From a restaurateur of too many years.
The major issue for aspiring restaurateurs is a lack of understanding of what’s actually required to open their romantic you-beut restaurant where customers line up to savour their galaxy leading cuisine whilst the owner swans around bathing in the glory of their accomplishments.
This is seen as a birth right by many a swanee.
Unfortunately, that’s a fantasy driven by blind romance not wanting to deal with the real world. If 5,000 restaurants are in danger of collapsing within say 12 months then another 5,000 hopefuls will see an opportunity and shoulder the mantle. Then another 5,000 will drop off the perch and another 5,000 swanee’s will have a whack. Most are ego driven wannabes who will not take advice and will fail.
Yet, this is exactly the type of people we need, the risk takers who have a vision and are willing to risk the house to fulfill it. Wow! Trouble arises when ego takes over from reality. A restaurant is not about cook and hope, it’s about running a business which happens to be a restaurant.
It’s sort of hard-ish work, mentally and physically challenging but bloody good fun!!
Obviously, negativity sells newspapers but the more we pontificate on doom and gloom the more people believe it and the more they retreat into some sort of protective cave. Negative and emotive statements in this article such as ‘Do they want to lose their house or go out for breakfast?’ are not helpful and just prove that this quote is there to sell a story rather than deal with reality.
In terms of restaurants, there will always be doom and gloom perpetrated by those who can’t distinguish between running a business [which happens to be a restaurant] versus just providing tucker and hoping someone turns up. In the same vein, clients [not mere customers] who risk losing their house because they went out to breakfast is an obfuscation fantasy and are not the clients anyone seeks. This hasn’t changed. Restaurants are a business and, the same as any business, target their market to clients who can enjoy the experience. This hasn’t changed. No one is suggesting this is foolproof but it’s a long way from the ‘hand wringing set’ of misplaced hope over business savvy. It’s not easy. This also hasn’t changed.
Covid knocked us all around where takings plummeted by perhaps 75% which forced cost cutting and closures. The lockdowns in Melbourne were disastrous not helped by the somewhat spurious statistic that restaurant margins are just 4.3%. Blink and you’re broke. This is insane!! I don’t know how anyone calculates this figure because no one in their right mind would take on a restaurant or any business with so little margin and zero cash backup. Yet there are apparently some 36,000 restaurants in Australia. Perhaps we are all loopy? Indeed, during covid we were humbled by the support we received as people flocked to get ‘take-home’ just to make sure we survived. Wow!
We have been in our current restaurant for over 21 years with just the two of us tootling around – [big is not better] sporting a normalised extrapolated ROI [based on a business valuation using internationally recognised capitalised future earnings] of 20%+ after wages whilst open just 30 hours a week, achieving international recognition and enjoying life. Our total overheads come in at 12% of revenue including rent and our normalised COS is at 30% leaving a nice margin - a far cry from 4.3%!!. We have almost zero plate waste indicating something is correct and bugger all stock waste. 80%+ repeat clientele also says something I feel. Indeed, I am 76 and consider work as ‘life affirming’ and fun rather than a hardship. Wahoo!
Our revenue hasn’t recently shifted by a great deal despite the doom and gloom, margins are very very closely guarded and we don’t charge clients just for using their credit card [being in my opinion a devious and shallow business ethic]. Some idiot said recently that we need to get used to paying $60 for a main course. What crap. All that says to me is that they are not running a business, have little understanding of finance and don’t manage margins. Out of control!
Apart from keeping an absolute focus on margins etc there are, in my opinion, three basic tenets to running a restaurant and all the while enjoying life. Really important – enjoying life!
Firstly, the restaurant’s ambience must absolutely exude at first glance to a potential client ‘I want to be in there enjoying myself’. Secondly, service must be instant, friendly and professional being focused on the client and their experiential enjoyment. Thirdly, the menu offerings must be fantastic remembering there are 35,999 other restaurants where people can spend their dollar. As an adjunct, ‘specialise’ in something which will differentiate you from the rabble.
Note that food is last!! Creating and running a business is first and that business must understand people and margins. Not until then does food rear its glorious head. Clients want a total experience they can salivate over in all aspects.
The restaurateur wants a good life.
At the end of the day, we enjoy people by providing an experience which cracks the smile dial. It doesn’t matter what it is but, love what you do and do it well!! We, at least, love what we do.
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