Friend wants to open small restaurant

[Dari]

She has a novel concept but knows nothing about the restaurant business. She's also a foreigner that is here on a student visa. I told her not to sell her idea but to pursue it. Other than that, there is nothing else I can do to help her. I'm leary of sending her to the business school because they might over-complicate the process. Any advice or link she can go?

 

[xSauronx]

Originally posted by: Dari
She has a novel concept but knows nothing about the restaurant business. Any advice or link she can go?

tell her to work in a restaurant first and see if she really wants to get into that. its not for everyone.

 

[Capt Caveman]

Since she's on a student visa, I'm pretty sure she's not allowed to work or run/own a business in the US.

 

[Syringer]

Originally posted by: Capt Caveman
Since she's on a student visa, I'm pretty sure she's not allowed to work or run/own a business in the US.

yes

 

[xanis]

Seems to me like starting a business in this economy is a huge risk... especially a business that involves dining, as it's a luxury that people are cutting back on.

 

[zerocool84]

Originally posted by: Xanis
Seems to me like starting a business in this economy is a huge risk... especially a business that involves dining, as it's a luxury that people are cutting back on.

If she wants to try to start a business then let her go for it. Things are cheaper so if she wants to do it then good for her. We can always use more small businesses.

 

[natto fire]

After personally knowing two people who have had restaurants fail, one of them being my father, I learned a few things. The location is very important, even if you have a great idea it has to have a demographic around to support it, especially with so many people just settling for chains or fast food. The second is that they inevitably have HUGE amounts of overhead and run on very thin profit margins. Depending on the type of restaurant she wants to run, there are the possibility of shady employees, lot's of insurance crap, and liquor license woes. Obviously the sagging economy adds a bit of twist to this as well.

The best advice I could offer is to be prepared to know when you should cut your losses and move on. My dad was trying so hard not to let his place go into the ground that he and my stepmom would sometimes work 90+ hour weeks doing everything from the janitorial to the paperwork. It really wore my dad down and I was glad to see him finally call it quits. It is a very exicting and fast paced industry, and not for the faint of heart or easily offended. It taught me loads about work ethic and provided me with cash and appreciation of food.

 

[xanis]

Originally posted by: zerocool84

Originally posted by: Xanis
Seems to me like starting a business in this economy is a huge risk... especially a business that involves dining, as it's a luxury that people are cutting back on.

If she wants to try to start a business then let her go for it. Things are cheaper so if she wants to do it then good for her. We can always use more small businesses.

I'm not saying she shouldn't go for it. I'm a HUGE fan of following your dreams, and I want to start a business myself some day. I'm just saying that it seems like a risk. Who knows though, she might find her niche and do really, really well.

 

[nageov3t]

the vast majority of restaurants fail within the first year.

 

[Dari]

Originally posted by: Captain Howdy
After personally knowing two people who have had restaurants fail, one of them being my father, I learned a few things. The location is very important, even if you have a great idea it has to have a demographic around to support it, especially with so many people just settling for chains or fast food. The second is that they inevitably have HUGE amounts of overhead and run on very thin profit margins. Depending on the type of restaurant she wants to run, there are the possibility of shady employees, lot's of insurance crap, and liquor license woes. Obviously the sagging economy adds a bit of twist to this as well.

The best advice I could offer is to be prepared to know when you should cut your losses and move on. My dad was trying so hard not to let his place go into the ground that he and my stepmom would sometimes work 90+ hour weeks doing everything from the janitorial to the paperwork. It really wore my dad down and I was glad to see him finally call it quits. It is a very exicting and fast paced industry, and not for the faint of heart or easily offended. It taught me loads about work ethic and provided me with cash and appreciation of food.

Yes, the location and customers are the easy part. Anything else? She may have to hire the chiefs, right? Insurance as well, correct?

 

[XZeroII]

Originally posted by: Captain Howdy
After personally knowing two people who have had restaurants fail, one of them being my father, I learned a few things. The location is very important, even if you have a great idea it has to have a demographic around to support it, especially with so many people just settling for chains or fast food. The second is that they inevitably have HUGE amounts of overhead and run on very thin profit margins. Depending on the type of restaurant she wants to run, there are the possibility of shady employees, lot's of insurance crap, and liquor license woes. Obviously the sagging economy adds a bit of twist to this as well.

The best advice I could offer is to be prepared to know when you should cut your losses and move on. My dad was trying so hard not to let his place go into the ground that he and my stepmom would sometimes work 90+ hour weeks doing everything from the janitorial to the paperwork. It really wore my dad down and I was glad to see him finally call it quits. It is a very exicting and fast paced industry, and not for the faint of heart or easily offended. It taught me loads about work ethic and provided me with cash and appreciation of food.

QFT

I also agree with the person who said that she should work in a restaurant for awhile first. She should volunteer to put in as many hours as possible and be involved in every aspect. She should learn as much as she can before she attempts this on her own because a lot of people don't realize how much work it really is and can't take the pressure.

 

[JS80]

Kind of hard these days you're competing against investor groups with "celebrity chefs."

 

[Capt Caveman]

Originally posted by: Dari

Originally posted by: Captain Howdy
After personally knowing two people who have had restaurants fail, one of them being my father, I learned a few things. The location is very important, even if you have a great idea it has to have a demographic around to support it, especially with so many people just settling for chains or fast food. The second is that they inevitably have HUGE amounts of overhead and run on very thin profit margins. Depending on the type of restaurant she wants to run, there are the possibility of shady employees, lot's of insurance crap, and liquor license woes. Obviously the sagging economy adds a bit of twist to this as well.

The best advice I could offer is to be prepared to know when you should cut your losses and move on. My dad was trying so hard not to let his place go into the ground that he and my stepmom would sometimes work 90+ hour weeks doing everything from the janitorial to the paperwork. It really wore my dad down and I was glad to see him finally call it quits. It is a very exicting and fast paced industry, and not for the faint of heart or easily offended. It taught me loads about work ethic and provided me with cash and appreciation of food.

Yes, the location and customers are the easy part. Anything else? She may have to hire the chiefs, right? Insurance as well, correct?

Is she planning on doing this in her home country? I already posted that b/c she's on a student visa, she is not allowed to work or run/own a business in the US.

 

[Dari]

Originally posted by: Capt Caveman

Originally posted by: Dari

Originally posted by: Captain Howdy
After personally knowing two people who have had restaurants fail, one of them being my father, I learned a few things. The location is very important, even if you have a great idea it has to have a demographic around to support it, especially with so many people just settling for chains or fast food. The second is that they inevitably have HUGE amounts of overhead and run on very thin profit margins. Depending on the type of restaurant she wants to run, there are the possibility of shady employees, lot's of insurance crap, and liquor license woes. Obviously the sagging economy adds a bit of twist to this as well.

The best advice I could offer is to be prepared to know when you should cut your losses and move on. My dad was trying so hard not to let his place go into the ground that he and my stepmom would sometimes work 90+ hour weeks doing everything from the janitorial to the paperwork. It really wore my dad down and I was glad to see him finally call it quits. It is a very exicting and fast paced industry, and not for the faint of heart or easily offended. It taught me loads about work ethic and provided me with cash and appreciation of food.

Yes, the location and customers are the easy part. Anything else? She may have to hire the chiefs, right? Insurance as well, correct?

Is she planning on doing this in her home country? I already posted that b/c she's on a student visa, she is not allowed to work or run/own a business in the US.

Well, that part can be dealt with in various ways. The idea, if carried properly, would be very profitable, I believe. But neither of us know anything about the restaurant business. I would ask current owners but don't want to make them suspicious so I decided to start here. Anyway, I guess I will ask restauranteurs in the other part of town. Perhaps she should ask her own kinsfolks. Thanks anyway.

 

[kranky]

I would imagine she'll need to sit down and figure out how much rent will be and the cost of setting up the restaurant. Will she have to remodel a place to turn it into a restaurant? If she thinks she can find a place that used to be a restaurant that she can just take over, will she be smart enough to ask "Why is it no longer in business?"

Does she have enough money to pay her suppliers in cash until she gets established? Enough for an advertising budget? Plates, cups, flatware, cooking utensils, dishwasher, freezer, refrigerator, shelving? Accountant to do payroll and business taxes?

My uneducated guess is she'll need to have at least $25,000 on hand to get things rolling.

If she knows nothing about the business, she's doomed, unless she plans to hire an experienced restaurant manager or consultant and that won't be cheap.

 

[illusion88]

Originally posted by: JS80
Kind of hard these days you're competing against investor groups with "celebrity chefs."

This.
I only eat at resturaunts with Celebrity Chefs. I never go to a small, local, diner/restaurant. This is the same for everyone I have ever known, ever.

 

[natto fire]

Can't help but feel like you mocked my post. The location and what not might seem easy, but in this economy, which will degrade further over the summer, they are tricky variables. Maybe you should help her get a proper visa and an Applebees franchise, tell her to stuff her dream because it will inevitably fail...

 

[guyver01]

Originally posted by: Dari
The idea, if carried properly, would be very profitable, I believe. But neither of us know anything about the restaurant business.

How do you know it would be profitable, if neither of you know anything about running a business?

 

[Dari]

Originally posted by: Captain Howdy
Can't help but feel like you mocked my post. The location and what not might seem easy, but in this economy, which will degrade further over the summer, they are tricky variables. Maybe you should help her get a proper visa and an Applebees franchise, tell her to stuff her dream because it will inevitably fail...

Ahhh...there's that 'Can-Do' spirit... Thanks anyway for all your help and advice.

 

[lxskllr]

How many private restaurants have you seen open up and close before 2 years were up? I've seen tons. In fact, I can think of damned few that have had the same management for more than 10 years. Bars and restaurants look like money machines to those standing outside looking in, but it's damned risky, and hard to be successful in that business.

 

[Dari]

Originally posted by: lxskllr
How many private restaurants have you seen open up and close before 2 years were up? I've seen tons. In fact, I can think of damned few that have had the same management for more than 10 years. Bars and restaurants look like money machines to those standing outside looking in, but it's damned risky, and hard to be successful in that business.

I know it's risky. And I just remembered that my uncle in Texas owns a restaurant business. I will give him a call tomorrow. Thanks again.

 

[ed21x]

Originally posted by: loki8481
the vast majority of restaurants fail within the first year.

this is the same with any business in any private industry. I have a few friends pool their money together to invest in a small private coffee shop here in NY, and while they all initially worked without pay, they now expect to recover their initial investment within about 4 years. So really... you have to stick through it and understand that it is a long term investment.

 

[ed21x]

Originally posted by: lxskllr
How many private restaurants have you seen open up and close before 2 years were up? I've seen tons. In fact, I can think of damned few that have had the same management for more than 10 years. Bars and restaurants look like money machines to those standing outside looking in, but it's damned risky, and hard to be successful in that business.

the vast majority of those restaurants fail for the pure reason that they didn't stick around long enough to build an adequate customer base. especially for a non franchise, you are basically relying on word of mouth, which means you'll need at least a few years before you have a sustaining customer base.

 

[lxskllr]

Originally posted by: ed21x

Originally posted by: lxskllr
How many private restaurants have you seen open up and close before 2 years were up? I've seen tons. In fact, I can think of damned few that have had the same management for more than 10 years. Bars and restaurants look like money machines to those standing outside looking in, but it's damned risky, and hard to be successful in that business.

the vast majority of those restaurants fail for the pure reason that they didn't stick around long enough to build an adequate customer base. especially for a non franchise, you are basically relying on word of mouth, which means you'll need at least a few years before you have a sustaining customer base.

Many of the ones I've seen *looked* like they did a solid business. People coming in and out, decently filled inside, but for whatever reason they couldn't/wouldn't continue. I really don't know much about it. I just go by what I see, and a couple of insiders I've talked to over the years. You certainly /can/ be successful opening a restaurant, but I don't like the odds of success that I perceive.

 

[nageov3t]

Originally posted by: ed21x

Originally posted by: lxskllr
How many private restaurants have you seen open up and close before 2 years were up? I've seen tons. In fact, I can think of damned few that have had the same management for more than 10 years. Bars and restaurants look like money machines to those standing outside looking in, but it's damned risky, and hard to be successful in that business.

the vast majority of those restaurants fail for the pure reason that they didn't stick around long enough to build an adequate customer base. especially for a non franchise, you are basically relying on word of mouth, which means you'll need at least a few years before you have a sustaining customer base.

and that's something the OP's friend would have to take into account -- having enough start-up money to not only start the business, but survive for years operating at a loss before seeing even a slim profit.