Open a restaurant or no? THAT is the question

[jbrink01]

Originally Posted by drbbq

Like I said there are exceptions, and I'm sure these new guys are doing very well. But I'd bet there are a few trailer guys out there who never got the attention of the local media and went away too. I was one.
There's also a lot of attention to "Food Trucks" these days but I wonder how that will all shake out five years from now.

I think many want to start small because they really don't know anything about running a restaurant. But IMO if you don't know anything about running a restaurant you shouldn't open one.

I've been through this many times on the net. All I can tell you is I personally left a lot of blood, sweat, and money on the ground one time trying this but nobody wants to believe it. It's gonna be different for them.
We hear many stories of start-ups doing well, but then many of them disappear. They never come back to tell the story of closing and paying the debt after they're done.

Ray,
Sing it brother. I am a trailer guy that has been blessed with success, but we work our @sses off for it!! The first few years, we kept nothing for ourselves and worked LOOOOONG days with an offset. People lose sight of that when they see a $100,00 catering shop, 2 FEC 500's, coolers, charbroilers, offset pit and the TONS of servingware. They also dont think about the check we write to the bank every month for the payment, or the $1500 we paid in labor - in one day, for a big event.

I grew up farming, and we thought that dairy farmers were nuts due to the hours. Turns out catering is much the same!

[chachahut]

Originally Posted by drbbq

I don't agree with the "Start small" or the "Grab and go" strategy. You need to do what the customers want, not what you want. IMO people won't take you seriously if you have short hours, no tables, and a limited menu. If I was going to start a business I'd be looking to make a lot of money. You can't do that with a small, carry out only, limited hours joint.

I've been reading & thinking about this thread (& others here with similar tone) for a bit so this may be a little long winded. Just want to share my personal experience in running a small grub & go joint in upstate NY.

I'm guessing Ray borrowed a shed load of cash so he could open a big sit down place with a large staff & a menu not focused solely on BBQ. I'm also guessing his overhead & debt load made it impossible for his place to succeed.

Perhaps had he set out to make a living instead of "a lot of money" he might have seen the wisdom in starting small, keeping the menu tight & focusing take out.

Low overhead & the possibility of capitalization without having to borrow.

I opened Cha Cha Hut BBQ in Roxbury, NY in January 2010 with an initial investment of around 30k. That's right - a Q joint in upstate NY opening in the middle of winter. Kept it small & simple - take out with 10 seats for any one wanting to stay & eat. No staff - me & the wife with a local kid on busy weekends. Wednesday - Sunday 11am - 8pm. My kitchen consisted of a few commercial fridges, a small freezer, stainless prep tables, 3 bin stainless sink, stainless prep sink, hand sink, wire storage racks, a commercial stove with oven & a couple of heated holding units. Two Backwoods Smokers in a shed out back. I basically designed the joint like a mobile rig in a building. I rented the building so anything like roof issues were taken care of by the landlord. (If the landlord is not covering major structural issues in your lease - you need a better lease. Always have a lawyer review before signing.)

My menu?

Pulled pork, beef brisket, smoked turkey, pork spare ribs, pig wings (rib tips), smoked mac & cheese, bbq beans, a couple of slaws, a soup of the moment, a side of the moment & a dessert of the moment. Sweet tea, lemonade & water for drinks.

We did everything Ray says destines us for failure. I guess we were the exception.

We started beating the sales projections in the first week. By the end of the first month, we completely re-tooled the business plan as we discovered folks in this area wanted:

1 Good BBQ (we're the only joint in about a 50 mile radius)
2. Inexpensive grub (our prices start a $6 for a pork sandwich)
3. Take out

Yes - people ACTUALLY want take out. (Hence the reason take out/fast food is still doing well even in the recession.) They will also pay attention to when you're open if you advertise, set clear hours & serve great food. Spent a bit on newspaper ads, but word of mouth & the internet became our best marketing source. We were doing about 35 - 40% net profit rolling into the summer (the area's biggest season).

Then - the Tuesday before Memorial Day - we had an electrical fire. Lost everything. Lesson learned: you never have enough insurance. Also - make sure to continue to update your insurance as new equipment is added. We did not do that - though to be honest we were only up for 4 months.

We've spent the summer doing Saturday gigs out of our front yard (a couple of tents & some picnic tables - take out about 80%) while working to open in a new location. (Unfortunately, the landlord of the original location has chosen not to rebuild. So, we're moving the joint to a new town about 20 minutes down the road.) We've continued to do steady business & have actually increased our clientele. Mailing list increased 30% & the Facebook page doubled in fans & traffic. Most week's found calls starting on Wednesday (when the newspaper ad came out) to pre-order food. We encourage folks to reserve food (especially ribs) as we cook a limited supply.

Our new space is rented in the back area of a local general store & my lease covers utilities & building maintenance. The kitchen & smokers will have the same basic set up as the first Hut. Yes - there are a few more tables if someone wants to take their food & sit plus a lunch counter with stools, but take out will still be 80% of my business. I am counter service only - order here/pick up here. The whole joint s around 800 square feet & will be run by myself, my wife & the occasional weekend kid. Thursday - Sunday noon until 9 or 10pm. Same laser focused menu. Nothing but BBQ.

The cost for re-opening? Essentially covered by the insurance.

I've invested about as much money as someone looking to put together a vending rig. My menu sticks with a limited amount of items to keep food & equipment costs down. If it's not BBQ or BBQ related it is not going on the menu. Burgers, hot dogs, fries & chicken tenders have NOTHING to do with BBQ. Their exclusion also remove the costs associated with a fryer & grill. Trying to be everything to everyone is precisely the reason so many restaurants fail. Trying to do what the customer wants is a losing battle. Every customer wants something different. Stick to what you do best - & if you're opening a Q joint that had better be BBQ - and you'll never disappoint any customer stopping in to get BBQ.

After all - if they did not want BBQ, why the hell did they come to Q joint?

[expatpig]

Amen chachahut, well said!

[JiveTurkey]

I had a chance to attend an event with a local bbq restaurant owner this past weekend, it was one hour worth it's weight in gold to get the chance to sit down and chat 1:1. He stressed the amount of hours to get started, dealing with hiring/firing of people, being able to trust employees when you're not there not because they steal directly but what he called "stolen productivity". He's finding that the younger generation of kids don't have much work ethic and waste a lot of time texting and only doing things if they're told to do them.

Yet after all of that the #1 stressor of the job above everything else was keeping equipment up and running. Something he said he never thought of before opening. Yet when a stove goes out or your freezer dies in the middle of the night and ruins all of your meat it can make for a long day.

Godspeed to anybody with the courage to go for it! You have my support!

[HawgNationBBQ]

Great points Cha-Cha. Curious, is this your first business venture or have you run a business prior?

[chachahut]

Very true JT. Even worse is a power failure. Had bar & restaurant friends in Brooklyn during the 2003 Blackout who basically had to grab Weber grills & cook everything in the fridges.

Insurance will cover losses on food due to fire & failures as long as you've had your agent put it into the policy, but you'd better have GREAT records or it will be an extreme pain to collect. Took us several weeks to assemble the appropriate invoices after the fire.

Of course, had we put the receipts in a fire proof box...

Yep - another lesson learned. Put fire proof safe on top of list & put all pertinent records in fire proof safe. Oh & disconnect backup thumb drive from computer & take it with you or put in fire proof safe. Leaving it on computer when office burns will do you absolutely no good when it comes to an insurance claim.

[Bamabuzzard]

Excellent advice and spot on. Starting out small and growing as needed is the best way to go. Risk is at a minimum and its a situation that the owner can keep control over rather than having the situation take control of them.

Many of your staple restaurants started off exactly as described below.

Originally Posted by Smiter Q

Just as a counter point, some of the best new BBQ joints in Austin are operated out of a trailer. A local paper did an expose on them this past year. In brief, they cook a set amount of food for the lunch crowd. One of them, "Franklin's" has people lining up a full half hour before he opens the window. He smokes a certain amount of pounds of product, sells it at a trailer that is parked in parking lot of a local business, and closes the window when all the food is gone. AND... it is ALWAYS GONE! People wait in line for 30 minutes too for the food, reminder now... this is waiting in near 100 degree TEXAS heat! He is looking now for a small brick and mortar, but he wanted to try his entry this way to see if he would have success. I personally think an operation like this is an ideal set up. There is a PROFIT every day, RISK are MINIMAL, and he is GROWING his business at a SMART pace. Not everyone has the funds or financing ability to start with a committed industrial lease and other aspects for expenses of a larger operation. Numbers speak for themselves, regardless of what one "may" want, vs. what one "can" have.

[chachahut]

Originally Posted by hawgsgonesmokin

Great points Cha-Cha. Curious, is this your first business venture or have you run a business prior?

First self-owned food service though I've been a cook for several years. Prior to this, we had a fairly successful web design shop for a decade. Both the wife & I are IT/web/design geeks. My life prior to starting my own web shop was 20 years in the music biz. My wife worked for several Fortune 500 companies as a tech guru.

[Stoke&Smoke]

Really interesting thread! Thanks to all for your input!

[drbbq]

Originally Posted by chachahut

I've been reading & thinking about this thread (& others here with similar tone) for a bit so this may be a little long winded. Just want to share my personal experience in running a small grub & go joint in upstate NY.

I'm guessing Ray borrowed a shed load of cash so he could open a big sit down place with a large staff & a menu not focused solely on BBQ. I'm also guessing his overhead & debt load made it impossible for his place to succeed.

Perhaps had he set out to make a living instead of "a lot of money" he might have seen the wisdom in starting small, keeping the menu tight & focusing take out.

Low overhead & the possibility of capitalization without having to borrow.

I opened Cha Cha Hut BBQ in Roxbury, NY in January 2010 with an initial investment of around 30k. That's right - a Q joint in upstate NY opening in the middle of winter. Kept it small & simple - take out with 10 seats for any one wanting to stay & eat. No staff - me & the wife with a local kid on busy weekends. Wednesday - Sunday 11am - 8pm. My kitchen consisted of a few commercial fridges, a small freezer, stainless prep tables, 3 bin stainless sink, stainless prep sink, hand sink, wire storage racks, a commercial stove with oven & a couple of heated holding units. Two Backwoods Smokers in a shed out back. I basically designed the joint like a mobile rig in a building. I rented the building so anything like roof issues were taken care of by the landlord. (If the landlord is not covering major structural issues in your lease - you need a better lease. Always have a lawyer review before signing.)

My menu?

Pulled pork, beef brisket, smoked turkey, pork spare ribs, pig wings (rib tips), smoked mac & cheese, bbq beans, a couple of slaws, a soup of the moment, a side of the moment & a dessert of the moment. Sweet tea, lemonade & water for drinks.

We did everything Ray says destines us for failure. I guess we were the exception.

We started beating the sales projections in the first week. By the end of the first month, we completely re-tooled the business plan as we discovered folks in this area wanted:

1 Good BBQ (we're the only joint in about a 50 mile radius)
2. Inexpensive grub (our prices start a $6 for a pork sandwich)
3. Take out

Yes - people ACTUALLY want take out. (Hence the reason take out/fast food is still doing well even in the recession.) They will also pay attention to when you're open if you advertise, set clear hours & serve great food. Spent a bit on newspaper ads, but word of mouth & the internet became our best marketing source. We were doing about 35 - 40% net profit rolling into the summer (the area's biggest season).

Then - the Tuesday before Memorial Day - we had an electrical fire. Lost everything. Lesson learned: you never have enough insurance. Also - make sure to continue to update your insurance as new equipment is added. We did not do that - though to be honest we were only up for 4 months.

We've spent the summer doing Saturday gigs out of our front yard (a couple of tents & some picnic tables - take out about 80%) while working to open in a new location. (Unfortunately, the landlord of the original location has chosen not to rebuild. So, we're moving the joint to a new town about 20 minutes down the road.) We've continued to do steady business & have actually increased our clientele. Mailing list increased 30% & the Facebook page doubled in fans & traffic. Most week's found calls starting on Wednesday (when the newspaper ad came out) to pre-order food. We encourage folks to reserve food (especially ribs) as we cook a limited supply.

Our new space is rented in the back area of a local general store & my lease covers utilities & building maintenance. The kitchen & smokers will have the same basic set up as the first Hut. Yes - there are a few more tables if someone wants to take their food & sit plus a lunch counter with stools, but take out will still be 80% of my business. I am counter service only - order here/pick up here. The whole joint s around 800 square feet & will be run by myself, my wife & the occasional weekend kid. Thursday - Sunday noon until 9 or 10pm. Same laser focused menu. Nothing but BBQ.

The cost for re-opening? Essentially covered by the insurance.

I've invested about as much money as someone looking to put together a vending rig. My menu sticks with a limited amount of items to keep food & equipment costs down. If it's not BBQ or BBQ related it is not going on the menu. Burgers, hot dogs, fries & chicken tenders have NOTHING to do with BBQ. Their exclusion also remove the costs associated with a fryer & grill. Trying to be everything to everyone is precisely the reason so many restaurants fail. Trying to do what the customer wants is a losing battle. Every customer wants something different. Stick to what you do best - & if you're opening a Q joint that had better be BBQ - and you'll never disappoint any customer stopping in to get BBQ.

After all - if they did not want BBQ, why the hell did they come to Q joint?

So are you paying your house payment, car payment, health insurance, putting a little in a 401k, buying the wife a little something now and then, and putting a little spending money in your pocket all from this business? If so I say congratulations! You've beaten the odds.

[bam]

Alcohol!! Restaurants that serve alcohol have a better chance of making it.

[bbquzz]

As many have said "Listen To The Dr." If you don't believe Dr. BBQ, make a list with two columns, one with people from this post who said to get in business and one the people who said "DON'T DO IT," that should answer the original question.

[chachahut]

Yes Ray - we are paying our bills & saving a bit. Thanks to the state of health care in this country, I have not had health insurance since I left the corporate world 15 years ago. As we spend pretty much all our time at the joint - we find it less necessary to have "spending" money but yes- we do have that as well.

Point is Ray - we're making a living on our own terms with our own business with very little debt. That - to us - is far more important than making a lot of money or even "buying the wife a little something". She'd probably gut you with a carving knife for that incredibly sexist statement.

Actually Bam - alcohol IS a great margin point but adds about 1000 times more headaches & money sucks to the business. Major among them is the insurance costs. You carry a MUCH greater insurance load with alcohol than with a simple Q joint. You also need a larger place - & staff - to serve alcohol which then gets back to why so many restaurants fail.

Buzz - sorry but I have to disagree. The Dr. has not offered anything other than HE failed ONCE & the absolutely absurd advice: "You have to start big & rack up a huge debt. You can't start small using your own capital & grow as your business grows." I know of no credible business adviser who would tell anyone they should not start small & manageable. As such, I can't put much weight into anything he has to say about opening a Q joint. Though perhaps he is right when it comes to opening a restaurant.

[Bamabuzzard]

I've never owned a restaurant but I've been accountant my entire life and currently am the controller for a pump specialists company in Louisiana. I also do contract accounting for small businesses on the side to have a little "BBQ play money".

One thing that is a fundamental element of business is to not leverage the company in so much debt (especially in the beginning stages) that the business has been set up to fail from the get go. It is always better to pay for things with "cash" rather than financing them. Realistically we all know this isn't always feasible. But when it is then it should be done over financing. "The borrower is a slave to the lender". Isn't that the old saying? Debt can be useful when it is strategically used and only intended to be used for a short term.

A friend mine's brother in law owns one of the most successful bbq joints in Shreveport/Bossier, LA. It began just as you've recommended to do. They started small, conservative and grew at a methodical steady pace and over the years they have now built a solid business that isn't sitting on the edge of the cliff with debt.

Originally Posted by chachahut

Yes Ray - we are paying our bills & saving a bit. Thanks to the state of health care in this country, I have not had health insurance since I left the corporate world 15 years ago. As we spend pretty much all our time at the joint - we find it less necessary to have "spending" money but yes- we do have that as well.

Point is Ray - we're making a living on our own terms with our own business with very little debt. That - to us - is far more important than making a lot of money or even "buying the wife a little something". She'd probably gut you with a carving knife for that incredibly sexist statement.

Actually Bam - alcohol IS a great margin point but adds about 1000 times more headaches & money sucks to the business. Major among them is the insurance costs. You carry a MUCH greater insurance load with alcohol than with a simple Q joint. You also need a larger place - & staff - to serve alcohol which then gets back to why so many restaurants fail.

Buzz - sorry but I have to disagree. The Dr. has not offered anything other than HE failed ONCE & the absolutely absurd advice: "You have to start big & rack up a huge debt. You can't start small using your own capital & grow as your business grows." I know of no credible business adviser who would tell anyone they should not start small & manageable. As such, I can't put much weight into anything he has to say about opening a Q joint. Though perhaps he is right when it comes to opening a restaurant.

[drbbq]

Originally Posted by chachahut

Yes Ray - we are paying our bills & saving a bit. Thanks to the state of health care in this country, I have not had health insurance since I left the corporate world 15 years ago. As we spend pretty much all our time at the joint - we find it less necessary to have "spending" money but yes- we do have that as well.

Point is Ray - we're making a living on our own terms with our own business with very little debt. That - to us - is far more important than making a lot of money or even "buying the wife a little something". She'd probably gut you with a carving knife for that incredibly sexist statement.

Actually Bam - alcohol IS a great margin point but adds about 1000 times more headaches & money sucks to the business. Major among them is the insurance costs. You carry a MUCH greater insurance load with alcohol than with a simple Q joint. You also need a larger place - & staff - to serve alcohol which then gets back to why so many restaurants fail.

Buzz - sorry but I have to disagree. The Dr. has not offered anything other than HE failed ONCE & the absolutely absurd advice: "You have to start big & rack up a huge debt. You can't start small using your own capital & grow as your business grows." I know of no credible business adviser who would tell anyone they should not start small & manageable. As such, I can't put much weight into anything he has to say about opening a Q joint. Though perhaps he is right when it comes to opening a restaurant.

How can you put this in quotes and attribute it to me? "You have to start big & rack up a huge debt. You can't start small using your own capital & grow as your business grows."

I never said that. It's your spin. Your credibility is gone.

I've been self employed and successful for 35 years, except the BBQ trailer venture. I can't tell it any other way. Yeah we had good weeks, months, and even a season. But then we had to move and the business didn't come with. Then there was a hepatitis scare that had nothing to do with us but business dried up anyway. Then some days it rains. then some days it's hot. then some days Sonny's has an all you can eat rib special. Then some days they sell slabs in front of Publix for $10. I could go on.
But I'm sure it's different for you.

Now tell me again how many successful years your BBQ business has had?