The truth is I have very little interest in hearing about concepts that are not coming from very experienced operators or are not of my own design.

Good info. The first questions that came to my mind are: A) why are you selling it? B) how would I ever verify financials? and C) do I keep the chef/cooks? Since menu and reputation are the bulk of what I'm really getting since the property being a lease.

This example is more of a thought exercise rather than something I'm actually looking to buy, but that restaurant is extremely well-reviewed (limited sample size) online and in a growing touristy area. The co-owners/chefs have one or two other restaurants in other cities, so it may well be that they are looking to focus on bigger markets somewhere else. I'm not sure if they're local or not.

Edit: Just saw your post about the sports bar with tips on discovering and/or estimating the financials. Great stuff.

Fair enough, can u elaborate more on your thoughts about how much equity you retain and if my thinking is off, etc?

I'm not sure how to structure these deals where my money is at risk and all the other person is risking is their time, time is valuable but if they don't bring a hell of a lot to the deal, then it seems absurd not to retain a controlling interest

Wait, I'm not trying to get into my concept or get you to invest, I'm curious what specifically you would want to see from an experienced operator that would make you want to invest in his business.

I'm asking because if I decide to go forward with something, I'd like to put it together IN a way that is not just profitable but an attractive investment to people that could take it to a multi unit, large scale operation.

For example, I'd love to know what path Chipotle took that made it attractive for mcdonalds to invEst in

Great thread, thanks for doing this.

Can you talk a bit about what questions you ask yourself before you decide to open in a area? How do you figure out those answers without investing a lot of money (is this even possible)?

To get into specifics, I live in Brooklyn and we have a large Jewish community in the area. There are many kosher restaurants as well as fast food joints that cater to the need for kosher food. If I was considering opening something up, what must I know in order to have a shot at succeeding? Is there anyway to know if the area can handle another restaurant/fast food place without actually starting up?

Yes, I understand your not looking for $ investment, I was speaking of my investment of time & effort & in some way $ because their is an opportunity cost involved in pursuing one concept over another.

There is not much chance that you will put together an operation that strong operator would like to franchise without making many, many changes or improvements--in the end, they don't really need your concept. & I think you might not be fully aware of the complexity involved in building a franchise model from the first unit. My advice is to focus on thing, do it really, really well & maybe someone will be interested--but the reality is that's very unlikely. Start with one idea, one store, make it profitable.

The answer to your chipotle question is in my previous post.

In a very general sense the first question I ask is..do I need foot traffic, actual footfalls of people walking around or can it work if you have to get in the car? Some concepts that do the majority of their business at lunch would look pretty good to me if I was in midtown manhattan (the largest concentration of office space in the world.) That same concept would not work very well in a bedroom community where the majority of residents are absent during that service period. It is possible to do quite a bit of DD without making much investment at all. Studying traffic patterns, footfalls, looking at maps, which side of the street I want to be on etc..etc.. It's very tedious though. I spent a couple of days last week standing on street corners counting pedestrians.

I don't open up to dominate a market. I would like to, but my goal is to peel off 5-10% of my sales from my individual competitors, so I don't worry about a high concentration of operators.

What is your background? What kind of experience do you have? Also, what ideas do you have for an operation?

I've opened up two successful businesses in the past 4 years. One wholesale bus which I started with a number of partners and another financial service business that I started on my own. I'm also working on a number of online projects with partners. The past four years I've learned a lot about businesses, working with partners, dedication, and planning to succeed. I however have zero experience with restaurants/retail businesses.

I had two ideas not sure which one to pursue further if at all. There is a space for rent that is near a highschool that has over 2k+ kids in attendance and is in high traffic foot area. Most of these kids order in, or go out for lunch.

There are no shortage of food options, here's what's nearby

2 Pizza joints within 6 blocks (very competitive pricing, 2 slices and a coke for $5)
1 fast food Chinese restaurant (also offers lunch deals)
2 Mid-High end restaurants
2 Bagel stores

My first idea was to open a yogurt type store as there seems to be a clear void for that. However, I'm not sure I can sell enough yogurts to make it profitable with the rent being $7.5k a month.

My other idea was opening up a kosher Subway franchise. We had one open in Brooklyn a couple years ago, the first couple months they were packed but they shut down after 8-10 months. The location was pretty bad though.

I guess my questions to you are should someone like me with no retail/food experience even consider getting into this business? Am I aiming too high by trying to open my first place in this type of area, and which of the ideas if any makes more sense to you.

Thanks

sir.op is tired of you and your concepts. he cant teach us anything from you.

dude............kids dont eat yoghurt! or kosher sanwiches! unless they are weird kidds!

Lol, I have to agree with you on this one Biggbob

I like that you have experience, actual operating experience & not just brain-storming sessions, working with partners. I didn't fully understand the value of working with partners when I first got into business and was overly concerned with the potential downside. It could have been that I was simply not coming into contact with the right people to partner with, but I should have spent more time thinking about how to best manage those concerns instead of just avoiding partnership deals all together. Partnerships help to focus everyone on the p&l & that alone is a huge benefit.

Of course the rent $ are relative to the market & the site, but your in the area of 500K in lease obligations (minimum) so I would be wary to put a froyo business in there. I would be looking more to businesses that can capture at least two of the service parts, lunch & dinner for example, than a dessert item. If you decide to exit, your leasehold improvements & your equipment package is only going to limit your market of buyers. How big is this space?

It might be worth taking a closer look at the kosher subway franchise.
I would be curious to know if the original franchisee had interests in other subways (kosher or not) or if he just controlled the unit you spoke of.
Was he a noob operator that got overwhelmed, picked a bad location & was under-capitalized or was he a sharp multi-unit operator that couldn't make a success out of it. How did it close? Was it listed for sale, did it change hands or just go away one day?Perhaps you should contact the franchisor and make some inquiries, but be clear that you are specifically interested in a kosher operation to be located in Brooklyn (i believe subway was founded there, btw) otherwise they might just give you the run-a-round & ask that you complete their franchise docs first. Worth looking into & worth the DD.
Subway's oxygen is volume & you might be in spot that can provide that.
The build-out costs for subways are reasonable if you take an aggressive role in controlling the costs, source used equipment & perhaps by taking on the role of general contractor (I don't know if that's even allowed in NYC) & really pencil whip your subs on price. One example, I often look for subcontractors that don't mind working side-jobs & let them work at odd hours (sometimes very late or even overnight). LOL, they always seem to have extra material in their service vans or garages too.

I guess my questions to you are should someone like me with no retail/food experience even consider getting into this business? Am I aiming too high by trying to open my first place in this type of area, and which of the ideas if any makes more sense to you.

Operating these types of businesses are really not that difficult, the major mistakes are made before opening--bad or ill-defined concept, bad location, illogical expectations. ( I was going to quote the second part of my last post, I don't see it. Probably closed my browser after hitting preview and not submit. I'll write it up again tonight--sorry) Are you thinking to big, based upon the lease on the place your looking at, maybe, but I don't know what kind of capital investment you are looking to make, would you involved partners & what return would satisfy you & them. Your asking the right questions.

Could you expand on this a little bit? How do 'drill down' through concepts? I know its vague, but I think there is something really important here.

Are there any readers of this thread who are of Vietnamese descent with language ability & some knowledge of the food culture. If so, please pm.

The process of “drilling down through a concept” is simply a matter of peeling back layers of an operation until the edges they are trying to exploit are revealed. Most of these edge's will have been manufactured during the pre-planning stage and are of the process, throughput & efficiency variety. You won't often find a concept that has one overwhelming edge over it's competition, it's generally a matter of accumulating incremental edges & wrapping the business around them. One fundamental mistake in identifying edges is to assume that a high gross margin is a legitimate & durable edge—it's not. Competitors are quickly drawn to high margins & that competition will narrow them. Or that an operator has a huge edge because their advertising budgets are large. Advertising budgets are helpful, but more so to pour gas on the fire & really how often will someone return to an establishment if it didn't meet whatever expectation they had the first time? Is it coincidence that these establishments which presumably do it with advertising also have the best locations & maybe a pretty competitive price/value offering?

A real edge might be extracting value from an inferior cut of meat through a cooking & holding process & then combining those ingredients with other low price commodities like beans & rice in just the right the measures to create a flavor profile, physical size & weight & thereby price/value relationship that is attractive to a wide & growing audience. They might trade-off investing in expensive tv advertising campaigns & instead invest the same $ in operations that focus on scratch cooking vs. processed goods and then balance the increased management & skill levels required of scratch kitchens by running a very short menu very, very well. This = Chipotle.

Hope that helps.

Hi OP, nice and informative thread! I have a question - sometimes, as probably many others, I have a dream of opening a bar. I'm thinking about student / very nonformal type of place, that would create sort of community of people who go there. This should include some activity, which should attract and keep people, like table tennis, darts, table football etc. Its still in a dream stage, and could you please give some thoughts on its success chances? Thanks

I don't enough about your background, investment capacity & few dozen other things to provide you a good answer. Why do you want to open this bar? A dream is not a good starting point.

Sorry for such blunt question. What I really want here is a few first obstacles and / or usual mistakes people do when opening bars, things that come to your mind first when thinking of it, so I could think about them and let this dream go with valid points. I have no expierence in bar business, I would come way undercapitalized, and no connections in relevant industries. I'm pretty sure myself this would crash and burn, just not sure what exactly would hit me first.

Well you have admitted to the two major mistakes operators make. #1 being under-capitalized & #2 no operating experience. I'm not sure what advice I can provide you. Inexperienced operators need to be over-capitalized since they will make many, many costly pre-opening mistakes. Even well capitalized operators fail, but being under-capitalized to start = likely failure.

I have a question about location. Why is it that indys decide to open business up in a location where a rest. recently failed. For example a burrito place bought the location of a failed quiznos in my area. What makes them think that they have a chance? Is it an ego thing? I see it all the time; a restaurant taking over the location of a failed restaurant. Location, location, location ??!??!?!

add: the worst is when they don't even change the decor!

Because good locations never come on the market

The short answer is that indy operators make many mistakes & these locations that you speak of, which they purchase & then try to re-purpose are really the only ones that come to market & that they are aware of. ArturiusX is right that fewer good locations are available than you might think.

The logic that most indy's follow in these purchases is to leverage the existing build-out to save $. One of the most expensive components of your build-out is the installation of a suppression system over the hot cooking line. This is essentially a stainless steal canopy that is hung or mounted over your deep fryers, broilers, saute station etc...etc... The canopy is connected to a large exhaust fan (often roof mounted) & then has return air connected to balance the exhausted air with fresh (sometimes tempered air). You will also need to have a fire suppression integrated into it. This is an expensive installation & one that novices often over-pay for.

There can be some value in these locations, but only after you determine why & how they failed.

Awesome thread so far. I'm in central Florida and am in college for game design. However I got into brewing along with some friends and we have since discussed opening a brewpub or a small scale brewery. I have one friend who has been brewing for a couple years and is in the construction business, one who just graduated with a mechanical engineering degree, and myself and another with 3+ years each of working front and back house of a restaurant.

As far as capital goes we have not really visited that idea but have come to the consensus that we will graduate, work jobs respective to our degree/expertise for a couple to a few years while trying to put aside X% of income, and then revisit this idea again. Assuming it is still something we would want to pursue we would be looking at around 100-200k of today's money.

None of us have significant book keeping skill, or any management experience other than me shadowing a restaurant manager for a month or two while also working there. My future brother in law is an accountant and works for a large hospital so I'd assume I could receive help or a referral to get help from him. Questions that I have off the top of my head are the following:

1) Assuming there are four of us that start this business, what is the best way to set up a fair equity share? We would be more than likely contributing different amount of initial capital, workload, expertise, and re-investing back into the company.

2) How feasible does this plan sound based on what I've given you? The restaurant side of the business would be limited to faster, traditional pub food. Think pizzas, burgers, fries.

3) What is the best way to find out more about zoning laws, distribution information, and other restrictions we could be looking at without running into biases?

4) Any other information you can ask me about or tell me about would be appreciated.

I've been lurking this thread for awhile now, and first and foremost would like to thank you for the wealth of knowledge you are sharing. You clearly have a level of experience that far surpasses most novice and naive individuals with ambitions of operating a business in the food service industry.

That being said, I am the individual that PrimordialAA was speaking on behalf of. I will attempt not to derail this thread too much out of respect for the other individuals looking for information pertaining to this thread, but would like to engage you in some conversation having to deal with my particular situation. Again, I thank you in advance for taking your time to do so.

I figured I'd answer some of the points you put forth not as a defensive posture; but more of an insightful way of showing my true character and integrity.

Disclosure: I don't pursue chef driven concepts.

My venture is not intended to be displayed as an over the top theatrical showing of my culinary abilities to a possible owner/franchisee. My concept is not driven by inflated ego as it is with many chefs. I come at this with a very neutral and level-headed approach.


I don't value chef's as highly as many of you might think. There is a place for a reliable & competent chef, but for me it's not about creativity or flair....it's about the p&l & how he can contribute to it. Is he good at stacking lux ingredients on a plate,designing entrees that require high price points & high input costs that serve to isolate our market--not so good. Is he very clever with portioning size, working from raw goods & in general knows how to put some value together for the house & the customer--really good.

I agree with everything said here. I strive to maintain at least a >30% food-cost with the majority of the menu. While maintaining fair and competitive pricing. 70% GP per plate is basically an industry standard in your low to mid-range dining establishments in my locale. And while food cost % may go up with various items/specials; other items on the menu buffer that rise in plate cost in my current establishment. Portion sizing is of utmost importance to me. I strive to find the delicate balance of keeping the owner happy and the people who fill our wallets happy. While I do have the capability of putting out a $40-$60 plate of culinary wizardry, I understand there's a time, place and particular location for that. Not all restaurants can operate at the same level.

One of the first things I look at in a kitchen is the walk-in boxes (coolers & freezers) & if those places are not in spectacular order & maintained like a bank vault--it's gonna be trouble. Guaranteed.

When I'm in charge, my walk-in's and store-rooms are obsessively maintained and organized. When I walk in to do my inventory and ordering, the shelves read like a food dictionary for my stock. I sweep the room with my eyes and know exactly what I have, what I need, and what is missing. When I'm not there, the power of delegation takes care of it.

Trying to catch on in one of the better nyc, chicago or boston kitchens is not a bad idea. Focus on learning & not owning...

To be quite honest I've put 10 years of my life into working under/for individuals to make sure their vision and goals are met. Sacrificing my own life to put considerable sums of money into the pockets of others. Taking everyday as a learning experience, climbing the ladder of excellence one rung at a time. I've taken my share of spills, and learned many harsh lessons. But have never lost focus of the objective. I currently feel beat down with the amount of energy, blood and sweat I've put into this. All for a below average 32K a year. I feel it is time to venture for myself and work on my own clock, not someone else's. As far as a network of contacts, I have a handful of trust-worthy and capable people whom I could call on if needed.

Is he reading the trades, learning about product pricing, thinking about price stablility & in general thinking critically about the industry? Or is he watching top chef & getting regularly wasted with his crew? I have met many, many chefs & most of them don't have what it takes & do not warrant an investment.

I fully comprehend the intensity and constantly evolving dynamic environment the food industry lives in. It takes a dedicated and mentally honed individual to keep on top of those details. I just recently saved my owner an average of $19,200 a year on food product overhead alone by doing my research and shopping around for the best pricing. Crucifying a few purveyor contacts and friends, in the name of business. A fact that I feel is being overlooked by the owner unfortunately. A large reason why I want out, and into my own gig.

I absolutely loath Top Chef and programs like it. I believe shows like that over-glamorize the industry leading to an influx of unfortunate knuckle-heads into thinking they can open, run and maintain their own establishments. With little to no knowledge of the true monster a restaurant/food service business can be. With a failure rate of 70%ish in the first few years; many of these poor souls get eaten alive before they even taste the faintest hint of success.

As far as getting "wasted" with my crew, that's a big no. I do not partake in mingling with my subordinates after hours. To many bad circumstances are the outcome of that mistake. I also refuse to become part of the statistic in this industry with some of the highest percentages of addicts, alcoholics and suicides.

(BTW, the bbc version of Gordon Ramsey's Kitchen Nightmares is quite good)

Yes, Gordon Ramsey is pure genius and a very inspirational individual.


Now that I've wind-boxed this thread with my answers to what were probably rhetorical questions in the first place; I'd like to get to the nitty gritty of what my current situation is.

I either A.) Want to own and operate a mid-scale catering service, with an emphasis on off-site catering and private chefing in people homes and/or events. Having a location to serve as a limited seat restaurant and catering/function store would be great, but would obviously lead to far greater overhead than just off site alone. Doing this in Vegas last summer was one of the greatest experiences of my life.
Or B.) Run and operate an upscale Italian & Mediterranean restaurant with a focus on fresh ingredients combined with a rustic non-pretentious menu. I'm not looking to re-invent the wheel. I'll leave the absurdity of gastronomical science to the ego filled professionals.

I'm leaning way more towards choice A.), for obvious reasons. My only obstacle is the monetary capability to make such a venture a possibility. Especially in today's economic climate. I feel as I though I have a leg up on many people with this dream. I do not by any means claim to be the end-all expert on any of this, and am constantly learning. I have true, raw and undying dedication...and that's a good starting point. So feel free to give me your opinion and advice.

Thanks for your time.

Hey OP, I hope you don't mind me adding something to one of your posts, but I was a cashwrap manager at a high volume store (>$100k/day cash) and had a lot of experience controlling internal loss.

My additional tips:

- Have a "clean" cashwrap policy. Calculators, cell phones, and notepads/paper should be absolutely forbidden as they can be used to keep track of unrecorded sales.

- Be on the lookout for "counters". A cashier playing with paper clips or building a rubber band ball could be creatively keeping track of unrecorded sales (yes, it has actually happened)

- No trash can at the register + require cashiers to give customers receipts. Cash from unrecorded sales can be discreetly dropped into the trash and will not be visible among undistributed receipts. (yes, it has actually happened)

- Don't allow coins to be kept on the counter or on top of the register. Coins that customers don't want should be secured in the drawer, not left on top where they can be used to make change for unrecorded sales. (Cashiers will bitch about their drawer being off, but it never comes out to more than a dollar over the course of an 8 hour shift).

- Beware of "creative" till organization. Require all bills and counts be kept in their designated slots. Putting the till back in order before a count out gives the cashier opportunity to pocket overages.

- If you have a tip jar, keep it far enough away from the register that the cashier can't discreetly make change for unrecorded sales.