A seasoned restaurateur just opened a new restaurant, unfortunately it’s a disaster, Why?
The premises: This fellow has opened several restaurants in the Los Angeles area. His last operation was in business for more than 30 years and very successful it closed for following reasons:
Lease was coming to an end, the landlord as usual was very greedy and came up with an imposible lease. The health department closed the place for vermin infection [not a very good medal to add to the restaurateur’s blazon.]
Although a very knowledgable restaurateur he made the same mistakes as a newbie will do.
Mistake number 1: He never asked Best Eatz for any advices [which by the way are FREE.]
Mistake number 2: He did set up his business model with the prospect to open several stores. Before thinking of the next location it’s well advised to concentrate to the one being open and to make sure this new venture will be in the 8% of restaurants who stay in business, and not to be accounted in the statistics. [Morale of the story do not sale the milk before it’s milked.]
Mistake number 3: The previous owner went belly up in this location. There was never any attempt to get in touch with previous owner to get the scoop of: Why? Who? When? What? How? It’s great to be able to know about all those whys, before signing the lease.
Mistake number 4: Got involved in a less than 100 seats restaurant with 2 other partners. With less than 100 seats how each partner is going to make a living? The maximum $ they can expect to gross? At best the profit will be around $600,000 to $700,000 (in regard to their menu prices and the # of seats.) Only if they manage their business with savvy. Restaurant well managed can expect a profit between: 8 to 12%. In their case under best condition they will generate $ profit to divide between 4 equal shares to = $15,000 each. How will they ever recuperate their original investment? $1,200,000 gross at 12% $144,000 profit divided by 3 partners = $48,000 each.
They have invested 1/2 million dollars to make a profit of only $48,000 ea. There are many other investments with higher return, with less risk. Those figures take into account, that they are successful, which is no guarantee.
Mistake number 5: Poured in 1/2 million dollars in remodeling without posting for the liquor license first. Now they have one person who filed against the license. Expectation of resolve, 6 months to 2 years. Another problem, since they closed more than 90 days for remodeling, they now come under the new regulations. Those regulations require a parking space for every 100 square feet of the dinning room occupancy; meaning they are now short of 8 spaces. Results: They will never get a full liquor license maybe not even a wine and beer license. A TERRIBLE MISTAKE, this might cost them all their dreams.
Mistake number 6: Signed a short lease of only 5 years. You never, never, NEVER sign a short lease. It takes about 5 years to get a restaurant going, when you are going you have now a new partner, the landlord who has been waiting in the shadow. This monster is now going to suck the maximum he can from you. You are doomed.
No business plan, no marketing plan, no staff training program.
In other words, although a seasoned restaurateur, he did set himself up for: FAILURE. Those are all newbie’s failures, obviously always present and ready to jump on the unaware at any time.
Morale of the story: One is never sheltered from basic mistakes. Before getting involved in a restaurant business, smell the coffee, take a deep breath. First thing first, you might save hundred of thousand of dollars by getting advice from professionals before signing anything.
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The staff at BEST EATZ