/10/31/business/too-many-restaurants-wall-street.html https://www.nytimes.com/2017/10/31/business/too-many-restaur...
    - Analemma_ 9y ago
      Investment banks might not loan to individual restaurants, but they absolutely do loan to chains, as well as to PE firms trying to buy those chains in leveraged buyouts.
- waqf 9y ago
  And yet it sounds as if his restaurant wasn't totally nonviable, he just didn't have nearly enough runway for all his first-time mistakes. He might even be successful next time with what he's learnt, if he had the stomach for another go … and another $200k starting capital …
  - wolco 9y ago
    Please do not encourage him. He lacks the proper budgeting skills. He starts thinking about expanding shuts down the place for a week and then everything falls apart.
acchow 9y ago
> We had started with $60,000; after six weeks, we were down to $3,000, and there was still so much to do. I don't think he did nearly enough research into how much it costs to start a restaurant.
- MuffinFlavored 9y ago
  Approximately how much would you say it costs? Could he have gotten a small business loan?
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  - binarymax 9y ago
    An order of magnitude higher than 60k, if your goal is to compete in the market he was targeting. For 60k he could have opened a pizza or sandwich shop.
    - bduerst 9y ago
      You'd have a hard time even opening a Subway with $60k
      - adventured 9y ago
        Bet on closer to $200,000, with room for $250,000.
      - mgkimsal 9y ago
        I googled subway franchise, found http://www.franchisedirect.com/directory/subway/ufoc/915/ http://www.franchisedirect.com/directory/subway/ufoc/915/ Low end estimate is $150k required up front, and high end of $320k. However, in that low end - $85k estimate for leasehold improvements. $15k for initial subway franchise fee. Local sandwich shop opened up a few years back and... while I don't know all the numbers, he didn't put in $200k up front. I suspect it may have been more like $40-$50k, between initial lease, equipment, stock, etc. Small town, passing traffic, little competition, he's done well enough that he's expanding - doubling his size and moving a bit up the street. He's also a very pragmatic guy, and the sandwich biz has been in his family for a couple generations, so I have to think they're at least moderately profitable.
photoJ 9y ago
Running a restaurant is hard and unsurprisingly its even harder if you never have run one before. Staffing, food cost, vender management and health code malarky: these are some of the first things that make or break a restaurant. Then maybe location. Quality of food clearly doesn't make the list, at least not disconnected from price as Dominos, McDonalds and Starbucks succeed with high probability. Sad to see a vanity project eat up someones life.
- AmVess 9y ago
  Gordon Ramsay is one of the most experienced and successful restaurateurs ever, and has had numerous failures along the way. Before he became TV famous, he worked in his restaurant every day until 1 AM, and back to it 6 hours later...every day, for many years. People vastly underestimate the time and dedication needed to run a restaurant. If you aren't built for it like Ramsay, you will regret it. For a lot of owners, it's a really good way to earn not a lot of money for a massive amount of work.
  - photoJ 9y ago
    Right and with that much work you know how to fix a menu so your food cost is managed. You know how many servers you probably need for that day of the week and how likely they are to disappear. You know how your staff will steal your booze, pocket the tips, or kill you clientele with a food allergy. You know how many people will complain and you will have to comp their bill. You know you should stock pile supplies because the vendor will run out. For an industry that is terribly easy to get into as a bus boy/server, prep cook, its amazing to me that more people don't just start there. Or maybe they do, but they don't write hand wringing articles about how they failed.(hopefully because they'd didn't and are too busy working). I once heard a story about an area for wine production in USA that you could buy for reasonable amount of money. Every few years, a 50 year old man would come and buy it, and start to work it. After 10 years about the time he might be getting the hang of what it all entailed he would be tired and sell it to the next 50 year old. The locals just watched the same story play out over and over again...
    - 9y ago
bookmarkacc 9y ago
I am surprised by the lack of up front number crunching that he did, seeing as his previous job was as an analyst.
rodgerd 9y ago
I don't want to sound mean, but... he has a well-thumbed copy of Kitchen Confidential and did this anyway? Because one of the things I remember most strongly from that are the stories about people who imagine fondly they'd like to own a restaurant, and it always ending in tears. (Also I'm bemused as to why the opener suggests red tape was a problem.)
- photoJ 9y ago
  Seems like he kinda missed the point.
- Antimachides 9y ago
  Seriously. That and the sheer draining drag of chefing and Bourdain's desire not to die of a heart attack next to the fryer. The whole book portrays restaraunteering as a brutal, taxing business and even contains profiles of some clueless owners.
smogcutter 9y ago
The first big red flag for me (besides that the whole thing pretty obviously started as a mid life crisis) was how little time it sounds like he spent working at his friend's bar in the three months he needed to put in to qualify for the liquor license. How could he not take that seriously as an opportunity to learn about the industry? I would bet money that the answer is he was afraid to learn that running a restaurant is actual work, not an episode of chef's table. His lack of preparation is mind boggling, but completely deliberate: the less he knew, the more room there was for fantasy. Beware working with people like this, who want to skip straight to the end.
- retailbuyout 9y ago
  Yea, it doesn’t take long working a kitchen or bar to see how fast you can bleed money, employees, reputation—you really have to enjoy the work. You’re going to to into debt, you’re not going to get vacation, you’ll have constant employee turnover and drama (mood issues? Drug issues? Both common in a kitchen.), you have to do shady shit to pass inspection (throw the food out and hit the lights to scare the mice, the inspector is in the lobby!), you’re battling bitter customers who find your food fine but can’t get your accent so they give you a two star yelp review and call you rude—it’s fucking endless. That said, the community is to die for. I can’t recall ever being close to my coworkers in that way since moving into tech. Nothing tastes as sweet as a cigarette, liquor, and stories after your shift. Kind of necessary with the hours you work!
  - cbsmith 9y ago
    You won't go into debt if you have enough capitalization. Of course, you almost never have enough capitalization.
    - retailbuyout 9y ago
      Right, i should note that not all the things i’ve seen are smart.... avoiding going into personal debt is fairly straigtforward. But, I frankly can’t imagine a restaurant business not taking on some debt in some seasons, at least at first.
synicalx 9y ago
I've known two chefs who've gone on to start their own restaurants over the years, and the one thing they have in common (other than smoking) is they are REALLY highly strung. I don't just mean a little anxious/fidgety - they quite literally don't seem to be able to sit still even for a few seconds. Even little actions like pulling out a chair to sit down happens as fast as they're physically able to do it. Noisiest people I've ever known! Neither of them have actually worked as a chef in years, and one of them hasn't set foot behind the counter at a restaurant since 2004. I can't even imagine the constant time pressure chefs, and undoubtedly restaurant owners must feel for this type of behavior to manifest and basically never go away.
- iKlsR 9y ago
  You ever seen Gordon Ramsey when he's demonstrating or standing in place gesticulating, dude is like a jackrabbit on meth, he can't keep still.
  - synicalx 9y ago
    Yes! That's pretty much what they're like.
wil421 9y ago
A bit of advice from someone who was in the restaurant industry for 7 years. Don’t start a restaurant especially if you work in tech. 80-100 hours a week for managers and owners is mandatory. Tech is easy money compared to what it takes to create a profitable restaurant from scratch. The author made the same mistake I’ve seen people make before. This guy did no research at all and sadly this is extremely common.
- photoJ 9y ago
  Breakfast prep starts at 6am, maybe 4am if you are baking. In a restaurant lights out might be midnight, later for a bar. Which staff do you trust with free access to the thousands of dollars of liquor, food and property? Do you stay closed for two days a week?
  - scarface74 9y ago
    It doesn't help with inventory loss, but these days I think I would try to run a non cash business - credit cards only.
    - needcaffeine 9y ago
      Can you elaborate on why?
      - sp332 9y ago
        To keep employees from walking off with the cash.
        needcaffeine 9y ago
        Is this really that a factor with 24/7 surveillance and legal repercussions for theft? I mean...you're making it sound like it is, and I believe you but it's just so hard to people employees are that stupid.
johan_larson 9y ago
Sounds to me like he started his restaurant with way too little experience. He was an amateur cook who had never even worked in a restaurant. Even a bit of experience as a cook or waiter would have helped by giving him a sense of how things work. And ideally he would have had some experience on the management side too, maybe as an assistant manager.
dahart 9y ago
Having started a software business with too much optimism and too little business knowledge myself, and failed, I seriously have no idea how people start successful restaurants at all these days. No matter what mistakes he made, I feel for the guy, and the thousands of people every year trying to get a restaurant off the ground and ending up bankrupt. Aside from marketing, the initial costs of getting a SAAS business running are almost nothing; people / dev time is far and away the main cost usually. The economics and risks and up-front costs of opening even a small restaurant are staggering to me, I doubt I'd ever attempt it. But I'm glad some people do, and make it.
- vmarsy 9y ago
  > Having started a software business with too much optimism and too little business knowledge myself, and failed I'd say trying in itself can be seen as a partial success, hope you didn't get too financially impacted. Is there any books/resources you (or other HN readers who also started their businesses :)) wish you had read before starting? Or that you did read and consider essential?
  - dahart 9y ago
    Well I (and my family) was hugely financially impacted, as a result of my own choices, but I also had the best few years of my professional life. I made big mistakes, but I don't really have big regrets, if that makes sense, aside from losing angel investments and scaring my wife. I hope to do it again some day. There are some great resources here and in books, but I can't think of anything I wish I'd have read earlier, and nothing I know of that would have changed my course. It might be out there, but I haven't read it yet. ;) My team wasn't balanced enough, and we underestimated how much marketing we'd need. We were conflicted about raising VC money, so we wasted time dithering. We didn't figure out the right business strategy and our market until it was too late. All the books say to pay attention to this stuff, but none can really tell you how to do it in your case. Great books I read include "Early Exits", "The Startup Owner's Manual", "Lean Startup", "Pitch Anything". I think I learned more about startups reading HN than in those books, but it's all good stuff. Seek out a wide variety of conflicting advice, find the best team, and go for it! ;)
joshuaheard 9y ago
FTFY: I poured my blood, sweat and life savings into a business I knew nothing about. It ruined my life.
Animats 9y ago
Well, duh. This is such a cliche that it is a plot point on "Hawaii 5-0". Most new restaurants fail.
kbos87 9y ago
I grew up working at a very successful family owned restaurant and landed in tech after college. The two can’t be any different. Owning a restaurant is a lifestyle in ways that working in tech never would be. There is no free time, there is never a day off, there is no exit in sight. It’s 80-100 hours in per week, small margins, and frequent turnover. Can it be profitable? Yes. But it requires as much, if not more domain expertise as anything else, including doing a startup. And, there are far fewer people out there talking about the valuable details of doing it correctly - very different from the startup world.
- marak830 9y ago
  The reason people like me don't talk about the valuable details is, it has taken me 17 years to learn those details, and I sell that expertiese :-)
AndrewKemendo 9y ago
Pretty much every restaurant owner I know is in the same situation - maybe not quite as bad - but generally they have at least one total nightmare horror story about a restaurant they owned that burned down/got shut down/went bankrupt. I find similarities to being a founder in a super risky high tech startup - but with higher possible payoff. Yet, I don't hear a chorus of bar backs, dish washers, servers, hosts and chefs complaining about not having a life outside of the restaurant or needing "work-life balance." What gives?
- umanwizard 9y ago
  The tech industry is basically printing money, so we workers can afford to be picky about the conditions we choose to work under. Restaurants are ultra-competitive and have very thin margins, so people who work there can't.
  - vkou 9y ago
    Also, a lot of the people working these jobs have very few other options in life. Back-of-house food prep is one of the few industries that won't bat an eye at a felony on your resume.
toomanybeersies 9y ago
> At work, I had trouble concentrating on spreadsheets and instead found myself scribbling menus on graph paper Funnily enough, if he wanted to be successful, spreadsheets could've been the key to his success. He would've known his Cost of Goods Sold, he would've known his staffing costs, his rent, and how much money he had and could spend.
- saosebastiao 9y ago
  I know what you mean, but it’s only part of it. Plenty of restaurants fail despite excellent bookkeeping. Personally I’d posit that the ability to create, measure, and manage operational processes is far more important, because operations are where the (often invisible) opportunity costs wreak havoc on restaurants.
  - toomanybeersies 9y ago
    The fact that he managed to run out of money before he even opened shows that he had no idea of the cost involved in opening and running a restaurant. He then reinforces this by telling us that he was selling his food too cheap, so he was running at a loss. It seems like he actually did have his processes in order in the end, he got to a point where he was running a bit of a profit, and was on track, until he decided to close for a week, which managed to quickly suck his funds dry and plunge him back into debt. This could've been easily avoided. Obviously that wasn't his only problem, but it's one of many. The fact that the restaurant succeeds today, without him, is interesting, because it sort of proves that he was the failing factor in the restaurant. Often it's external factors that doom a restaurant, poor location for instance.
    - mgkimsal 9y ago
      > until he decided to close for a week And it was the week before 'the slow season'? They came back to the start of a slow period. It's almost comical how little thought/planning he managed to put in to things, and after getting a 4 star review, and things picking up, he decides to close things down "for a week"? Closing down during a known 'slow period' - that makes sense. I know seasonal/tourist places that do that. This was just... yet another misstep that, as you said, could easily have been avoided. It became painful reading this. And it makes me think... this whole notion of '80% of restaurants fail' stuff is partially due to just really poor planning or non-critical thinking ability by people up front. Of course, more planning and analysis up front may just stop people from opening in the first place, which may bring the % rate of failures down, but the overall numbers would be lower too. It's hard not to read this and think "I'd be smarter than that - I wouldn't make those mistakes" (having worked in restaurants, I wouldn't make those mistakes - I'd likely make other ones!)
Waterluvian 9y ago
I wonder if some suffer from the same mistake people doing entrepreneur IT do. I fix computers at home, how hard can it be? I cook at home, how hard can it be?
- sjg007 9y ago
  Yep.. I ran a business out of high school / college summers networking up college kids in dorms. This was before computers came with ethernet cards by default and while dorms were being wired. My biggest mistake was not charging enough and not doing enough marketing. The university offered a similar service for 3x more than me.. I offered a flat rate including the card (which I got cheap.. easy drivers etc..) but I should have offered a choice of cards (fast, faster, fastest) and charged way more than I did as well as up sell (or sell an extended warranty or something...) It was a flash in the pan business only viable for 2-3 summers. To follow up I also did computer IT consulting.. later and I still charged too little!! I guess one issue is that there is a ceiling on what you can charge (since you can just buy a new computer) unless it's in regard to recovering some important data... even then and nowadays you can just take the hard drive out and stick it in a usb enclosure, tell them to buy a new machine and call it a day.
exabrial 9y ago
This sounds like a lot of startups, insufficient market research, poor cost management, chasing hip trends...
megy 9y ago
> so I doled out $3,000 to hire a lawyer to oversee my incorporation. He later told me that I could have done it myself online for a couple hundred bucks. This guy is so raw that he is even missing basic stuff. > We can barely afford the place, but I wanted my daughters to have their own rooms And he doesn't learn.
- icedchai 9y ago
  most lawyers don’t charge 3k to incorporate. He got taken advantage of, plain and simple.
  - vkou 9y ago
    From the sounds of it, his lawyer gave him a bit more advice then just how to incorporate. I'm more surprised that he didn't give him the advice that the corporate veil will not shield him from outstanding sales tax receipts.
damontal 9y ago
maybe start with a food truck? seems like a less risky way of getting into the business. if you are successful and make a name for yourself, you could parley that into a restaurant.
- scott_karana 9y ago
  No kidding. When he learned (to his surprise) that he could barely afford a food truck already, that should have been a red flag.
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jroseattle 9y ago
"What I lacked in experience I could make up for in enthusiasm." So many startups are based on this very premise. Reminds me of this poster: https://cdn.shopify.com/s/files/1/0535/6917/products/incompetencedemotivator.jpeg?v=1403276021 https://cdn.shopify.com/s/files/1/0535/6917/products/incompe...
- rconti 9y ago
  Or worse. See: "We have a great team, funding, want to start a startup, but have no idea what to do". It would be like wanting to start a restaurant because you like to eat, but don't know how to cook or what kind of food you should focus on.
sersi 9y ago
Between this article and the article on people too poor to retire, I sometimes think we should have classes on financial planning in high school. A lot of the mistakes he did came down to poor financial planning. He even gave a raise to his employees when he sold his home. As he describes it, there's no way he was counting, looking at his benefits, costs of goods, etc... Basic stuff but too many people seem to not know how to manage their money at all.
- apersona 9y ago
  This isn't just lack of experience with financial planning. This is lack of common sense. You can't teach common sense.
Lazare 9y ago
> In 2011, I applied to operate a booth at the Toronto Underground Food Market [...] my fingers cramping so severely from peeling 100 pounds of potatoes that I almost called 911. [...] I lost money So his first experience was extremely painful, almost landed you in the emergency room, and you lost money on it. What valuable lessons he learned going forward? > I didn’t care. None. > Eighty per cent of first-time restaurateurs fail. I knew this. Opening a restaurant was the least sensible, dumbest thing I could do. My wife, Dorothy, a daycare worker, was coasting toward the end of a maternity leave, and we had two kids to feed. It's so rare to see people brag about being reckless, irresonsible, and wasteful of resources they cannot afford to waste. > “Are you sure you want to do this?” he asked. “I don’t think you know what you’re getting yourself into.” Friends who knew what they were talking about tried to warn him off. > My shifts consisted of a few leisurely hours chopping veg and prepping salad dressings. Any opportunity for experience is to be strictly avoided. "The law says I need to know how a restaurant works? I know better!" > My role was largely symbolic anyway No it wasn't. > As it turns out, no one invests in first-time restaurateurs, no matter how mind-blowing they think their cooking is. Man, I wonder why? More to the point, it's clear he never did. > I realized it was far from the downtown foodie scene [...] Admittedly, I had an ulterior motive: the place was a 10-minute walk from my house and close to the girls’ school He purposefully chose a bad location, knowing it was a bad location, because it was convenient for him. ...I've got to stop reading, this is actually enraging me. It's so dumb, and he seems so proud.
- tw1010 9y ago
  I think his behaviour is already well described by Carl Jung. His world view is skewed by mythology (like movies and hero worship) instead of by rational thought.
  - icedchai 9y ago
    Not much different from some tech startup founders I’ve encountered.
  - linkmotif 9y ago
    Any particular work by Jung you’re thinking of?
mathgenius 9y ago
Seems like this was his life's dream to do, and he got to do it. So, I'm not sure it was entirely a bust. But certainly it was a very expensive dream to follow. And how many really ambitious people fail and fail again, before finally succeeding at something? It is a common story. Not that failure is any guarantee of success.
nubbins 9y ago
Every so often one of these articles comes out about someone's dream restaurant or coffee shop that failed and I'm starting to think that maybe there are lots of just soft, naive people out there who just got by in life checking off the boxes and being responsible enough to get an easy office job (they're usually decent at writing a dramatic article though). Unless you get lucky making anything stick in the real world is very hard. Having succeeded and failed in business before most days I can't believe how easy my office job is.
tarr11 9y ago
Reminds me of this story (sadly similar) http://www.wweek.com/restaurants/2016/09/30/heres-what-happened-when-i-opened-a-restaurant-in-portland/ http://www.wweek.com/restaurants/2016/09/30/heres-what-happe...
didip 9y ago
Hard as it is to read it, I am glad that he wrote the article. His journey is a cautionary tale on how difficult it is to start a new business (including tech startups). There's so much work to be done and a lot of them are non-glamorous.
m3kw9 9y ago
You all would be surprised how many people will operate and act like him in worse ways. He’s putting it in business, however it looks dumb for what he did, people gamble in casinos, what would you say to that? He had a dream, was dumb, reckless but attempt to fulfill it. Hard life lessons learn the hardest of ways
Mz 9y ago
My role was largely symbolic anyway, and after a few shifts stretched over a three-month period, I checked off that box. I am reminded of a college class where everyone but me was solely concerned with getting a good grade and enthusiastically encouraging the professor to curve the grades and skip parts of the curriculum. I was the only one who expressed the concern that we might actually need to learn the course materials in order to actually be prepared for higher courses or even, god forbid, a job at some point.
jimmywanger 9y ago
One thing that's interesting is that there's a factor a lot of people don't consider. The more appealing a lifestyle seems, the more hard work probably has to go into it, because there's so much more competition. For instance, in the story, he had a fantasy about having a hunting rifle next to the stove and going hunting whenever he damn felt like it. Who the heck doesn't want that? Once he gets a taste of what it's like to peel several dozen potatoes, he doesn't take it to heart. He writes it off as an outlier. Anything cool takes a lot of effort, because so many other people want to do it also. But he still thought he could pull it off, because he "loved cooking". Does not matter. If you can't do the 1001 other things required to run a business, you're hosed.
siliconc0w 9y ago
I like to visit local neighborhood restaurants to give these places hope because I hate seeing another retail location taken up by a franchise or worse of all - banks which are just basically dead space. To digress - they just opened another WF near me so there are now five total. Each is essentially a huge empty building with a huge empty parking lot. It's like the city decided they didn't want any useful commerce happening in this area and zoned it entirely for banks. Sad. Meanwhile within walking distance there are like two restaurants and a coffee shop and I count myself lucky I even have that and visit all of them at frequently because I so treasure them. Even if their food isn't that amazing they at least somewhat contribute to the community of their surroundings.
wheresmyusern 9y ago
most of the time i read a story like this, the infamous statistic of 90 to 80 percent new establishments failing is referenced, and then the person goes on to explain how they barged into the business like a belligerent, drunken bull in a china shop. this guy did zero research. zero thought was put into the costs involved. i am frankly amazed that this guy made it as far as he did. i remember the last time a story like this was posted, the guy got fooled into paying to renovate the building he was renting. i have a feeling that most of these restaurants fail because they are started by complete idiots.
wheresmyusern 9y ago
ive always liked the idea of automated restaurants. weve seen what automation has done for car production, so its interesting to imagine what an automated restaurant might be like. since the food is the product of very exact expenditures of energy, time and resources, you could forecast, resupply and otherwise manage your output and resource levels in a much more accurate way, for one. and of course, you could make the food a lot faster i would imagine. and you could make it perfect every time. and you wouldnt have to pay people huge amounts of money to make it. i would also advocate for automating the delivery of the food to the table but that might be off putting to customers, so you could just build a system that would automate most of the mental load of managing tables and just use your human employees as meat puppets for the delivery software. perhaps something like google glass could be used. i bet you could reduce your serving staff very dramatically by doing that. and as for ingredients, you could even grow some of them. ive seen videos about restaurants in new york that use roof top aquaponics systems to grow all their vegetables. whether on the roof or off site, one would need to run both production and processing and delivery in order for uniform quality to be achieved. the quality of the ingredients is supremely important -- i went to sauls in the bay area and their cheese burger literally gave me pause. if you want to know the difference between average ingredients and good ingredients, go try the cheese burger at sauls medium well. even outside of automation, there are so many improvements to be made. i used to work in a restaurant and they would cook food on these large woks. i would guess more than a third of the energy from the flames below simply go around the wok and up out of the vent hood. automating the heating of the food would probably make it much easier to capture and use all of that thermal energy instead of half.
- averagewall 9y ago
  Perhaps it can't scale up enough to make automation economical because the customers have to be located nearby. You might make enough of a particular dish to satisfy the whole neighborhood in your delivery radius but still be too small a scale for robots to be cheaper than humans. I suppose TV dinners are made like you say, but they can be frozen and transported to allow higher volume production.
bps4484 9y ago
I've often wondered about the selection bias of the "80% of restaurants fail, they're the worst investment" because I had a suspicion that many people start restaurants thinking essentially, "My Mom's pasta sauce is so good, people say they would pay for it. I should open up a restaurant with her recipe." and then proceed to fall flat on their face. Reading this article, I think I'm right. I wonder what the success rate is of a restaurant is when the owner has even a basic idea of how the various positions in a restaurant work and the important business metrics.
- Danihan 9y ago
  Yes, you're mostly correct. Most new restaurants fail because they don't handle the fundamentals properly. To be fair, it's not that easy to learn all the fundamentals without doing the whole process and failing at it.
Mz 9y ago
I think one issue with restaurants is they aren't usually conducive to an MVP and iterate model. But that isn't always true. Velo Burrito started as delivery only two days a week,then turned into a restaurant.* I wonder if a template for how to do this more successfully could be developed. * http://micheleincalifornia.blogspot.com/2014/07/this-tiny-burrito-shop-has-legs.html http://micheleincalifornia.blogspot.com/2014/07/this-tiny-bu...
stretchwithme 9y ago
Peter Thiel uses restaurants as an example of a super competitive industry that you don't want to be in.
X86BSD 9y ago
I could have saved him the trouble has he asked before doing this on quora. Seriously the culinary world is full of the worlds rejects. Junkies, alcoholics, thieves and the mentally unstable. I took a break from IT to pursue a culinary career. It was a great lesson in life. It taught me you don't get paid anything but slave wages even though you are working 15 hour days. Your body gets wrecked. You get no respect. You work with the people who couldn't get a job anywhere else for the worst reasons. It's repetitive AF. There are not a lot of good reasons to try and live that life. No matter what glitter and rainbows crap food tv makes it look like.
purplezooey 9y ago
A lot of Monday morning quarterbacks here.;)
RestlessMind 9y ago
I read the whole article end to end - this guy looks like he had a real interest into cooking, was willing to work hard and was able to contribute to the society in terms of a nice highly rated restaurant. It doesn't look like he wanted to draw millions of dollars from day 1 nor that he wanted his restaurant in the fanciest of the places. This should be a very normal thing to do and such people should succeed. Why is our modern day society arranged such that following this straightforward path doesn't help you make the ends meet? Something is very very wrong.
- dagw 9y ago
  If you read the whole article you'd see that it was perfectly possible to succeed, just that you cannot go in completely blind and just expect things to work by magic. Once a guy who had some experience in the restaurant business and wasn't completely naive about the whole process took over the place it started turning a profit.
ufmace 9y ago
I had a few more thoughts after thinking about this one for a bit. It's easy to laugh at the boneheaded mistakes, but can we say anything deeper about this? The author's actions seem to be motivated by an almost childish level of over-enthusiasm. That the word childish occurs to me makes me wonder - are we making it too difficult for kids to try things? Not actually opening a restaurant, of course, but something moderately ambitions for their age. Big enough for them to fail badly at when they're insanely, blindly hopeful about it. It would be good in a way to experience that sort of failure at an age and life situation where you don't destroy your finances when you're 3/4 to retirement and with kids of your own to send to college. Maybe if he had experienced that, then he could chase after his next dream with a little more realism and self-control and a little less blind optimism.

203 points by moonka 9y ago

This is really something everyone who opens a restaurant should be prepared for. An overwhelming majority of restaurants go out of business within a few years. It's a really difficult profession to be a part of, and if you want to be successful you've got to make some serious sacrifices--even then that might not be enough.

Top19 9y ago
There was a Wall Street Journal article a few weeks ago that said banks were being far too lenient about giving out loans to restaurants and pumping money into an essentially dying, unforgiving market. I actually thought the WSJ was a little hard on the banks, since restaurants are so notoriously hard, but I wonder if this is more of systemic issue.
- acchow 9y ago
  I really don't think banks give loans to restaurants. I'm gonna need to see a citation here.
  - photoJ 9y ago
    huh? https://www.fundera.com/business-loans/guides/restaurant-loans https://www.fundera.com/business-loans/guides/restaurant-loa...
  - Top19 9y ago
    Fair request and it was actually the New York Times so my mistake: https://www.nytimes.com/2017/10/31/business/too-many-restaurants-wall-street.html https://www.nytimes.com/2017/10/31/business/too-many-restaur...
  - Analemma_ 9y ago
    Investment banks might not loan to individual restaurants, but they absolutely do loan to chains, as well as to PE firms trying to buy those chains in leveraged buyouts.
waqf 9y ago
And yet it sounds as if his restaurant wasn't totally nonviable, he just didn't have nearly enough runway for all his first-time mistakes. He might even be successful next time with what he's learnt, if he had the stomach for another go … and another $200k starting capital …
- wolco 9y ago
  Please do not encourage him. He lacks the proper budgeting skills. He starts thinking about expanding shuts down the place for a week and then everything falls apart.

acchow 9y ago

> We had started with $60,000; after six weeks, we were down to $3,000, and there was still so much to do. I don't think he did nearly enough research into how much it costs to start a restaurant.

MuffinFlavored 9y ago
Approximately how much would you say it costs? Could he have gotten a small business loan?
- deleted 9y ago
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- deleted 9y ago
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- binarymax 9y ago
  An order of magnitude higher than 60k, if your goal is to compete in the market he was targeting. For 60k he could have opened a pizza or sandwich shop.
  - bduerst 9y ago
    You'd have a hard time even opening a Subway with $60k
    - adventured 9y ago
      Bet on closer to $200,000, with room for $250,000.
    - mgkimsal 9y ago
      I googled subway franchise, found http://www.franchisedirect.com/directory/subway/ufoc/915/ http://www.franchisedirect.com/directory/subway/ufoc/915/ Low end estimate is $150k required up front, and high end of $320k. However, in that low end - $85k estimate for leasehold improvements. $15k for initial subway franchise fee. Local sandwich shop opened up a few years back and... while I don't know all the numbers, he didn't put in $200k up front. I suspect it may have been more like $40-$50k, between initial lease, equipment, stock, etc. Small town, passing traffic, little competition, he's done well enough that he's expanding - doubling his size and moving a bit up the street. He's also a very pragmatic guy, and the sandwich biz has been in his family for a couple generations, so I have to think they're at least moderately profitable.

photoJ 9y ago

Running a restaurant is hard and unsurprisingly its even harder if you never have run one before. Staffing, food cost, vender management and health code malarky: these are some of the first things that make or break a restaurant. Then maybe location. Quality of food clearly doesn't make the list, at least not disconnected from price as Dominos, McDonalds and Starbucks succeed with high probability. Sad to see a vanity project eat up someones life.

AmVess 9y ago
Gordon Ramsay is one of the most experienced and successful restaurateurs ever, and has had numerous failures along the way. Before he became TV famous, he worked in his restaurant every day until 1 AM, and back to it 6 hours later...every day, for many years. People vastly underestimate the time and dedication needed to run a restaurant. If you aren't built for it like Ramsay, you will regret it. For a lot of owners, it's a really good way to earn not a lot of money for a massive amount of work.
- photoJ 9y ago
  Right and with that much work you know how to fix a menu so your food cost is managed. You know how many servers you probably need for that day of the week and how likely they are to disappear. You know how your staff will steal your booze, pocket the tips, or kill you clientele with a food allergy. You know how many people will complain and you will have to comp their bill. You know you should stock pile supplies because the vendor will run out. For an industry that is terribly easy to get into as a bus boy/server, prep cook, its amazing to me that more people don't just start there. Or maybe they do, but they don't write hand wringing articles about how they failed.(hopefully because they'd didn't and are too busy working). I once heard a story about an area for wine production in USA that you could buy for reasonable amount of money. Every few years, a 50 year old man would come and buy it, and start to work it. After 10 years about the time he might be getting the hang of what it all entailed he would be tired and sell it to the next 50 year old. The locals just watched the same story play out over and over again...
  - 9y ago

bookmarkacc 9y ago

I am surprised by the lack of up front number crunching that he did, seeing as his previous job was as an analyst.

rodgerd 9y ago

I don't want to sound mean, but... he has a well-thumbed copy of Kitchen Confidential and did this anyway? Because one of the things I remember most strongly from that are the stories about people who imagine fondly they'd like to own a restaurant, and it always ending in tears. (Also I'm bemused as to why the opener suggests red tape was a problem.)

photoJ 9y ago
Seems like he kinda missed the point.
Antimachides 9y ago
Seriously. That and the sheer draining drag of chefing and Bourdain's desire not to die of a heart attack next to the fryer. The whole book portrays restaraunteering as a brutal, taxing business and even contains profiles of some clueless owners.

smogcutter 9y ago

The first big red flag for me (besides that the whole thing pretty obviously started as a mid life crisis) was how little time it sounds like he spent working at his friend's bar in the three months he needed to put in to qualify for the liquor license. How could he not take that seriously as an opportunity to learn about the industry? I would bet money that the answer is he was afraid to learn that running a restaurant is actual work, not an episode of chef's table. His lack of preparation is mind boggling, but completely deliberate: the less he knew, the more room there was for fantasy. Beware working with people like this, who want to skip straight to the end.

retailbuyout 9y ago
Yea, it doesn’t take long working a kitchen or bar to see how fast you can bleed money, employees, reputation—you really have to enjoy the work. You’re going to to into debt, you’re not going to get vacation, you’ll have constant employee turnover and drama (mood issues? Drug issues? Both common in a kitchen.), you have to do shady shit to pass inspection (throw the food out and hit the lights to scare the mice, the inspector is in the lobby!), you’re battling bitter customers who find your food fine but can’t get your accent so they give you a two star yelp review and call you rude—it’s fucking endless. That said, the community is to die for. I can’t recall ever being close to my coworkers in that way since moving into tech. Nothing tastes as sweet as a cigarette, liquor, and stories after your shift. Kind of necessary with the hours you work!
- cbsmith 9y ago
  You won't go into debt if you have enough capitalization. Of course, you almost never have enough capitalization.
  - retailbuyout 9y ago
    Right, i should note that not all the things i’ve seen are smart.... avoiding going into personal debt is fairly straigtforward. But, I frankly can’t imagine a restaurant business not taking on some debt in some seasons, at least at first.

synicalx 9y ago

I've known two chefs who've gone on to start their own restaurants over the years, and the one thing they have in common (other than smoking) is they are REALLY highly strung. I don't just mean a little anxious/fidgety - they quite literally don't seem to be able to sit still even for a few seconds. Even little actions like pulling out a chair to sit down happens as fast as they're physically able to do it. Noisiest people I've ever known! Neither of them have actually worked as a chef in years, and one of them hasn't set foot behind the counter at a restaurant since 2004. I can't even imagine the constant time pressure chefs, and undoubtedly restaurant owners must feel for this type of behavior to manifest and basically never go away.

iKlsR 9y ago
You ever seen Gordon Ramsey when he's demonstrating or standing in place gesticulating, dude is like a jackrabbit on meth, he can't keep still.
- synicalx 9y ago
  Yes! That's pretty much what they're like.

wil421 9y ago

A bit of advice from someone who was in the restaurant industry for 7 years. Don’t start a restaurant especially if you work in tech. 80-100 hours a week for managers and owners is mandatory. Tech is easy money compared to what it takes to create a profitable restaurant from scratch. The author made the same mistake I’ve seen people make before. This guy did no research at all and sadly this is extremely common.

photoJ 9y ago
Breakfast prep starts at 6am, maybe 4am if you are baking. In a restaurant lights out might be midnight, later for a bar. Which staff do you trust with free access to the thousands of dollars of liquor, food and property? Do you stay closed for two days a week?
- scarface74 9y ago
  It doesn't help with inventory loss, but these days I think I would try to run a non cash business - credit cards only.
  - needcaffeine 9y ago
    Can you elaborate on why?
    - sp332 9y ago
      To keep employees from walking off with the cash.
      - needcaffeine 9y ago
        Is this really that a factor with 24/7 surveillance and legal repercussions for theft? I mean...you're making it sound like it is, and I believe you but it's just so hard to people employees are that stupid.

johan_larson 9y ago

Sounds to me like he started his restaurant with way too little experience. He was an amateur cook who had never even worked in a restaurant. Even a bit of experience as a cook or waiter would have helped by giving him a sense of how things work. And ideally he would have had some experience on the management side too, maybe as an assistant manager.

dahart 9y ago

Having started a software business with too much optimism and too little business knowledge myself, and failed, I seriously have no idea how people start successful restaurants at all these days. No matter what mistakes he made, I feel for the guy, and the thousands of people every year trying to get a restaurant off the ground and ending up bankrupt. Aside from marketing, the initial costs of getting a SAAS business running are almost nothing; people / dev time is far and away the main cost usually. The economics and risks and up-front costs of opening even a small restaurant are staggering to me, I doubt I'd ever attempt it. But I'm glad some people do, and make it.

vmarsy 9y ago
> Having started a software business with too much optimism and too little business knowledge myself, and failed I'd say trying in itself can be seen as a partial success, hope you didn't get too financially impacted. Is there any books/resources you (or other HN readers who also started their businesses :)) wish you had read before starting? Or that you did read and consider essential?
- dahart 9y ago
  Well I (and my family) was hugely financially impacted, as a result of my own choices, but I also had the best few years of my professional life. I made big mistakes, but I don't really have big regrets, if that makes sense, aside from losing angel investments and scaring my wife. I hope to do it again some day. There are some great resources here and in books, but I can't think of anything I wish I'd have read earlier, and nothing I know of that would have changed my course. It might be out there, but I haven't read it yet. ;) My team wasn't balanced enough, and we underestimated how much marketing we'd need. We were conflicted about raising VC money, so we wasted time dithering. We didn't figure out the right business strategy and our market until it was too late. All the books say to pay attention to this stuff, but none can really tell you how to do it in your case. Great books I read include "Early Exits", "The Startup Owner's Manual", "Lean Startup", "Pitch Anything". I think I learned more about startups reading HN than in those books, but it's all good stuff. Seek out a wide variety of conflicting advice, find the best team, and go for it! ;)

joshuaheard 9y ago

FTFY: I poured my blood, sweat and life savings into a business I knew nothing about. It ruined my life.

Animats 9y ago

Well, duh. This is such a cliche that it is a plot point on "Hawaii 5-0". Most new restaurants fail.

kbos87 9y ago

I grew up working at a very successful family owned restaurant and landed in tech after college. The two can’t be any different. Owning a restaurant is a lifestyle in ways that working in tech never would be. There is no free time, there is never a day off, there is no exit in sight. It’s 80-100 hours in per week, small margins, and frequent turnover. Can it be profitable? Yes. But it requires as much, if not more domain expertise as anything else, including doing a startup. And, there are far fewer people out there talking about the valuable details of doing it correctly - very different from the startup world.

marak830 9y ago
The reason people like me don't talk about the valuable details is, it has taken me 17 years to learn those details, and I sell that expertiese :-)

AndrewKemendo 9y ago

Pretty much every restaurant owner I know is in the same situation - maybe not quite as bad - but generally they have at least one total nightmare horror story about a restaurant they owned that burned down/got shut down/went bankrupt. I find similarities to being a founder in a super risky high tech startup - but with higher possible payoff. Yet, I don't hear a chorus of bar backs, dish washers, servers, hosts and chefs complaining about not having a life outside of the restaurant or needing "work-life balance." What gives?

umanwizard 9y ago
The tech industry is basically printing money, so we workers can afford to be picky about the conditions we choose to work under. Restaurants are ultra-competitive and have very thin margins, so people who work there can't.
- vkou 9y ago
  Also, a lot of the people working these jobs have very few other options in life. Back-of-house food prep is one of the few industries that won't bat an eye at a felony on your resume.

toomanybeersies 9y ago

> At work, I had trouble concentrating on spreadsheets and instead found myself scribbling menus on graph paper Funnily enough, if he wanted to be successful, spreadsheets could've been the key to his success. He would've known his Cost of Goods Sold, he would've known his staffing costs, his rent, and how much money he had and could spend.

saosebastiao 9y ago
I know what you mean, but it’s only part of it. Plenty of restaurants fail despite excellent bookkeeping. Personally I’d posit that the ability to create, measure, and manage operational processes is far more important, because operations are where the (often invisible) opportunity costs wreak havoc on restaurants.
- toomanybeersies 9y ago
  The fact that he managed to run out of money before he even opened shows that he had no idea of the cost involved in opening and running a restaurant. He then reinforces this by telling us that he was selling his food too cheap, so he was running at a loss. It seems like he actually did have his processes in order in the end, he got to a point where he was running a bit of a profit, and was on track, until he decided to close for a week, which managed to quickly suck his funds dry and plunge him back into debt. This could've been easily avoided. Obviously that wasn't his only problem, but it's one of many. The fact that the restaurant succeeds today, without him, is interesting, because it sort of proves that he was the failing factor in the restaurant. Often it's external factors that doom a restaurant, poor location for instance.
  - mgkimsal 9y ago
    > until he decided to close for a week And it was the week before 'the slow season'? They came back to the start of a slow period. It's almost comical how little thought/planning he managed to put in to things, and after getting a 4 star review, and things picking up, he decides to close things down "for a week"? Closing down during a known 'slow period' - that makes sense. I know seasonal/tourist places that do that. This was just... yet another misstep that, as you said, could easily have been avoided. It became painful reading this. And it makes me think... this whole notion of '80% of restaurants fail' stuff is partially due to just really poor planning or non-critical thinking ability by people up front. Of course, more planning and analysis up front may just stop people from opening in the first place, which may bring the % rate of failures down, but the overall numbers would be lower too. It's hard not to read this and think "I'd be smarter than that - I wouldn't make those mistakes" (having worked in restaurants, I wouldn't make those mistakes - I'd likely make other ones!)

Waterluvian 9y ago

I wonder if some suffer from the same mistake people doing entrepreneur IT do. I fix computers at home, how hard can it be? I cook at home, how hard can it be?

sjg007 9y ago
Yep.. I ran a business out of high school / college summers networking up college kids in dorms. This was before computers came with ethernet cards by default and while dorms were being wired. My biggest mistake was not charging enough and not doing enough marketing. The university offered a similar service for 3x more than me.. I offered a flat rate including the card (which I got cheap.. easy drivers etc..) but I should have offered a choice of cards (fast, faster, fastest) and charged way more than I did as well as up sell (or sell an extended warranty or something...) It was a flash in the pan business only viable for 2-3 summers. To follow up I also did computer IT consulting.. later and I still charged too little!! I guess one issue is that there is a ceiling on what you can charge (since you can just buy a new computer) unless it's in regard to recovering some important data... even then and nowadays you can just take the hard drive out and stick it in a usb enclosure, tell them to buy a new machine and call it a day.

exabrial 9y ago

This sounds like a lot of startups, insufficient market research, poor cost management, chasing hip trends...

megy 9y ago

> so I doled out $3,000 to hire a lawyer to oversee my incorporation. He later told me that I could have done it myself online for a couple hundred bucks. This guy is so raw that he is even missing basic stuff. > We can barely afford the place, but I wanted my daughters to have their own rooms And he doesn't learn.

icedchai 9y ago
most lawyers don’t charge 3k to incorporate. He got taken advantage of, plain and simple.
- vkou 9y ago
  From the sounds of it, his lawyer gave him a bit more advice then just how to incorporate. I'm more surprised that he didn't give him the advice that the corporate veil will not shield him from outstanding sales tax receipts.

damontal 9y ago

maybe start with a food truck? seems like a less risky way of getting into the business. if you are successful and make a name for yourself, you could parley that into a restaurant.

scott_karana 9y ago
No kidding. When he learned (to his surprise) that he could barely afford a food truck already, that should have been a red flag.

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jroseattle 9y ago

"What I lacked in experience I could make up for in enthusiasm." So many startups are based on this very premise. Reminds me of this poster: https://cdn.shopify.com/s/files/1/0535/6917/products/incompetencedemotivator.jpeg?v=1403276021 https://cdn.shopify.com/s/files/1/0535/6917/products/incompe...

rconti 9y ago
Or worse. See: "We have a great team, funding, want to start a startup, but have no idea what to do". It would be like wanting to start a restaurant because you like to eat, but don't know how to cook or what kind of food you should focus on.

sersi 9y ago

Between this article and the article on people too poor to retire, I sometimes think we should have classes on financial planning in high school. A lot of the mistakes he did came down to poor financial planning. He even gave a raise to his employees when he sold his home. As he describes it, there's no way he was counting, looking at his benefits, costs of goods, etc... Basic stuff but too many people seem to not know how to manage their money at all.

apersona 9y ago
This isn't just lack of experience with financial planning. This is lack of common sense. You can't teach common sense.

Lazare 9y ago

> In 2011, I applied to operate a booth at the Toronto Underground Food Market [...] my fingers cramping so severely from peeling 100 pounds of potatoes that I almost called 911. [...] I lost money So his first experience was extremely painful, almost landed you in the emergency room, and you lost money on it. What valuable lessons he learned going forward? > I didn’t care. None. > Eighty per cent of first-time restaurateurs fail. I knew this. Opening a restaurant was the least sensible, dumbest thing I could do. My wife, Dorothy, a daycare worker, was coasting toward the end of a maternity leave, and we had two kids to feed. It's so rare to see people brag about being reckless, irresonsible, and wasteful of resources they cannot afford to waste. > “Are you sure you want to do this?” he asked. “I don’t think you know what you’re getting yourself into.” Friends who knew what they were talking about tried to warn him off. > My shifts consisted of a few leisurely hours chopping veg and prepping salad dressings. Any opportunity for experience is to be strictly avoided. "The law says I need to know how a restaurant works? I know better!" > My role was largely symbolic anyway No it wasn't. > As it turns out, no one invests in first-time restaurateurs, no matter how mind-blowing they think their cooking is. Man, I wonder why? More to the point, it's clear he never did. > I realized it was far from the downtown foodie scene [...] Admittedly, I had an ulterior motive: the place was a 10-minute walk from my house and close to the girls’ school He purposefully chose a bad location, knowing it was a bad location, because it was convenient for him. ...I've got to stop reading, this is actually enraging me. It's so dumb, and he seems so proud.

tw1010 9y ago
I think his behaviour is already well described by Carl Jung. His world view is skewed by mythology (like movies and hero worship) instead of by rational thought.
- icedchai 9y ago
  Not much different from some tech startup founders I’ve encountered.
- linkmotif 9y ago
  Any particular work by Jung you’re thinking of?

mathgenius 9y ago

Seems like this was his life's dream to do, and he got to do it. So, I'm not sure it was entirely a bust. But certainly it was a very expensive dream to follow. And how many really ambitious people fail and fail again, before finally succeeding at something? It is a common story. Not that failure is any guarantee of success.

nubbins 9y ago

Every so often one of these articles comes out about someone's dream restaurant or coffee shop that failed and I'm starting to think that maybe there are lots of just soft, naive people out there who just got by in life checking off the boxes and being responsible enough to get an easy office job (they're usually decent at writing a dramatic article though). Unless you get lucky making anything stick in the real world is very hard. Having succeeded and failed in business before most days I can't believe how easy my office job is.

tarr11 9y ago

Reminds me of this story (sadly similar) http://www.wweek.com/restaurants/2016/09/30/heres-what-happened-when-i-opened-a-restaurant-in-portland/ http://www.wweek.com/restaurants/2016/09/30/heres-what-happe...

didip 9y ago

Hard as it is to read it, I am glad that he wrote the article. His journey is a cautionary tale on how difficult it is to start a new business (including tech startups). There's so much work to be done and a lot of them are non-glamorous.

m3kw9 9y ago

You all would be surprised how many people will operate and act like him in worse ways. He’s putting it in business, however it looks dumb for what he did, people gamble in casinos, what would you say to that? He had a dream, was dumb, reckless but attempt to fulfill it. Hard life lessons learn the hardest of ways

Mz 9y ago

My role was largely symbolic anyway, and after a few shifts stretched over a three-month period, I checked off that box. I am reminded of a college class where everyone but me was solely concerned with getting a good grade and enthusiastically encouraging the professor to curve the grades and skip parts of the curriculum. I was the only one who expressed the concern that we might actually need to learn the course materials in order to actually be prepared for higher courses or even, god forbid, a job at some point.

jimmywanger 9y ago

One thing that's interesting is that there's a factor a lot of people don't consider. The more appealing a lifestyle seems, the more hard work probably has to go into it, because there's so much more competition. For instance, in the story, he had a fantasy about having a hunting rifle next to the stove and going hunting whenever he damn felt like it. Who the heck doesn't want that? Once he gets a taste of what it's like to peel several dozen potatoes, he doesn't take it to heart. He writes it off as an outlier. Anything cool takes a lot of effort, because so many other people want to do it also. But he still thought he could pull it off, because he "loved cooking". Does not matter. If you can't do the 1001 other things required to run a business, you're hosed.

siliconc0w 9y ago

I like to visit local neighborhood restaurants to give these places hope because I hate seeing another retail location taken up by a franchise or worse of all - banks which are just basically dead space. To digress - they just opened another WF near me so there are now five total. Each is essentially a huge empty building with a huge empty parking lot. It's like the city decided they didn't want any useful commerce happening in this area and zoned it entirely for banks. Sad. Meanwhile within walking distance there are like two restaurants and a coffee shop and I count myself lucky I even have that and visit all of them at frequently because I so treasure them. Even if their food isn't that amazing they at least somewhat contribute to the community of their surroundings.

wheresmyusern 9y ago

most of the time i read a story like this, the infamous statistic of 90 to 80 percent new establishments failing is referenced, and then the person goes on to explain how they barged into the business like a belligerent, drunken bull in a china shop. this guy did zero research. zero thought was put into the costs involved. i am frankly amazed that this guy made it as far as he did. i remember the last time a story like this was posted, the guy got fooled into paying to renovate the building he was renting. i have a feeling that most of these restaurants fail because they are started by complete idiots.

wheresmyusern 9y ago

ive always liked the idea of automated restaurants. weve seen what automation has done for car production, so its interesting to imagine what an automated restaurant might be like. since the food is the product of very exact expenditures of energy, time and resources, you could forecast, resupply and otherwise manage your output and resource levels in a much more accurate way, for one. and of course, you could make the food a lot faster i would imagine. and you could make it perfect every time. and you wouldnt have to pay people huge amounts of money to make it. i would also advocate for automating the delivery of the food to the table but that might be off putting to customers, so you could just build a system that would automate most of the mental load of managing tables and just use your human employees as meat puppets for the delivery software. perhaps something like google glass could be used. i bet you could reduce your serving staff very dramatically by doing that. and as for ingredients, you could even grow some of them. ive seen videos about restaurants in new york that use roof top aquaponics systems to grow all their vegetables. whether on the roof or off site, one would need to run both production and processing and delivery in order for uniform quality to be achieved. the quality of the ingredients is supremely important -- i went to sauls in the bay area and their cheese burger literally gave me pause. if you want to know the difference between average ingredients and good ingredients, go try the cheese burger at sauls medium well. even outside of automation, there are so many improvements to be made. i used to work in a restaurant and they would cook food on these large woks. i would guess more than a third of the energy from the flames below simply go around the wok and up out of the vent hood. automating the heating of the food would probably make it much easier to capture and use all of that thermal energy instead of half.

averagewall 9y ago
Perhaps it can't scale up enough to make automation economical because the customers have to be located nearby. You might make enough of a particular dish to satisfy the whole neighborhood in your delivery radius but still be too small a scale for robots to be cheaper than humans. I suppose TV dinners are made like you say, but they can be frozen and transported to allow higher volume production.

bps4484 9y ago

I've often wondered about the selection bias of the "80% of restaurants fail, they're the worst investment" because I had a suspicion that many people start restaurants thinking essentially, "My Mom's pasta sauce is so good, people say they would pay for it. I should open up a restaurant with her recipe." and then proceed to fall flat on their face. Reading this article, I think I'm right. I wonder what the success rate is of a restaurant is when the owner has even a basic idea of how the various positions in a restaurant work and the important business metrics.

Danihan 9y ago
Yes, you're mostly correct. Most new restaurants fail because they don't handle the fundamentals properly. To be fair, it's not that easy to learn all the fundamentals without doing the whole process and failing at it.

Mz 9y ago

I think one issue with restaurants is they aren't usually conducive to an MVP and iterate model. But that isn't always true. Velo Burrito started as delivery only two days a week,then turned into a restaurant.* I wonder if a template for how to do this more successfully could be developed. * http://micheleincalifornia.blogspot.com/2014/07/this-tiny-burrito-shop-has-legs.html http://micheleincalifornia.blogspot.com/2014/07/this-tiny-bu...

stretchwithme 9y ago

Peter Thiel uses restaurants as an example of a super competitive industry that you don't want to be in.

X86BSD 9y ago

I could have saved him the trouble has he asked before doing this on quora. Seriously the culinary world is full of the worlds rejects. Junkies, alcoholics, thieves and the mentally unstable. I took a break from IT to pursue a culinary career. It was a great lesson in life. It taught me you don't get paid anything but slave wages even though you are working 15 hour days. Your body gets wrecked. You get no respect. You work with the people who couldn't get a job anywhere else for the worst reasons. It's repetitive AF. There are not a lot of good reasons to try and live that life. No matter what glitter and rainbows crap food tv makes it look like.

purplezooey 9y ago

A lot of Monday morning quarterbacks here.;)

RestlessMind 9y ago

I read the whole article end to end - this guy looks like he had a real interest into cooking, was willing to work hard and was able to contribute to the society in terms of a nice highly rated restaurant. It doesn't look like he wanted to draw millions of dollars from day 1 nor that he wanted his restaurant in the fanciest of the places. This should be a very normal thing to do and such people should succeed. Why is our modern day society arranged such that following this straightforward path doesn't help you make the ends meet? Something is very very wrong.

dagw 9y ago
If you read the whole article you'd see that it was perfectly possible to succeed, just that you cannot go in completely blind and just expect things to work by magic. Once a guy who had some experience in the restaurant business and wasn't completely naive about the whole process took over the place it started turning a profit.

ufmace 9y ago

I had a few more thoughts after thinking about this one for a bit. It's easy to laugh at the boneheaded mistakes, but can we say anything deeper about this? The author's actions seem to be motivated by an almost childish level of over-enthusiasm. That the word childish occurs to me makes me wonder - are we making it too difficult for kids to try things? Not actually opening a restaurant, of course, but something moderately ambitions for their age. Big enough for them to fail badly at when they're insanely, blindly hopeful about it. It would be good in a way to experience that sort of failure at an age and life situation where you don't destroy your finances when you're 3/4 to retirement and with kids of your own to send to college. Maybe if he had experienced that, then he could chase after his next dream with a little more realism and self-control and a little less blind optimism.