top | item 15439346

What happened when I opened a restaurant in Portland

323 points| phyller | 8 years ago |wweek.com | reply

323 comments

order
[+] dsshanley|8 years ago|reply
I can personally relate to their struggles to get a business going, retain staff, and to be one step ahead of everything when you're just trying to survive.

And I lived right next door to Renard.

It's hard to imagine that during the planning, budgeting, and all the upfront work that someone didn't caution him against the unscrupulous landlord. The landlord was a guy that wrapped a chain around our neighboring building to pull his building back onto its foundation. This is a guy that had public, outstanding violations and complaints on his building and unpermitted work.

And they moved in to a microscopic kitchen to do white-tablecloth dining in a local neighborhood. Yes, they moved in right after a hot restaurant, St Jack, moved out, but St Jack had a marketing/advertising/buzz machine behind it. They systematically created success, not the other-way around.

I guess the moral of the story is take this to heart:

>I told myself what I'm sure every single novice restauranteur tells themselves: I'll be in the 1 percent that make it, by sheer will.

Take the leap, but you've got to do your diligence. Listen to the feedback and concerns people voice about your endeavor.

[+] brookside|8 years ago|reply
> Take the leap, but you've got to do your diligence. Listen to the feedback and concerns people voice about your endeavor.

Absolutely, but there's never a situation of any kind without drawbacks.

A quote from David Chang of Momofuku, etc:

> I think almost everything we've done has been a failure from the get go. That's just the truth, and I don't think people see that. We have fucked up just about every opening in every restaurant we've ever done. We grind it out and figure out how to make it work as we go. That's what makes it a very organic experience and sometimes maddening. But I can't see any other way to do it than to engage with the world, make the mistakes, and pick up the pieces from there.

[+] stuntkite|8 years ago|reply
The landlord may or may not be a dick. I'd like to see some more on that chain story (because I'm really curious about the specifics physically) and the general statement about unpermitted work.

The hype machine thing you mentioned might be the real deal. As far as I can tell chef's food wasn't remarkable for Portland. His highlight pic was a french onion soup and a steak tartar, not even plated well. The rest of the atmos looked like snippets from "How to be Portland" magazine. They said "Keep Portland Weird" but that brand has been bought and sold and done with since Death Cab for Cutie had that song about answering machines.

It might be good food, it might be expensive, but man... Portland basically invented what we think of as the modern 'foodie' dickweed.

I'm not sure that any place that doesn't have extremely deep pockets isn't dealing with a landlord that wouldn't try some chain foundation voodoo, or even like real deal fraud, and chef still gotta survive plus overdeliver world class dining experience if he wants to be heard.

[+] anigbrowl|8 years ago|reply
The other moral of the story would don't assume that enthusiasm equals friendship. This poor fellow's erstwhile landlord fleeced him and I'm astonished that his investing partner didn't warn him away in favor of some less glamorous but more economically sustainable location.

Also, commercial landlords are not nice people. I see and hear a lot of similar stories here in the Bay Area, where it's now routine for landlords to jack up the rent by 100% at the end of a lease period. In cases like this landlords often plead that they have no other choice than to charge the market rate, and this is partly true - but they omit to mention that they are often leveraged to the hilt and are using their existing holdings as collateral to buy more property.

Even when property is sitting empty, it may still be 'working' for the landlord - commercial property can be depreciated for federal tax purposes over a 39 year period, so a building in a downtown area can sit empty but serve as a tax umbrella for profitable rentals elsewhere, as long as the costs of maintenance/blight mitigation stays low. I'm no accountant but as far as I can tell the tax code disproportionately favors property owners.

[+] marak830|8 years ago|reply
Novice restauranteur. . .. is just another word for failure.

You cannot purchase a restaurant without knowing the industry (eg by working in it), and expect things to just flow.

Don't take the leap, actually learn what the hell you're getting into.

As for the landlord, bloody hell. Needing to spend 20k on plumbing and they didn't think that was a bad place to rent ? There is no excuse for that, even if there was more than 20k of equipment on premises, they should have seen the warning signs.

Tldr: foolish investor thinks buying a restaurant is easy money, learns the hard way that it isn't.

[+] Kurtz79|8 years ago|reply
>I told myself what I'm sure every single novice restauranteur tells themselves: I'll be in the 1 percent that make it, by sheer will.

I would be surprised if every single novice restauranteur tells themselves that before starting a venue.

Most of them are probably tell themselves something like "If I build it, they will come".

Still, 1% seems to me very low, we are not talking about startups, are there actual statistics on it ?

[+] marak830|8 years ago|reply
Okay it's time for me to chip in properly, forgive any typos I'm on a phone.

Preamble: I'm rated as an executive chef(my last 3 positions before leaving the industry), and I had worked for over 17 years in hospitality (from apprentice chef, to manager and executive chef - I also spent 4 years traveling to different restaurants to try and save them from foreclosure).

"That chicken is a confit (with duck fat, aka $$), then served with a stock/stew that takes days (of labor dollars) to prepare, plus cost of employees to serve"

I sympathised with the author until this point. No it doesn't take days in the way the author points it out, it takes minutes with a time to follow. (Eg you don't have to actually do anything after you prepare and set it). That's akin to saying a good jam or beer takes months - yes in pure time, but it doesn't take staff time(and $$ as the author said).

As for the hours? The author is correct, hospitality is a slug fest, there is no doubt about that.

What I take from this article? An unexperienced person tried to build a new business in an industry that didn't have the experience in.

Would you try to start a software business, a cloud storage or a trucking business without experience? No it would be foolhardy, and that's the biggest problem with hospitality.

Frankly if you're not a chef - dont purchase a restaurant. Anyone can cook one decent meal, now try doing 100 a day while managing costs and staffing. (That's just the basics, there are hundreds of things you need to do just to begin).

At the end of the day, I sympathise with the author, I have seen (and tried to help), a lot of people in that situation, but you cannot just jump into hospitality with money and assume that it will work.

Edit: typos ( thanks qwerty_asdf :-p )

[+] NaOH|8 years ago|reply
As someone in the food industry, I can appreciate the hardships and frustrations shared by the author. I've worked for others in restaurants and other consumer-facing food businesses, and now my company is a wholesaler. Some of why my company is like that comes from what I learned in prior industry experiences, but much of it is merely a reflection of my preferences and strengths, both of which compel me toward direct relationships with customers (wholesaling) rather than the fleeting, complicated interactions that come in restaurants, bakeries, etc.

So I can appreciate the frustrations the author shared. Many of them remain a part of my life—the crazy hours, bureaucracy, expenses, etc. Many of them are the nature of the industry. It is, after all, a service industry, and that means service to others. That’s typically a trying environment in the US, with its individual-focused culture. So I’m sympathetic to much of what the author described.

But it certainly reads like someone who didn’t know what he was getting himself involved with doing. Sadly—not critically—I’d even say it sounds like he (at the time of writing) only understands the symptoms of how things happened, not the actual causes. Just one example: He mentions lease negotiations covering four months but then describes the place as being in shambles. That indicates thorough inspections weren’t performed. Many of the self-described problems in the piece follow this pattern, him seeing what went wrong instead of describing what should have been done differently.

Maybe in the intervening time since publication he (and his partners) have learned from this. Obviously, what they went through came with high costs, emotionally, physically, and economically. I can only hope they’ve ultimately benefited from going through this and it improves their chances of success in whatever else they do. It’s never pleasant to read about someone failing, but it’s always great to hear when people turn disappointment into a stepping stone to success.

[+] rdtsc|8 years ago|reply
> That chicken is a confit (with duck fat, aka $$), then served with a stock/stew that takes days (of labor dollars) to prepare, plus cost of employees to serve, stuff to serve it on and rent to pay, not to mention the utilities (the water bills on that cursed grease trap were the opposite of "the gift that keeps on giving"). That damned chicken should be $40!

Maybe $60 even. But the restaurant has to look and feel like the restaurant which serves $60 chicken. Maybe there is a marketing problem there, people thought it was just plain chicken. Then yes, $29 is too expensive. If they were eating chicken confit, with carefully crafted stock which took days and a team of 3 chefs to make, and it came from some Sunny Mountain organic free-range farm in the next county then $29 sounds like bargain.

But as they say, everyone in Portland wants to open a restaurant. Probably anyone who could and wanted, already did. So there are plenty of options. At least I remember lots of options to choose from.

There is another element I noticed. If there are just a few good restaurants, and a plethora of other ones, people will just go to the ones they know. Not just because it is easy and a default choice. But also because they learned that trying new ones did not turn out as well, so they stop trying.

> bringing the plumbing up to code. $20,000 later we had a huge pit, filled with the gigantic, state-of-the-art grease trap the city now requires—all of which now benefit not us, but the landlord and his next tenant.

That sounds like they got swindled. They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.

[+] icebraining|8 years ago|reply
That sounds like they got swindled. They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.

Eh, as a landlord myself, unless we agreed upfront to cover that improvement (usually by discounting on the rent), you're on your own. Renting to restaurants seems like a pain in the first place; considering their low expected lifetime, the property will have to be on the market again soon enough, losing money during the transition. Plus who knows if they won't go bankrupt with unpaid rent.

If this was prime location for restaurants, the grease trap would already be there. As it isn't, chances are the next tenant won't even be a restaurant.

I wouldn't contribute either, frankly.

[+] x0x0|8 years ago|reply
Either this guy didn't get his contractor on site before signing a lease, or the contractor is at fault for not mentioning this $20k problem. This is what happens when you skip your due diligence, because any contractor who should be building out restaurants would have known about the grease trap regulations off the top of his or her head.

For anyone else thinking of renovations, it's really worth it to get a contractor onsite before you commit. Any competent one will be able to tell you things like hey, widening those door frames 2 inches to bring you up to code is going to be far more expensive than you think it ought to be. etc etc etc. And just wait until you see how much a bit of asbestos on your ceiling is gonna cost you to remediate...

[+] junkcollector|8 years ago|reply
The mistake you are making there is assuming that those improvements add any value to the landlord or property. They don't. That $20,000 grease trap is an anchor that the next tenant has to have pulled out at great expense. They probably want different lighting so the electrical will have to be redone as well.

In any commercial property I have ever dealt with the tenant is responsible for any renovations because every tenant is looking to outfit the space differently. If the market is heavily in the favor of the renters at the time, I have seen landlords offer discounts on the rent to help cover certain renovations, typically expanded electrical service and the like, but even that has it's limits as landlords typically have costs associated with ownership they need to cover out of the rent.

[+] audiometry|8 years ago|reply
Yeah, I don't know if the photos were stock or pictures of the real premises. But I wouldn't be very keen on 40-50$ entrees in a restaurant serving things in styrofoam cups.
[+] vacri|8 years ago|reply
> They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.

In business, the landlord is renting a space, and the company renting fits it out. You could spend more than several years' rent on a fit-out, why should the landlord goes halvsies in that case?

[+] tryingagainbro|8 years ago|reply
That sounds like they got swindled. They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.

Landlord: I don't care if you do it or not.

[+] cwilkes|8 years ago|reply
Landlord splitting a cost with the renter? I about spit my coffee out.

While that’s true with residential housing (where the landlord pays all of the bill) it is not at all like that in commercial real estate.

I’ve worked at a number of startups where we needed an improvement. Electrical, computer wiring, knocking down a wall between two adjoining units that are now one. Not once has the landlord even offered to pay for any of it.

They can do this as they hold all the cards. Employers or shopkeepers need a physical space. There’s a limited amount of it in a desirable area. Ergo they can get away with it.

This isn’t true in residential as there is always more inventory coming online. Plus people will decide to move farther away. You can’t easily do that with a business.

What this does mean is that when opening a restaurant look for a place that previously had a restaurant in it and use their improvements. You’ll probably get a deal from the previous failed one to buy the movable equipment.

[+] ska|8 years ago|reply

   Maybe $60 even. But the restaurant has to look and feel like the restaurant which serves $60 chicken.
However margins on high end fine dining are reportedly even worse than most of the sector. If they're selling you $40 chicken it's probably still at a loss, counting on you making it up on wine and pastries.
[+] greedo|8 years ago|reply
Leasehold improvements aren't always split; it's better to negotiate those during the lease discussion. In our restaurant, we got ZIP back from the landlord for leasehold improvements.
[+] viraptor|8 years ago|reply
I see a lot of comments concentrating on "maybe they didn't have a good plan/experience/whatever". But having some experience close to non-fastfood restaurant staff (in the UK though), I can only confirm a lot from the article. That business is more messy and the environment can be more toxic than anything I've seen in the IT.

The margins are way too small and staff is underpaid and overworked. Think paid for 7.5h, but working whole week of split shifts (morning, long lunch break, evening till closing) at close to minimum pay. Stockholm syndrome and "that's what working means" thinking is rampant. Abusive staff, back/front restaurant conflicts, etc. are standard. Rockstar developers are nothing compared to chef who makes the service staff cry and can leave with their kitchen staff to anther place when they want.

The lower management comes from people who survived enough of this to advance - they already know this is how it works, so not much gets changed.

Just recalling this makes me really angry. If you get a good service - appreciate it.

[+] crispyambulance|8 years ago|reply
Philly is similar to Portland in that there's a huge restaurant scene here. Yeah, there's a lot of failure, but some people seem to "make it" not just once but multiple times as chef-owners who operate 2 or more restaurants. Yes, if you look at overall failure rate for new restaurants it is very high and it is sad to see first time owners fail, but there are some who enjoy serial success (who also fail sometimes, but can afford it).

The ones which I know personally who are successful all had LONG histories of working under-the-wing of a master, literally starting as a line cook and progressing to sous-chef. Along the way they get savvy to the business, make an enormous set of connections and learn their market intimately. When they break out, they start very small and later take calculated risks to expand as they're able to survive failures.

Other ways people have found success is by starting as food trucks or as catering services or as suppliers (eg bakery, patisserie) to restaurants.

[+] SmellTheGlove|8 years ago|reply
I'm not in the restaurant business, so take what I say with a grain of salt (heh), but from the people I know in that business there's a wide variance in the actual business knowledge they possess.

You need enough capital to actually open the doors - that means not leasing the space with knob and tube wiring, residential drainage and a leaky roof. If that's all that's out there, you could simply not open yet and keep looking. In the OP, it sounded like that money was burning a hole in the owner's pocket and he had to open now. Patience.

Then once the doors are open, you need detailed, ongoing knowledge of your costs. There is no $29 chicken if it costs out to $31. If no one is going to pay $35 so that you can make a profit, it doesn't go on the menu. But you don't, as the author put it, sell $40 in cost for $29 simply because no one would pay $40. Then you get into ordering and spoilage, where even me as a total outsider, could tell you there's often money rotting in the walk-in. Point is, you must know your real operating costs before you ever even stand a chance.

Then you have to go out there and not suck. For a chef opening a restaurant, this is probably the part they're focused on. Problem is, you could be sunk before you even get to this stage. The guys that are successful and worked under successful people for a long time probably learned quite a bit about running the business, and is why they have better odds.

tl;dr - Under-capitalization is a leading cause of failure for many businesses. You can't make up your operating losses in volume. Don't open any business if you aren't prepared to live and breathe the minutiae of your costs.

[+] gregmac|8 years ago|reply
> I remember clearly the day when the accountant showed me that we could effectively double our monthly sales and still not have enough to meet our eventual payroll obligations and that's about when you just finally sink into it: You're done.

The article doesn't really go into this part, but it does mention an extensive business plan. Was it that the labor costs were not foreseen, or that the revenue was much lower than expected? To be off by half is significant. It would be interesting to hear with hindsight what could have been done differently to avoid this (even if the calculation came out to "don't open a restaurant").

[+] audiometry|8 years ago|reply
I sympathize with his difficulties, and don't want to shit on the guy. Trying to read between the lines, I sense that one of his core problems was weak negotiation skills, or the ability to have tough conversations. He negotiated a lousy lease. He hired a chef who wouldn't do the necessary work. Fundamentals that poison the whole downstream.

Like other commenters, also wondering how his elaborate business plans (made w/ experienced restaurateur's input) could be so wildly inaccurate.

Maybe another lesson is, don't rush to the "hot spot." Maybe find a market that has no good scene instead. Be an early gentrifier. By the time newspapers are writing about "hot spots" "hot jobs" etc, it's almost always the high-water mark.

Multiple times I've spotted tops of commodity bubbles by noticing when news articles talk about the absurd wages being paid the labor force. Miners and crane-operators being paid $250k/year during the initial Western Australia mining boom. Low-level labor in North Dakota being paid crazily during the initial part of the Shale Boom, etc. The news coverage is always breathless and euphoric. Wonder if we could build some sentiment analysis that can detect these sorts of articles in a generalized way?

Another way I've heard it described, "whatever industry the current class of graduating MBA is racing to join--avoid it."

[+] csydas|8 years ago|reply
> Like other commenters, also wondering how his elaborate business plans (made w/ experienced restaurateur's input) could be so wildly inaccurate.

I think the author commented on this pretty clearly in the article when they described themselves as someone with "...more money than sense". I've had many friends who are pretty insistent they have what it takes to make a successful run with a restaurant business with some gimmick on the side to bring in audiences, and every time I hear their pitch I can't help but be let down by the lackidasical pitch. I think in general people just don't really understand what it takes to get a restaurant just to "stable", neverminding profitable.

I'm often reminded of the difference between producing something and production something at a production scale; my partner is a chemist, and she tells me how their applicants don't always understand why a 1% impurity in a product matters immensely when you're producing 1 metric tons of the stuff. It's the same with a restaurant, I imagine, and trying to produce the same quality dish rapidly and consistently without much waste or flubbing the process, and being able to also rapidly adjust the volume you produce on a day to day basis with no strong indicator as to which way the demand is going to swing.

But none of that really registers when you read advertisement pieces from cities about booming restaurant scenes and how largely demand can be overstated when a city just wants some fresh air in their night life, and it's really appealing to people to imagine themselves as successful restauranteurs when inundated with such material.

[+] mozumder|8 years ago|reply
A lot of is is that restaurants are largely built by wealthy people for their own social niche. They aren't designed to be profitable businesses, but more as a social device for their owners.

If you're wealthy in New York City, you will eventually be asked to fund a restaurant.

[+] HeyLaughingBoy|8 years ago|reply
Wonder if we could build some sentiment analysis that can detect these sorts of articles in a generalized way?

What would you do with the data?

The canonical example I always turn to is a friend of mine who realized one day that he was being paid $25/hour to sweep the floors in a factory (union job) and there was no way that was sustainable over the long term.

He started going to college at night and graduated and got a good job just before they shut the entire plant down!

[+] michaelbuckbee|8 years ago|reply
My friends and I have a saying: "boring makes money". That it's really hard to pull off the success of a Facebook, etc. but it's only moderately hard to do consulting and spin off some kind of related product as a service, or micro SAAS.

I'm curious what the "boring" food venture is?

- trucks?

- catering?

- middle brow family style Italian?

I'm aware of a couple of food businesses that rent kitchen space in the morning/evening from restaurants to make prepared paleo/keto meals that are then distributed through gyms/fitness centers (genius resource utilization).

There's also a really interesting little business in the Outer Banks that sells you a metal pot full of uncooked seafood that you then put on the stove for an hour and let steam at your beach house. It costs something like $100 and I'm pretty sure it's about 50% profit for them.

There's always room for cleverness.

[+] gyardley|8 years ago|reply
While good advice in general, I'm not sure this applies in the Portland restaurant market. Renard was pretty boring - good French food, but the same food you've eaten at a dozen other French restaurants - and that, for me, was its problem. So many more interesting places to go!

The cautious thing to do in the Portland restaurant market, as far as I can tell, is to do periodic pop-ups or a food cart and try to build up your repeat clientele to the point where you can justify a brick and mortar location of your own.

[+] evan_|8 years ago|reply
I think "boring" in the food service industry is something like, buy a Domino's franchise and hire a manager– and then never go near the place.
[+] johan_larson|8 years ago|reply
Are there boringly profitable restaurants? My impression is restaurants are always skating on the edge of bankruptcy. It's wildly competitive because everybody thinks they can run a restaurant (and a hefty number of them actually can), there is significant regulation because of food safety issues, and the labour force is ill-paid and therefore not entirely reliable.
[+] gadders|8 years ago|reply
Dunkin' Donuts?

"Tony would pick one of his hardworking employees and sell him a franchise, loaning him the money through a 10-year mortgage. He’d work out the math so the former worker could make a decent salary in addition to covering all his costs, including making his note payments with interest to Andrade. After busting his butt for 10 years, the former employee would own an investment that today is worth $1 million or more."

https://www.bostonglobe.com/magazine/2014/09/17/the-secret-w...

[+] marak830|8 years ago|reply
I wrote a few responses, then I deleted each one. The more I think about it, the more I realise that there really isn't any low hanging fruit in hospitality.

A few examples:

Food truck: a proper food truck can be ran quite well, but so, so many are ran badly. If you are just reselling prepackaged food to labourers, at first you can make a good sale, but anyone making their own(at a good quality point), can undercut you. (Side note: yes, you can undercut prepackaged food if you control the production from start to finish, the difficult point is quality and consistency).

Cafe: good coffee, good food and a good price point will get you a stable customer base - but this isn't low ha ginger fruit, you will be there 12+ hours per day and using your own time to offset wages.

Bistro(low end restaurant): high output and middling quality will get you a high turnover, but again, you are at a huge risk of being cut out by a slightly higher price point and exceptionally better quality restaurant (or even a one chef show, I've seen that before - more later).

High end restaurant: you need exceptional quality, which means(ibitaly) high turnover until you find the right staff, then paying more than your competition for those staff members (I have many times sniped good chef's from other restaurants). Also you need an amazing head chef to do this - many will say they can, very very few can actually follow through with this.

Goverent contacts (or private) for such as hospitals: good luck, to beat their rates you need to hire under current min wage and/or cut corners somewhere - it's a race to the bottom, as quality is never a consideration compared to the books.

As for cleverness, I have seen that work. Infact the best example is a small restaurant I saw once(and spent a lot of time talking to the owner), it was a 30 seat, one sitting restaurant with a set menu.

You had to book two days in advance, the chef/owner purchased everything that day and they charged quite a lot.

Imho this is how restaurants should be, and he was quite successful (for someone who only worked 3 days a week in his retirement). But that's not low hanging fruit, he was a 40 year experienced chef who has probably forgotten more about food than I'll ever hope to know.

Long winded I know, but I hope that gives you an idea about trying to be clever in an industry that is probably one of the most cutthroat around.

[+] CloudYeller|8 years ago|reply
The one and only surefire way to make money hand over fist in the food business is authentic American Southern-style fried chicken & BBQ in China, made by actual Americans living there. You could start an empire rivaling KFC if you do it right.
[+] deadmetheny|8 years ago|reply
I own a food truck, and I can say it's definitely not a 'boring' food venture, although it's definitely a lot cheaper than starting a physical location. You have to ensure that you can get decent parking spots for lunches, book good evening events or be willing to deal with drunkards on weekends, and be able to put out a good quality product quickly and efficiently. Getting the truck built out and going through inspections is nowhere near as expensive as doing so in a storefront, and you can run a much leaner crew (ours is me, my partner, one employee, and occasionally our spouses helping if needed - and I still have a day job on top of this).

We're doing fairly well for ourselves - nobody's getting rich, but it's fun and the income is enough to keep us from wanting to shut down, so I guess we're doing something right.

[+] Doctor_Fegg|8 years ago|reply
From limited personal experience (I chair a community-owned deli/cafe - that's deli in the British English, gourmet food sense):

"Boring" is getting the location right. If you're competing with 50 other restaurants, you've got to be special. If you're the only one in town, and the demographics are right, you're sorted.

[+] ska|8 years ago|reply

   I'm curious what the "boring" food venture is?
Perhaps things like a mid range franchise in a underserved city. Or a low end franchise with a captive audience (highway service, travel intersections). Industrial cafeterias.
[+] Nate75Sanders|8 years ago|reply
“”” I remember clearly the day when the accountant showed me that we could effectively double our monthly sales and still not have enough to meet our eventual payroll obligations and that's about when you just finally sink into it: You're done. “””

If you need your accountant to tell you this, you were doomed from the beginning.

[+] subroutine|8 years ago|reply
"I'd worked several jobs in all kinds of food; I had capital from my grandfather's estate"

This sounds like a few of my friends, minus the capital. In fact, it sounds like a fantasy every guy has probably had, at least once in their life; ohh to have that feeling of walking into a place like you own the joint.

I wonder if the very high failure rate in the restaurant biz has anything to do with this. Food is something everyone knows, and seems to be a common fallback job for those without better prospects. When one of those people happens upon a windfall of cash, it’s probably natural to think “I’m gunna open up my own restaurant” - it’s perhaps something they have been daydreaming about whenever their manager gives them any shit. Or maybe they see some inefficiency and think “if i owned this place, I would do X different”. It’s not clear that’s what happened here, and I do give this guy some credit for his earnest attempt at due dillegence, but I wonder if things would have been different for someone who could start an article with... "I had 10 years experience managing restaurants of a similar niche, and was backed by professional investors." At least the management part I think is key.

All that said, I hope the best for this guy. He just gained some very expensive but invaluable experience, and I’m not sure this type of experience can be gained any other way.

Also, for the interested...

Street view of Renard's "Hot Corner" https://goo.gl/1YSjpj

Yelp page https://www.yelp.com/biz/renard-portland

Best inside photo I could find https://i.imgur.com/a5LD2cN.jpg

[+] Doctor_Fegg|8 years ago|reply
Fascinating looking at those Yelp reviews. Pretty uniformly positive: "Holy smokes- I can't believe this place wasn't bursting at the seams with a line out the door."

But then look at https://twitter.com/renardpdx. Just 62 followers, which even allowing for the passage of time (restaurant closed 2 years ago) is crazily low.

In a crowded market you need buzz; you need to get those people through the door. I wonder if it wasn't the food, or the rent, but the marketing that did for Renard.

[+] jaclaz|8 years ago|reply
>Mostly, it's labor. Not only does $9.50 hourly, plus tips work out to a fair amount of money for front of house staff (my partner was horrified to learn we could not do a tip credit). But the more the front of house makes, the more our valuable back-of-house staff demands in pay (or tipshare tribute). At a premium, you can't afford to lose your core cook staff, you have no room to negotiate salaries down 'until we get stabilized,' and meanwhile they have three other prime job offers waiting. The labor costs alone were enough to sink us, especially once we got to the taxes.

It is not like overnight the average pay of waiters and kitchen people doubled or increased 50%, more or less that pay has remained the same over two-three years. Either the hourly pay was underestimated or more people were needed than planned.

And the "we could not do a tip credit" coming out as a surprise?

Here:

Minimum Wages for Tipped Employees

https://www.dol.gov/whd/state/tipped.htm

2014 9.10 US$

2015 9.25 US$

2016 9.75 US$

2017 9.75 US$

And "surprise", the kitchen brigade wants some money to be on par with the waiters?

And - again "surprise" - you have to pay taxes?

The "unexpectedly expensive renovations"?

Hey, you took months of making business plans, negotiating and what not, no matter how expensive is the renovation it cannot come out "unexpected", you should have put some allowance (10%-20% at least in a project of this kind) for unforeseeable added costs.

Anyway the business plan was "wrong" on the "other" side, the income, simply it could not reach the target, either because it was set too high or because you weren't capable (for whatever reason) to attract enough customers and serve the intended number of meals.

[+] lazyjones|8 years ago|reply
If this was an IT story, it would be about someone with SAP skills only, wondering why his startup wasn't turning in a profit like the Perl guy's next door...

Running a company is always a compromise between stubbornly doing what you think is best and trying to please everyone involved with limited means. If you can't afford much of the former and can't stand the latter, it's probably not for you.

[+] marak830|8 years ago|reply
I know, right. And yet you see so many people starting restaurants because they think it's easy. I can't imagine the mess if I tried to start a software company haha.
[+] noonespecial|8 years ago|reply
From the comments: "I walked away not because of the lack of TIs, but because it had a pizza hood and I needed a class 1 hood and if I put one in it would trigger a building permit that would require a bazillion other upgrades and possibly make that patio illegal."

You want to know why its so hard? That. Everything else is figuratively (and literally sometimes) cake.

You want local restaurants that aren't Chili's? Stop making them exist in some kind of Kafkaesque Clown-world where an oven hood can make a patio illegal.

[+] scandox|8 years ago|reply
I grew up in the high-end restaurant business. It is a nightmare. If you have friends or family that dream of doing this, it is your duty to prevent them.

The only people who succeed in this, in the long term, are what I call the Artists.

The Artists have no choice. Restaurants and food are the only thing they can do. They live or die there. Success of their own or a lifetime of working in a subordinate position in the same business.

[+] AndrewKemendo|8 years ago|reply
No user lock in, no real possible moats, challenging staffing problems, razor thin margins, heavy regulatory burden, very touchy customer base and extremely dependent on logistics. How restaurants survive even a few months is beyond me.
[+] cyberferret|8 years ago|reply
> "I told myself what I'm sure every single novice restauranteur tells themselves: I'll be in the 1 percent that make it, by sheer will."

Sounds like every startup founder all over the world who builds a mobile or web app these days. Many just see the 1 in 999999 success stories and think that having an idea for an app is a licence to print money.

I would far rather see more stories like this, but from app founders. Not to discourage or dissuade anyone from trying at all, but merely to set the expectations at a realistic level.

[+] notyourday|8 years ago|reply
The owner of the restaurant was clueless. That's the real news.

If he or she did not grow up in a restaurant business, then the only way for him or her to know about it enough not to lose the shirt is to go out for breakfast, lunch and dinner, daily, for twenty years.

Yes, $29 dollar chicken dish is insane outside the market such as NYC. It is definitely insane in a dump of a place pictured - yes, it is a dump if a chicken is $29. If he actually went out daily he would have known that a place with $1 cutlery can't get away with it while a place with $5 cutlery can. So buy $5 cutlery to be able to raise prices by $5 per dish, i.e. forty dollars for a two top per dinner.

[+] ChuckMcM|8 years ago|reply
Spending much of my youth in Vegas and, at the time watched a number of restaurants appear and vanish, a person I met at the culinary union said something that my high school self didn't understand but later made much more sense. "All the successful restaurants in this town were started for laundering money for the mob."
[+] dgudkov|8 years ago|reply
If the author spent a few months just working for some restaurant it could've helped him to estimate risks correctly and maybe stopped him from opening a restaurant at all. People with experience are much less into super-detailed business plans because they have the empirical knowledge. I suspect the desire to have a super-detailed business plan is a subconscious replacement for empirical experience.
[+] greedo|8 years ago|reply
Yup. Any spreadsheet can be manipulated so that somehow, your net is always enough to be successful. GIGO...