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Investigating starting a restaurant

post #1 of 18
Thread Starter 

I am considering a career change from software to the culinary world. Currently I'm doing the hordes, heaps, loads and stacks of research needed to learn whether or not this is a good choice for me. I am also investigation short-term intensive culinary arts programs, and although I live in both the USA and Buenos Aires Argentina at the moment I'm completely open to relocation for school (UK + USA dual citizen, love living abroad).

About me, I am a serial entrepreneur (although all my adult businesses, the first created at age 19 making websites during the dot com boom, have been software-related). I grew up in Australia (Melbourne), Belgium (Liege), and the USA (Seattle and Bellingham primarily). I speak English, French, and Spanish. At time of this writing I am 31 years old, born in 1977.

I absolutely love this forum, it embodies the best of web forums (experience, knowledge, respect) and has been a wonderful resource for me so far.
post #2 of 18

welcome to Cheftalk!

I wish you all the luck in the world and if you are as successful in Software as you say I also wish you the same success in the restaurant biz.

If I may offer one (or 20) suggestion(s)?

In my 30 years of experience (dishwasher to ownership), the close to 100 concepts and properties I have been associated with and the lessons learned the gawd awful hard way.......

Do not under any circumstance go into the venture with no less than 3-5 years of working capital. That, IMHPO would be looking at things from the standpoint of a 100 seat property. This involves a budget of 50m a week. You may not reach those sales and you very well may but if you have the capital to cover expenses to the level of service, exeution and quality that you would provide doing those sales, you will beat the averages. Those averages are....50% of all restauraants fail with in the first year.

Secondly , what you start doing when you open the doors as far as hours of operation, staff needs and food quality.......don't change things unless it's to imporve quality and service.

There are a great deal more nuances to things than I can list without getting long winded (as if I wasn't already. Hehehe) but any questions you may have I will be happy to try and answer them. I don't know everything but I have had a good deal of experience in opening restaurants. (close to 20 to date with 12 of them in two years way back when.:beer:
post #3 of 18
I've learned the secret for making a million dollars operating a restaurant...start with four million!
Specialties: MasterCook/RecipeFox; Culinary logistics; Personal Chef; Small restaurant owner; Caterer
Specialties: MasterCook/RecipeFox; Culinary logistics; Personal Chef; Small restaurant owner; Caterer
post #4 of 18
Well said!!!!!!!

Oh yeah. Just remember this. A wise man once told me it is better to have 1% of a million dollars than 10% of nothing.
post #5 of 18
Thread Starter 
The best way to make a million from a restaurant is to start with four, I love it! With a 50% first year failure rate...

oldschool1982 thank you so much for all your advice! I did not find it long-winded at all, on the contrary I hunger for more! Anything I don't have to learn the gawd awful hard way is fantastic. I think back to many of the trials and tribulations of figuring out the software scene and cringe at how many hours were wasted "building character".

Thank you so much for throwing me a few bones, my ear is always available and appreciative!
post #6 of 18
Write up a list of questions and ask away!
post #7 of 18
Thread Starter 
I have quite a few questions. I know I have a lot to learn, I’m going to post what I don’t know. I’ve tried to limit them to things that are difficult to research or otherwise discover on my own. Perhaps each question could be its own post, but I’d hate to spam the forum to death. I’ve categorized my questions – any assistance anybody could provide is most appreciated. As far as the restaurant, imagine a simple sandwich shop with a walk-up sales window near a university. Additionally I know the post is massive, thanks for anybody who takes the time to read it.
I am considering purchasing a Panini grill, an electric vertical rotisserie, a refrigerator with a prep surface on top and a griddle. I’m looking at purchasing these items used. Is there anything in particular I should watch out for? Is there a problem with purchasing any of these things used?
I read on this forum that a good place to purchase used restaurant supplies is at auctions. Where do I find these auctions?
Should I purchase a meat and cheese slicer and a vertical rotisserie, what are the risks I face with employees handling them? Do I need to create a training program to teach them how to use them? What about liability?
I have been reading about meat and cheese slicers. Some say “It is not suitable for continuous, heavy use, raw or frozen meat, or cheese”. What does this mean? What is continuous heavy use? If I need to slice 50 lbs of meat does that constitute continuous, heavy use?
Government regulations
Is it true I need a special license for a grill/griddle in the U.S.?
Where do I find out all the government regulations for my area?
All of my experience with employees in the past has been work-for-hire and freelance. How would you recommend I go about screening employees, and do you have any great advice for how to retain them?
If I create a truly modest operation (1-2 people working at a time) how do I protect myself from an employee quitting at a moment’s notice? Do I just cover the shifts?
How do I determine how much to pay my employees?
Do any of you have any advice on how to provide health insurance? Regardless of the position, I would like to provide it. I know that Dick’s Drive-In in Seattle does simple burgers, fries and shakes but their employees also get health insurance. I would like to do the same.
How do I deal with trust and theft issues? At what point should I feel safe handing over the keys to the restaurant and the cash drawer?
How much time does it generally take to train somebody new to the point that the trainer does not need to be there (simple food prep and POS services).
Shelf life of food
How long after prep should I keep various ingredients around? For example if I chop an onion, how do I determine how long to keep it before throwing it out? Is this something I will learn in a culinary arts school?
How do I gauge how much to prep? How many onions to chop, etc.
How long after buying dry aged meat at a butcher can I keep it refrigerated before I shouldn’t sell it?
Running capital / costing / markup / profits
It has been recommended that I have three years of running capital. Does this mean enough money to keep the restaurant running for three years without a single customer? What do you think about this number.
If I were to sell sandwiches at $5.50 to university students, how would I make a ballpark estimate of how many I would sell per day/week? Do I watch the competition and count? The cost / sales estimate analysis appears to be a black art, I don’t really know how to proceed with the estimates.
Bankruptcy / lease agreement
If I fail and need to exit a lease how can I do this? If I create an LLC will I be protected from a need to declare bankruptcy or something similar?
Branding / signs
What should I look for in a sign company to make custom lit signs? I have no idea what to look for in a sign company.
Software infrastructure / POS / inventory
What kind of software am I likely to need for simple POS management and inventory tracking. Is there anything you would recommend? Is it actually any good?

Thank you so much for anybody with experience or wisdom to share.
post #8 of 18
Thank you for introducing yourself, PouncingPanda. I see you've got a very interesting discussion going already.

The topic is very important and needs the broadest audience possible for you to get the feedback you desire. I'll move it from the Welcome Forum to the Professional Chef's forum.

Good luck in your venture!
Moderator Emerita, Welcome Forum
***It is better to ask forgiveness than beg permission.***
Moderator Emerita, Welcome Forum
***It is better to ask forgiveness than beg permission.***
post #9 of 18
Im going to start this post off by giving you the same advice I give to just about every career changer that comes to Chef Talk seeking advice: you had better be sure you love the restaurant business before changing careers. First off, the love of cooking does not always correlate into the love the restaurant world. It is a whole different game. I suggest you spend some time working in restaurant before you get in too deeply. Next thing you need to ask yourself is can you afford it? Can you afford to take a huge salary cut? And that's just thinking about changing from your career to an entry level cook's position. It is even worse starting up a restaurant. Can you afford to not pay yourself for weeks on end, maybe even months at a time? As an owner this is a real reality. Bills and staff get paid before you do. Finally, forget Food TV and celebrity chefs. There is no glamour in this business (or very little for a select few). You work long, hard hours in a hot, stressful environment. On top of that, as an owner, you have hours of work ahead of you above and beyond the day to day grunt work. Im not saying not to do it, but seriously consider what you are thinking of doing. Ask yourself all the above questions. If you have even the slightest doubts then my advice to you is to not do it. Here's another sobering statistic: while 50% of restaurants will close within 1 year, 75% will be closed within 3.
post #10 of 18
This needs repeating!!!!!!!!!

Hope we haven't scared ya yet or.....maybe we have?:D
post #11 of 18
Thread Starter 
Thank you. I absolutely agree with you. This is a question that I am spending a lot of time and effort investigating. Additionally I am taking into account "escape strategies" in my business plan should I never sell a meal or decide that I truly hate owning and managing a restaurant. This includes a total financial commitment that I can, in the worst case, walk away from without it being cataclysmic.

As for the details, I know I have a very large list of questions, and I truly appreciate any additional assistance that can be provided.
post #12 of 18
I've been lurking this forum for about a week since I found it, your post was enough to make me register... for what that's worth... Also, all my experience if from USA restaurants. If you decide to open in another country, my comments may or may not apply, I really have no idea.

I worked in a restaurant owned by a guy in a similar situation, but from your posts, obviously a completely different outlook. He had never worked in the restaurant industry, but decided it'd be cool to open one. Eventually I was promoted to the executive chef position of that restaurant, and I'd constantly hear complaints about how he has never taken a paycheck out of the place, how he needs changes made, and how his well has run dry. His mistakes were beyond numerous, too many to even get into, but most of them could have been avoided by simple insight from the average line cook. The two mistakes I will mention, first, he hired a friend to be general manager who also had no prior restaurant experience. Then, because they were friends, he gave him a six figure salary. The guy worked 8-4 Monday through Friday. As anyone in this business can tell you, it's bad enough that you don't have any experience in the business before becoming the general manager, but it's even worse when you try to hand down edicts based on second hand testimony of problems that happened over each and every weekend. Once we did a banquet that he booked. The party paid $4200. I paid almost $3800 to order the food we needed, and that did not include the open bar. After mentioning the problem to him many times over for the past six months, he came to me after that night and said "We should review this banquet option." Duh. The second mistake of the owner, he was an egotistical bastard. He had all the answers. Except they were usually wrong. After a year and a half of trying to reason with him and improve things, I left. Never been happier. Bah, enough rambling, you've got questions.

Plan your menu first. Then try to estimate your sales of particular items. Then figure out what equipment you'll need. A rotisserie is great, but if you find yourself selling 10 roast beef sandwiches a day, you don't need the biggest and best model available. This is something that is tough to estimate, and even tougher if you haven't been in the business, but you need to find a way. More on this later. The last place I worked at bought a 40 gallon tilt skillet for soups. It cost over 10k USD. We sold maybe 2 gallons of soup a day. You can see the error.

You absolutely must train each employee in the use of all equipment. Thankfully, it doesn't take long. Teach them to use the guard and the handle of a slicer, don't push things through with their hands. Always return the blade to a neutral position before cleaning, and of course, make sure it's not running. It's all common sense, but if a guy sticks his hand in a slicer, it's still on you. Pretend you are talking to a five year old when teaching safety precautions. Nearly every time, they already know, but you have to say it anyway.

Are you buying an existing facility or building from scratch? I've never dealt with licenses and such, but there are specialized companies that deal in selling and repairing kitchen equipment, including exhaust hoods and maintenance. If you're buying and existing place, have an inspector come before you buy and make sure if everything is up to snuff. If you're building from scratch, talk to some hood companies and have them install everything and inform you on what you need to do to keep up with code. Sorry if this advice is vague, I just haven't had that much experience with it.

Ask them both food and non food questions. In a sandwich shop type place, unfortunately you will sometimes be hiring people that don't have experience. These people should demonstrate some eagerness to learn and work hard, or at least have some idea of what they are doing. Ask them if they know what's in a rueben, or how they would know if beef is at a certain doneness. If they simply say, "I don't know." then that's a red flag. Even if they don't know the answer, a response such as "I'm a quick learner and though I don't know now, I would like to know." Enthusiasm is key. Ask them what they do in their free time, then why they like doing that. If they like to play golf, why? If they can't come up with an answer quickly, think about why that might be. Everyone has fun. I rarely hired anyone without experience, but the one question I would always ask is "Have you ever burned bacon?" Every chef has. If they said no, but had a lot of experience, I probably wouldn't hire them.

Pretty much. In a small operation like this, you should expect to be there open to close every day for at least a few months in the beginning. Once you can find people you can trust, you can take a day off here and there, but be ready to come in at any time.

You can try to call around other similar businesses in the area to see what they are paying. Some will help you out, most won't. Peruse your local craigslist and see what people are offering for similar work. When you first open, it's easiest if all employees in the same position start at the same wage. After a few months, you'll quickly realize who is worth more money and who isn't. Also, hire more people than you think you'll need, probably double. Not only are people new to their jobs and not proficient at them yet, but restaurants are generally busier when they first open. People want to check out the new place. This added stress tends to make people quit/walk out/not show up.

As for how long to keep ingredients, you don't need to learn it in culinary school, you should already know. Chop an onion and throw it in your fridge. Check on it a couple times a day. Eventually you wouldn't want to eat it. Same with everything else. There are guidelines involving shelf life on various ingredients, you can google them easily, but most of it is common sense. Just don't go overboard. Fresh is extremely important, of course, but I once worked in a place that wouldn't allow any sort of cut tomato to be sold after it was more than 6 hours old. If the AM prep people made bruschetta, they had to throw it out around 4pm. Not only is this ridiculous, it increases your labor, food costs, and headaches.

How to estimate how much you'll sell? I guess this is tough without experience. The general rules are, one the longer it takes to make an item, the more sure you should be that you won't run out. Two, the better an item keeps, the more you can cheat ahead. For example, if you're making a pulled pork sandwich that braises for 3 hours, you better be **** sure you have enough for the next day. On top of that, you can braise a ton of pork at a time and then freeze most of it. Just pull out a little each day. Sliced tomatoes on the other hand are probably going to be a pain. They go bad fast, can't be freezed obviously, and you won't be able to cut tomatoes to order during a busy rush without sacrificing a lot of productivity and sales. On top of that, a sandwich place that runs out of tomato is ridiculous. In the beginning, slice more than you think you'll need and identify slow times in the day where you can slice more. With items like these, you set pars throughout the day. For example, if you're busy from 11:30am to 1pm, have a bit of a lull until 5pm, then are busy from 5pm to 8pm, decide how many tomato slices you need for each rush. You'll want to cut more than you'll need barring a crazy tomato rush, but at the same time, not too many that they don't get used at least by the follow lunch and dinner the next day. For items like these in the beginning, plan on wasting a good bit until your business levels off and you can nail down the pars.

Three years without a single customer would be good. There are many hidden money sinks in restaurants of any kind. Training a new employee will cost anywhere between $200 to over $1000 in additional labor cost before they can perform the job the way you want. Equipment breaks and needs repaired. A key ingredient's price rises. You need new equipment that you hadn't anticipated. All the while, you are working 80 to 100 hours a week and need to pay your mortgage, your bills, etc. Think of the worst case scenario over a year or two span, and then what you would want to have left to go on with your life. Add that all together and that's what you should have.

Do you like it? Does it look appealing? Is it visible and recognizable from an appropriate distance? I've heard stories about the letters in the lights of a restaurants name being out for years because the owner and all employees entered from the back and never noticed. Consult with your key employees, more on this below.

There are a ton of POS software programs available. Make sure you get one that is easy to use and is adaptable. You come from a computer backround, so you should be able to easily master even the most complex system and make it work the way you want.

You want to get someone who has worked in the business who you can trust. How exactly is up to you. You need recipes, staffing pars, ordering pars, ability to adjust, a million other things. They need to realize that the local college football game is going to create a business spike right after the game ends, and they need to be ever aware when the kids go home for easter break. There's a snow storm coming up in four days, order and staff less. There's an article in the paper touting the weight loss benefits of chicken over beef. Lent is just rough. Don't fool yourself into think it's as easy as people order food and you make it. Any minor detail can affect your business and needs to be planned for accordingly.

Lastly, I don't think you need culinary school, I think you need experience. Go work in a restaurant similar to the type you want to open. Work there for a year. Learn to deal with the frustration of having to work ten times as hard when someone calls off and there's no replacement. Learn to spot troublesome coworkers from the start. Learn how frustrating it is to work 12+ hours for low pay and no thanks, and sometimes not even a tidbit to eat, let alone sitting down. Learn how to sweat in 100+ degree F for that entire time. Learn to take silly orders from a chef or manager that has worked too many hours or lost too many brain cells to drugs, alcohol or both. Learn to do it with a smile while you watch them do not half the work you do. Learn to be treated like the "rank and file" with an absolute expectation of perfection or else. Most of all, learn to love it. If you do love it, great, that's the most important quality. If you absolutely hate it and can't wait to get out, this business is not for you.

If you have any additional questions or something I didn't answer, let me know, I'd be glad to help. The owner of a restaurant can be the greatest or worst person, and it's a fine line between the two. Wow, what a novel I wrote for a first post.
post #13 of 18
Thread Starter 

I think I'll give you a free sandwich or three when the time comes! Thank you so much for such an informative and thoughtful post. The more information the better, absolutely. This is wonderful.

Also, welcome to the forum!
post #14 of 18
I have been in this business many years and have owned and operated many places. I just want you to keep this in mind

A restaurant, contrary to what some believe ,for the owner is not show biz. You have a strict boss and he is unforgiving. It is the FRONT DOOR, it must be licensed, staffed, insured. cleaned, equipped, opened, closed, stocked, in other words taken care of. The first year or two you may not make a dime. Most banks will not give you a loan, in fact they will tell you its a high risk. Put your money in bank you will probably do better with interest, its cheaper to work for someone else in these times.:lol:
post #15 of 18
Words of wisdom in these posts, for sure.

The best advice I can give you is.....get some experience. Go work in a busy restaurant kitchen for a year. Study and learn all that you can. Come in before your shifts, stay late, volunteer for any and every job available. Even some experienced and talented chefs make terrible restauranteurs and end up with businesses that go belly up. And the restaurant business is like no other business. You have a business background...and that's great....but again you'll find this field is totally, totally different from any other.

With that said I'll try to help with your questions as well....find a mentor who knows equipment and knows it well. Scour Kijiji and Craigslist for restaurant closeouts and auctions. If you don't find equipment you can use there you will at least make contacts and those contacts may lead you to equipment you need.

DO NOT fall in love with anything. If you see a piece of equipment that you absolutely must have....try to act nonchalant...almost like you MIGHT take it off the person's hands...but you don't care one way or the other. Used equipment dealers capitalize on the excitement of first time restaurant owners and they'll try to sell you the white elephant if they can. This is where a mentor is invaluable--get all the specs on the equipment including how old it is, what make and model it is, and how long its been in use. Oh and what work has been done to the machine. Call your mentor with this information. Someone who knows this type of equipment will be able to tell you its value, potential problems you might encounter, and what to look for and avoid. And then you'll owe that person alot of sandwiches once you get open!

Workman's comp and your liability insurance should cover any workplace accidents IF you train your staff properly. There is always a risk that employees will abuse equipment...or use it improperly or carelessly. You must train them properly. And observe them after you have trained them to make sure that they are still using the machinery in the manner in which they have been trained. All employees should also take a food safety course...that will cover some of the aspects of treating all equipment with respect and operating it safely.

You will need a proper ventilation system for a grill/griddle. Regulations differ with electric and gas models. I would call your local fire department to find out building code regulations for your area. I would also call the health inspector once a location has been secured. Have them come down and take a look at the space. Tell them what you want to do...and ask them what changes to the space will need to be made in order to pass your health inspection.

As far as finding employees...oh...believe me....you'll be able to spot the deadbeats a mile away. And don't be in a hurry to fill a spot...so much so that you hire a problem. I have a really good vibe for people...I can tell in minutes if a person is the right fit for my shop. If you do not possess this skill yourself you might want to find someone who does. Someone who understands what you need in an employee. Give them a list of questions and ask them to do the preliminary interview for you. If you have a good relationship with your local entrepreneurial centre they will do this for you.

As far as retaining employees--pay well and treat well once you find the right person for the job. Consider their needs and desires. Find someone who wants to learn and grow with your business.

Health benefits--I don't know too many employers who can afford to provide them. I'd put the money into giving them a higher hourly wage instead. Health insurance premiums are EXTREMELY high.....not really feasible for most employers. And if you're hiring young people they aren't really going to care or consider them that much of an attractive salary package. I know even at my age--I'm 37 with a healthy husband and no kids--I could care less about health benefits. BUT that is just me. Someone my age with kids at home might feel differently.

You can't protect yourself from someone quitting at a moment's notice. It happens. The sad reality is that as an owner of a restaurant you are going to have to be at the place almost 100 percent of the time without exception. You are going to need to know how to do every single job in the restaurant...and you are going to have to be prepared to fill in. For example I have an extremely reliable sous...she got sick last week. Really sick. I don't have a back up for her...so guess who had to step in and do her job and mine? That would be me! It's a sad reality of ownership. But you must realize now....this place is going to become your life. Restaurants demand your heart, your body, and your soul. You will eat, drink, sleep, and live this place every minute of every day once you open it. Be prepared...and proceed with caution.

It's hard to determine what to pay an employee. I generally go from what their previous employer was paying them and then start them at a dollar an hour higher with a promise of a raise in three months time if I am pleased with their performance.

As far as the prep question goes...you need to get some experience before even considering opening your own restaurant. These are very basic questions that you MUST know the answers to....going to work in a busy professional kitchen for a year will give you the answers that you need with regard to this.

Running capital is extremely important. The restaurant business is unpredictable at best. And just when you think you see a pattern it will change on you. And you will have very busy times and very, very lean times. Money in the bank to cover the bills regardless is invaluable. It's very stressful to stand and watch a door HOPING customers will come in because YOU KNOW if they don't you're going to be in financial trouble. Take the pressure off of yourself and start with money in the bank...at least enough to run for a year without a single customer walking through your doors.

Depending on the size of your operation you may not need a big fancy POS system. A simple cash register and debit machine may be enough. As far as managing my inventory, etc....I don't need to computerize it....I just make all staff responsible for keeping a handle on it and I check it myself every day. If you have a large operation then you would need big inventory lists, etc but depending on your size this may not be necessary.

I hope that I have been able to help in some small way. Best of luck to you!
post #16 of 18
Thread Starter 
CHEFED - Thank you for your warnings. I imagine many culinary arts students have delusions of becoming Iron Chef rock stars right out of school.

chefelle - Another extremely thoughtful and thorough post on this thread, I feel absolutely spoiled! Thank you so much.

So far as gaining experience, I completely agree. The devil is always in the details and to learn these details I will need hands-on experience. I intend to find a volunteer position this summer somewhere in the Seattle area and learn the line in tandem with the research and planning I am currently doing.

Regarding workers comp and training employees properly, how do you determine how to do this properly? Should I get a job somewhere as a dishwasher and observe the training for a meat slicer and hope their training is good? How do I know that this training is "good enough" both to decrease accident risk (#1 priority for me) and to mitigate liability (#2 priority, also important)? Is there a set precedent for determining such procedures?

Your warning about falling in love with an item at an auction reminds me of an amusing story - University of Washington surplus auction. I was there with other computer geek friends buying used computers for servers for our website construction/hosting business. They had a palette of used small dorm fridges and the conversation went something like this:

"Dude, Steve took the beer fridge when he moved out"
"We don't need 32 fridges"
"Let's just get 2"
"We can't, we have to bid on them all"
"It's a silent action, let's just bid something and ditch the rest"
"No way, we don't need 32 fridges"
"Nobody's bidding, let's just bid something"
"Dude, seriously, shut up. Everybody's staring"
"I want to bid on the X-Ray machine from the UW medical center"
"Dude, no. We're not getting an X-Ray machine"
"They took it off the list, they're not selling it"
"They're almost done, I'm bidding something"
"You're an idiot"
"It's worth $25 to me to get a fridge, I'm bidding"
"Bid something stupid"
"Okay, here it goes, $28.53"
"What the heck guys"
"Dude, we're the only ones bidding!"

Long story short we had an apartment full of fridges for a while, most of which we sold for $20 a pop to all our friends. True story.
post #17 of 18
The advice you have received here is outstanding and I have learned quite a bit myself.

When students tell me that there long term goal is to open up a restaurant, I first as "Why?" and then ask "How do you plan on doing that?"

You have this deli idea in mind which is great. I would recommend that before you make the financial investment in this, find a business that you like and is ideally similar to your vision. Then figure out a way to work there. It appears you work full time and daytime hours so you might just have to limit yourself to working for free on a Saturday or Sunday. I have had students do this just to gain a little experience or get their foot in the door.

I would recommend the same to you but because you have asked the right questions and have really investigated this, I beliieve you will be successful with whatever route you take.

Keep us posted on this and good luck.
See the truth about the culinary education industry at www.culinaryschooladviser.com 
See the truth about the culinary education industry at www.culinaryschooladviser.com 
post #18 of 18
Thread Starter 
Thank you, these are kind words indeed.
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