I can feel your excitement through these pages as you begin to read, anxious to open that restaurant. You are ready for the next steps—picking a location, deciding on the menu, and preparing to jump feet first into this great adventure.
The very first step is … searching your soul, brainstorming, and really delving into your psyche to determine if you really want to open a restaurant and be in the hospitality industry.
I will take you step-by-step through the process to determine if you should pursue this venture. I have met people who were born to be in the food and beverage industry. Others tried and realized this is not their path to happiness.
I have friends who tell me that they just want to prepare meat by smoking it all day. They tell me how they love brining it and cooking it; to them, this is art. They delight in making the perfect burnt ends and unbelievable bark. Others want to create vegan options like carrots that taste like hotdogs. That is their passion. I know others with the same inspiration, drive, and single-minded purpose when it comes to food and beverage.
Together, let's discover if you are one of those people who yearn to be of service to others and should open a restaurant, or someone who should go in a different direction.
You are on your career path, and there is a yearning desire that won't go away. You feel that you are not following your destiny: something is missing, and you don't just want to open a restaurant, you have to, or your soul will wither and die.
Or on a more practical level, do you see owning a restaurant to
My suggestion is to write down your answers, either on a legal yellow pad or on a whiteboard. On the left side, start with your pros; and on the right side, list your cons. It is this simple. Your pros and cons will become clear as you begin to write down the answers to the questions. Here are some other questions you need to ask and answer before you go any further with this business:
Do you love the food and beverage industry?
Are you willing to take a risk with your money?
Do you have family and friends willing to take a risk with their money?
Do you have the necessary relationships, or are you willing to cultivate them, including vendors, staff, media, and other people in the food and beverage industry?
Along with relationships with others in the industry, are you willing to create relationships with your customers?
Do you have the time and patience to research all aspects of opening a restaurant, such as food supply, real estate, hiring staff, licensing, marketing, and the competition, just to name a few of the areas? This book will help you with those details of what, where, and how to research. One of the most-used words in this book is research, and many areas need research for success in order for your restaurant to succeed. So, are you ready to start spending quiet time in front of a computer and doing your research?
What is your competitive advantage?
Does the community where the restaurant will be located need and/or desire this establishment or the cuisine? What are the demographics?
Can you handle the competition? Can the competition handle you?
What makes you different and/or better?
Can you leave your ego at the door—knowing you will work 10 times as hard with all of the responsibility?
Can you handle adverse reactions when you drop the bomb that you want to open a business with a 60% chance of failure in the first three years? How will you feel when your family and friends don't support your decision?
Next, reading the following statements, what fits with your concept of opening a restaurant?
How will you handle angry customers, vendors, staff, and food critics?
How do you define success?
What are your motivations?
Can you handle aggressive salespeople? Are you able to tell the difference between a new trend and a sales pitch?
Do you give in to salespeople, staff, or customers under pressure? How do you handle confrontation (which is not necessarily combative or negative)?
What are you going to do when times are rough? How will you handle missed deliveries, absent staff, price increases for ingredients, taxes, lack of customers, bad advertising decisions, bad reviews, and other challenges while making no money?
What are your expectations and long-term goals?
You need to really examine yourself.
While devices and notebooks are great, this is where you need to use your yellow legal pad and find your favorite pen or pencil. Then write down the following statements:
Rate yourself on a scale from 1 to 10 for each statement, and see where your personality and temperament fall on the scale. Then, select people you trust and see if they agree with your assessment of yourself.
When you share your dream of actually opening a restaurant, do your friends and family tell you that you must be insane? You know these are the same people in your life who told you that your food is fantastic and you should open a restaurant. What will you say when people ask why you invested in a business with a high failure rate? According to CNBC, 60% of new restaurants fail within the first year as of 2016. But according to Upserve Restaurant Insider, projected sales for restaurants in 2018 were $825 billion, with Americans spending 48% of their total food budget to dine out. Don't let those figures give you the wrong impression. Industry growth is no guarantee you will succeed.
How do you differentiate from those who are scared about your decision because of what they heard about the industry and those who tell you not to open a restaurant because they don't understand you and the entrepreneurial life you choose?
Also, what impact will opening a restaurant have on your family? Most people can't work a full-time job and operate a restaurant. That means they need to quit their job and focus on the restaurant. There is financing that could involve taking out a loan or second mortgage. How will this impact your immediate family? They certainly have a different perspective than your parents, siblings, aunts, uncles, cousins, and other family members. Your friends will view your decisions differently, and either you thank them for their concern or ask them for help.
You love to invite people over for Sunday dinner. You make the best meals (whatever they may be), and everyone who comes over tells you that you should open a restaurant. You may be bombarded with a million thoughts of insecurity, or it may simply reinforce what you already know about your desire to open a restaurant. A channel is opened, and you ask yourself, “Why aren't you pursuing this dream?” Then self-doubt raises its ugly head, and you give yourself many excuses why this dream can't happen.
Fear grips you. However, dreams are not built on fear or excuses. The truth is, most of the believed obstacles are not real and not part of reality. I once heard that fear and anxiety are when someone worries about the future instead of focusing on the right now. Some people will back down, wonder “what if,” and stick to a safe career path.
I was raised that “can't is not an option” and obstacles are challenges. This is part of the soul-searching process. Are you able to overcome these challenges? I have discovered that entrepreneurs thrive on challenges. They embrace them. Entrepreneurs tell the world to watch them as they show how they can do this and accomplish that. Just the thought that it can be done leads the entrepreneur down the path of doing it. This was my path to entering the food and beverage industry as a part of the broader hospitality industry.
What about you? Are you able to get past the fear of the future and self-doubt and move forward, actually becoming excited about this new adventure?
There was a time I was pitching a television show about food called Family Traditions. My friend, actor Louis Lombardi, and I wanted to travel around the country and interview people who cook family recipes that create traditions. I have discovered that this is probably the number-one reason people open a restaurant. They tell you about their grandmother's gravy recipe (don't call it sauce in some Italian households). People go into detail about growing the tomatoes, and the proper way of preserving the tomatoes, until then and only then are the tomatoes ready to combine with the other ingredients. Other people remember the times they went to the ballpark with their dad and shared hot dogs, so now they want to open a restaurant selling hot dogs.
One of my closest friends and mentors, the late, great Chef Kerry Simon, created dishes that would genuinely touch your heart. He took snack cakes, cotton candy, and other comfort foods such as meatloaf and made them his own. People enjoyed them, and it brought back their own memories. This is a feeling that is hard to convey. Even chains are now trying to create a family atmosphere, but it is a contrived, Hollywood set; most people search out chef-owned, family-owned, or individually owned places to dine.
Caveat—just because you have terrific memories tied to food doesn't mean you can open a restaurant. This is part of your soul searching. You have great stories to go with the food, and you can share them with the public. Still, this does not mean people will line up to try that food.
You need confidence, belief in yourself, and, yes, a healthy ego telling you that you are talented, are creative, and can accomplish this dream.
What you don't need is such a big ego that you believe you are too good to wash dishes, treat your staff with respect, or accept other people's constructive criticism. In fact, you should never wonder how people could dare to criticize you, your food, or your restaurant. Yes, there will be haters and those who are jealous of your drive and ambition to make your dream a reality. However, some people with experience and expertise want you to succeed and are willing to share their opinion and advice.
Here is the scenario. You have a fantastic recipe. Your family loves it, your friends rave about it, and everyone you know who has tried the recipe enthusiastically endorses you and the dish. You are inspired to open a restaurant, just knowing everybody will eat there just for that dish on the menu.
You are on top of the world with a full wind in your sails, so to speak, and you are ready to conqueror the food and beverage industry. You envision yourself on top of a mountain; arms spread wide as you survey the landscape below, knowing your dish and restaurant will become the talk of the town, and you are the greatest!
Then something horrible happens!
Customers actually don't like the recipe and won't return to your restaurant. A vendor might start to criticize the recipe (or its ingredients) and tell you they have better options. One of the ingredients is not available, or there is a spike in its price. A trend overtakes the culinary landscape, and your main ingredient is “bad” or unhealthy or, worse, old school. Then comes the dreaded review that blasts you, your dish, your restaurant, and the fact that you are still open for business.
If you have a big ego, you can be crushed as you see yourself tumbling down the mountain into a crumpled pile of despair.
But if you see this as a bump in the road, you can ride out the storm.
Customers will complain to the manager, post how much they hate the restaurant on social media, and then write a bad review. How are you going to handle that? Will a big ego get in the way, or are you going to handle this situation using a fair, reasonable, and logical approach?
You can't take anything personally, because it's not personal. It's the customer's acquired taste, and you have to be prepared for that. Some people will never be satisfied. It is the nature of the business. Food and beverage is very personal. If you take any of this personally and become belligerent, ego-driven, and put your walls up, you will probably never succeed in the hospitality industry.
Recently, a friend told me that I must try the greatest chocolate chip cookie that I would ever eat. I explained patiently that I hear this about food every day, and I refused to try the cookie. Well, he was persistent, so I decided that I needed to eat one of these cookies and see if I agreed with my friend. The baker told me that only one person of the many who had tried his cookies did not like them.
I ate the cookie.
It was the greatest cookie I ever tasted, literally.
I decided to call another friend who owns and operates one of the largest vending companies in the country. I knew that if he liked this cookie, we could package it and sell it through his vending infrastructure. This was a home run—my latest million-dollar idea. I was about to be the cookie king of the world!
I was told by the baker that there was no way this vending machine company owner would not like the cookie, since everybody so far who had tasted the cookie had loved it.
The owner of the vending machine company was visiting Las Vegas, so I had a basket of the freshly baked cookies delivered directly to his plane when he landed.
He tasted the cookie.
He didn't like it. He told me that he thought the outside of the cookie tasted stale even though it was a fresh batch. Just like that, I wasn't the cookie king anymore.
Now I had to tell this to the baker. I wondered before I told him if he was equipped to handle the truth, reminding me of the film, A Few Good Men, when Jack Nicholson's character screams, “You can't handle the truth.”
The baker had bragged about only one person not liking his cookies, but now there were two, and the second one could have created more business (and success) for him. How did the baker handle this criticism?
It was awful. I will leave it at that, since he is not a client of mine, but even though I think his cookies are the greatest cookies I have ever tasted, I predict he won't go far. His ego is getting in the way of either fixing something or persevering without taking it personally.
I would have advised him not to consider this a failure but rather just one of the many bumps when you are part of the food and beverage industry. Yes, this was a big one, since the baker could conceivably have made millions if the vending machine company owner had loved his cookies.
The baker can fix the problem if he believes the input. If the baker believes in his recipe and someone doesn't like it, he is okay with keeping the recipe. A good restaurateur will really examine the other person's opinion calmly, decide on a course of action, and stick with it.
If anyone gets defensive, makes excuses, and becomes confrontational in the restaurant industry, they will probably go out of business.
What about your friends and family? You know, the people in your life who told you that your food is fantastic. How would you feel if they criticized something and gave suggestions on how to fix it?
Here is a harsh reality. I am not just being negative—I want you to succeed. But many people are expecting you to fail and will go after you because no one really wants you to succeed except maybe your mom and dad. Don't rely on your family and friends to be your steady customers because they won't show up, and if they do, they may expect free food. You need to realize that haters are going to hate. Friends and family (other than your mother and father) become jealous of you following those dreams to make them a reality. Many people want their own dreams to succeed, and when they see someone else accomplishing their goals, they get triggered. Many people just don't have the mental capacity to be unselfishly happy for someone else.
You need to entice people to try your new place instead of sticking with something familiar. It can be a hard sell, but it can be done with your personality and positive attitude. This includes receiving any criticism, bad review, or complaint and handling all of them positively and favorably for everyone involved.
However, once you get them through your front door, people will come to the restaurant with a positive attitude. They are spending their time and money and want a great experience. As for social media and other review sites, people who post regularly enter a restaurant with a little more awareness of mistakes and problems. If a mistake or problem is pointed out, that means something needs to be fixed, and I see this as a positive.
I kept my ego out of my business and understood the difference between constructive criticism and negativity. I hate criticism like most people, but I can determine whether it is something that should be changed or just someone hating. I realize people can be negative by nature. If you give everything you can for the best possible dining experience, people can't complain. They can criticize, but not complain. You need to know the difference, and you have to view this as a challenge and not a personal attack. Simply be of service to everyone and hold true to your mission. Hedge your bets, mitigate any problems, and you will have a customer for life, including family and friends.
If becoming a great chef or restaurateur so you can look down on people is your goal, then this book is not for you.
Yes, there are movies such as Ratatouille, Chef, and No Reservations about chefs. There are great TV shows with the late Anthony Bourdain and Andrew Zimmern. But what draws audiences is that there are no big egos involved. The chefs are willing to try anything even though they might not know how to cook it.
The stereotype of the egotistical French chefs is gone. That barrier has been totally broken with new chefs of the twenty-first century. However, I believe media still portrays great chefs with a big ego, and, yes, I have known chefs with huge egos. But in the end, the chefs would joke about themselves because they realized as they got older that they didn't need to be pompous and that they made mistakes like everyone else.
Chefs and restaurateurs must be confident in what they do but not arrogant or egotistical. Restaurateurs who own nationally acclaimed restaurants, including Wolfgang Puck, Piero Selvaggio, Nobuyuki “Nobu” Matsuhisa, and the late chef Paul Prudhomme, were among the most humble restaurateurs and supporters of me when I first started, and I am honored that I can now be their voice to you.
Are you able to handle everything without complaining to everyone or, worse, posting on social media?
Don't whine to your family and friends. They will perceive (right or wrong) that you made a huge mistake and need to walk away now. This would be putting your restaurant in an awful light.
Yes, find one or two confidants or a mentor in the industry (not a vendor, please) you can vent, talk, complain, and whine to, and just get it out of your system. For everyone else, including mom and dad, keep the smile on your face and only talk in positives when it comes to the restaurant. While I am not a psychologist, negative talk colors a person's experience, and you want everyone to have the most positive, pleasant, and memorable experience possible at your restaurant.
When considering opening a restaurant, you need to determine how much you personally have to invest and how much money you will need to make your dream a reality.
This is financing.
Let me explain—financing is not just obtaining a loan. It is spending money to open a business, regardless of the source of the funds. That includes using savings, cashing out your 401k, taking out a second mortgage (which I don't advise), and obtaining loans from a financial institution, investors, or family and friends.
How much do you need to get started?
This depends on the type of restaurant you want to open, the space you will lease or own, and whether the space has already been built out as a restaurant and what equipment is included.
Living in Las Vegas, many people approach me about opening a restaurant and investing $3 to $5 million. What they don't understand is that it is almost impossible to make back that much money owning a restaurant. I have seen many people invest that much money and lose it.
As for raising the funding, the book will explore the options, but right now you need to determine the amount of money you can raise and invest before you go any further in deciding to open a restaurant.
If you decide you want to open a restaurant and you have at least $25,000, this book can help you open that restaurant. If you have $100,000 or more, this book will be just as valuable. If your restaurant is successful, you will make back your original investment.
Throughout the book, I will advise you on sourcing, equipment, and even finding a restaurant that will be ready to open almost immediately after some modifications. If you want to open a steakhouse on limited financing (not the budget), you can find a restaurant that has been closed but will include the equipment as well as space. The same is true for restaurants that feature burgers, pizza, and other cuisines, which could save you over $50,000. If you are financing your restaurant for $25,000, and you find the perfect space, there is money you are not spending on the location that you can use in other areas.
There are third-, fourth-, and fifth-generation restaurant spaces that offer even more equipment that will save you money. However, it may cost you to have the equipment serviced and cleaned. Most of the equipment is made of metal and can be cleaned, and I have spent a lot of money to have old fryers scrubbed to the point that they shine. Sometime you will have to replace a temperature gauge or heating filament. The worst-case scenario I have found is when you have to replace the compressor, which is expensive. However, sometimes the landlord will repair and replace the equipment to lease the place, so definitely ask them. You won't have new, state-of-the-art technology, but you don't need that right now. If you can save over $100,000 by renting an older restaurant space with the necessary equipment including tables and chairs, go for it! This will enable you to have more options in opening a restaurant.
It can be done if you follow this book and, more importantly, really want to open a restaurant.
Entrepreneurs list their assets other than financial. One of the most valuable assets anyone can have is a relationship. When I was 18, it was through a friend that I met a person running a wholesale frozen food business to supply my ice cream truck that I wrote about in the introduction. He taught me a lot when I was operating that ice cream truck as a teenager. I credit much of my entrepreneurial success to my relationships.
You need to write a list of everyone you know—professionally, personally, or on social media. Then you need to develop a list of people to establish relationships, including vendors and others in the industry. This is not meant to be viewed as using people or seeing what you can get out of knowing someone. However, you need to know what they can do to help you as well as what you can do to help them (without going broke by offering 50 of their closest friends free food). Don't be unreasonable and expect everything from them; but people do love to help, and this is very valuable for success.
When I started the magazine, I put together an advisory board, including chefs Wolfgang Puck, Bobby Flay, Kerry Simon, and others. Wolfgang gave me his vendor list and told me to use his name when I called them. Bobby said to me that he wanted to help me build up the magazine. I was able to develop this advisory board because I met these people and developed relationships. But most important to my success was the friendship I had with television personality Robin Leach, famous for hosting Lifestyles of the Rich and Famous. Robin taught me the value of these relationships and how to intertwine them into my success. He emphasized always giving more than receiving and learning from the successes and the failures of high-profile people. He taught me that we never stop learning and should always be building new relationships.
If you already have family and friends in the food and beverage industry, that is great. Do you know any celebrities, including entertainment and sports figures? Do friends of friends know any personalities? While maybe A-listers would not be interested, it is a celebrity-driven society, and people want to meet celebs even if the personalities' peak was 20 years ago. People also love to read about personalities eating at a restaurant. If you cultivate a professional (or personal) relationship with celebrities, and do not ask for an investment, you can get that extra push.
There are foodie influencers on Facebook and Instagram who can get the word out. The fascinating aspect of social media is that influencers are more accessible, and I would recommend that you cultivate relationships with them.
Are you ready, willing, and able to do that?
I began a business selling roses for $9.99 per dozen, eventually adding the wholesale component and transforming the business as part of a mega-million dollar industry. Then the industry changed, with supermarkets and other big-box retailers offering flowers at discounted prices. I then changed directions and went into the publishing industry.
Business models change, and as an entrepreneur, I needed to accept change to continue my success. I asked myself, “What is it that I love?” I loved hospitality, especially the food and beverage industry, and the fact that there was a targeted audience. I decided to enter it as a publisher of a magazine and be a voice in the industry.
Are you able to think like an entrepreneur in an ever-changing market in order to succeed? You've got to be able to move at the speed of light in a different direction. You can't become too attached to the food, or a venue, or a theme. Restaurants that were staples in the American landscape have closed or are losing money. McDonald's, one of the most successful restaurants of all time, customizes its menu by location (domestically and internationally). Two of the biggest trends as of publication are avocado toast and boneless chicken wings. I didn't know wings could be made without bones. Delivery technology and plant-based dishes are shaking up the hospitality industry. Franchises' and chains' profits are plummeting, and I believe it is because the price point is too high and the quality has diminished. Can you learn from their mistakes as well as follow a trend if it fits your restaurant?
Yes, there are favorites, but a real entrepreneur can determine when favorites remain profitable and not ego-driven. Are you motivated that way? Can you let something go, leave it behind, and start something new?
Most importantly, after considering all of your answers to the questions in this chapter, can you still say you love this industry and want to serve people and become successful? If you said yes (and meant it), your personal foundation has been set, and now it is time to begin working on and learning about starting a restaurant.