You are what they eat: a how-to for the budding restaurant

Entrepreneur, Feb, 2003 by Jacquelyn Lynn

THE NUMBERS ADD UP TO A TREMENDOUS opportunity" Every week, Americans consume an average of 4.2 meals that are prepared away from home--that's 218 meals per year and increasing. By 2010, the restaurant industry will operate more than 1 million units, with sales of $577 billion capturing 53 percent of the consumer food dollar. Will one or more of those units be yours? It can happen--if you have the right recipe for restaurant success.

Most baby boomers can easily remember when "going out to eat" was a special event; today, restaurant meals are an integral part of our everyday lives. Whether we're grabbing a sandwich on the run, sitting down to a leisurely gourmet dinner at a five-star establishment or enjoying one of the many choices in between, we're eating out more than ever--and the trend is expected to continue. There's never been a better time to open a restaurant.

Experienced restaurateurs say that this is definitely a business where you can make a lot of money quickly--but you can lose it even faster if you don't have three key ingredients: industry experience, adequate capital and a thorough knowledge of the market you're serving.

Start With a Job

Successful restaurateurs agree that the best preparation for owning a restaurant is to work in someone else's first. Think of it as getting paid to be educated. "You'll learn a lot about things you never thought about," says industry expert Rich Melman, chair of Lettuce Entertain You Enterprises Inc., a Chicago-based company that owns, manages and consults with restaurants throughout the country. "There are hundreds of little things, each not being of great consequence as a single issue, but of big consequence when you put them together."

Certainly you should read books and take courses, but plan to work in a restaurant for at least a couple of years doing as many different jobs as possible. And if you're not actually doing the job, pay attention to the person who is--you may find yourself doing it when your own restaurant is unexpectedly shorthanded. "I've had to cook when I've had chef problems," says LaVerna Gilbert, 42, co-owner and general manager of Shelly's Courthouse Bistro in Santa Ana, California.

"With experience will come the knowledge that you know what you want to do," says Melman. "Are you certain you're going to love it, or is it going to wear off? It's your love for what you're doing that pulls you through difficult times." Ideally, work in a restaurant similar to the type you want to open. You may find you don't like the business. Or you may find you're more suited to a different type of operation than you originally thought. You might even discover you're in exactly the right place.

"As I started working in restaurants, I realized this was my passion," says Scott Redler, co-owner and founder of Timberline Steakhouse & Grill in Wichita, Kansas. Redler, 42, got his first restaurant job at 15 opened a Chinese fast food restaurant at 26 that failed in eight months, and now has five successful steakhouses. He also opened two Freddy's Frozen Custard restaurants. "When you have a busy restaurant and you're watching everything happen as it should," he says, "it's a wonderful feeling of satisfaction."

"Everyone likes the idea of owning a restaurant, but it's easier to invest money than it is to work it," says Gilbert. Her advice: If you don't like the work but you still want to own a restaurant, find a good operator to partner with.

Decision Time

Armed with practical experience, you're ready to decide what you want to do and put together your business plan--the most critical element of your restaurant. Map everything out on paper before you buy the first spoon or crack the first egg. Melman says 80 percent of what makes your restaurant a success will take place before you ever open the doors.

Your business plan should include: a clear definition of your concept; a description of your market; menu and pricing; detailed financial information, including start-up capital (amount and sources) and long-term income and expense forecasts; a marketing plan; employee hiring, training and retention programs; and plans to deal with challenges restaurateurs face every day. Bill Ellison, 30, and Frank Perez, 31, co-own and operate Frasier's, a sports bar in Apopka, Florida. Ellison recommends including an exit strategy. "Know how you'll get out if things go bad, as well as how you'll get out if things are going good," he says.

Be thorough, but don't write your plan in concrete. "You have to go into it being flexible," Ellison says. "Don't say 'This is what I have to offer; take it or leave it.' Open with an idea, then evolve to what the customers want."

Putting the Plan Into Action

Once you've decided on the concept and market, begin scouting for a location. Issues to consider when choosing where to put your restaurant:

* Area demographics: Do the people who live and work in the vicinity fit the profile of your target market?

* Traffic: Consider foot and vehicle traffic. How many pedestrians and cars go by daily? How accessible is the location to passers-by?