Running a Restaurant For Dummies®, 2nd Edition
Published by John Wiley & Sons, Inc. 111 River St. Hoboken, NJ 07030-5774 www.wiley.com
Copyright © 2019 by John Wiley & Sons, Inc., Hoboken, New Jersey
Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada
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Library of Congress Control Number: 2019939093
ISBN 978-1-119-60545-4 (pbk); ISBN 978-1-119-60546-1 (ebk); ISBN 978-1-119-60547-8 (ebk)
The restaurant business is an exciting one, full of challenges and opportunities. We’re glad you’re interested in finding out more about it, and you’ve definitely come to the right place to get started. Years ago, going out to eat was truly an event — reserved for weekends or special occasions. Today, however, even a Tuesday, just another day, can be an occasion to eat out, especially when busy careers and overloaded family schedules leave little time to cook. Fortunately, consumers have more restaurant choices than ever before. And opportunities in the industry have never been greater. This book can help you minimize the challenges and overcome the obstacles before they overcome you.
We’ve managed, worked, eaten, mopped floors, tended bars, learned to repair equipment midshift on a Saturday night, hired, fired, trained, and done inventory in some of the best (and worst) restaurants in the world. We’ve worked in ultrafine dining, fast food, catering, and everything in between. We’ve worked dining rooms that sat 30 and catered events that fed 50,000 diners in a single day. Sure, each of these situations is somewhat different, but many aspects of running a restaurant transcend restaurant size, location, or dining style and fall under the category of universal restaurant truths. We do our best to bring all that information to you in this book.
Whether you’re a seasoned restaurant veteran or just out of cooking school, we believe that if you’re reading this book, you have the desire to run a restaurant. After reading it, you should know whether you have a passion for it — or what we sometimes call The Sickness.
Success in the restaurant business is the dream of many and the achievement of few. Often, would-be restaurateurs have misconceptions about what running a restaurant is really like. Some folks are quick to see the glitz and glamour without also seeing the anxiety and effort that accompany it. Others have seen the business from the inside and are sure that they can do it better than the people they’ve worked for, without feeling the true weight and complexity of the tasks and decisions that face The Boss everyday. On the other side of the coin, you find people who could do very well in the restaurant business but stay out because of the horror stories they’ve heard.
We want you to see the full picture — the good, the bad, and the absurd — so you can make an informed decision about your place in this business.
We wrote this book because no Bureau of Restaurant Operators exists to test your knowledge and skills to determine whether you have what it takes to get into the business. After you’ve read the pages between these gorgeous yellow and black covers, you’ll have a good idea of whether this is the racket for you — and the knowledge to get started on the right foot.
Plenty of books tell you how to open a restaurant, but you don’t find many on how to keep it open. This book does both. Why? Because you can never stop improving your service, evaluating your product, scoping out the competition, and researching opportunities in the marketplace. Change is the only constant in the restaurant business. To succeed, you must anticipate and act on new trends, new pressures, and whatever else the market throws your way. The spoils go to those who see opportunities before they happen.
Please don’t mistake our realism for cynicism. We want you to be in the business. But we’re going to make sure that you have the information you need to be a success. We show you many everyday realities that people don’t always consider but should. We hope you take the information and use it to be wildly successful. You can do this, but you have to look at this business the right way. If you do, save us a table!
To help you navigate through this book, we use the following conventions:
Monofont
is used for Web addresses.Sidebars, which appear as text enclosed in shaded gray boxes, consist of information that’s interesting but not critical to your understanding of the chapter or section topic. You can skip them if you’re pressed for time. You can also bypass bonus material marked with the Technical Stuff icon.
Just as restaurant owners have to make assumptions about the customers who will be eating there, authors have to make assumptions about their readers. If one or more of the following descriptions hits home, you’ve come to the right place:
This book is organized into five separate parts. Here’s what’s on the menu.
In this part, we give you a crash course in the restaurant business, including tips for getting started, understanding your options, creating your concept, and picking your name. We help you research the marketplace to determine whether your concept has a shot at success, and we provide information on how customers approach buying decisions. We take you through the critical step of writing a business plan. We also help you figure out whether you have what it takes to make it in the business.
In this part, we focus on acting on your idea. We go through the ins and outs of finding the right location or making an existing location work for you. We give you tips on finding financing for your new business. And we wrap up by dotting some i’s and crossing some t’s, including help on getting the right permits and licenses, getting up to speed on local laws, and legally protecting yourself the right way.
Here, we detail all the tasks you need to do to get up and running. We walk you through hiring and training your staff and developing your menu and beverage program. We show you how to set up your kitchen and dining room for the best flow of food and people. We also give you concrete tips for purchasing and managing your inventory, which can take you a long way toward profitability. And finally, we cover two often-neglected areas of the business: operating your office and promoting your business.
This part is for anyone running a restaurant today or tomorrow or considering doing it in the future. We show you how to maintain and build on your current operation, including tips for managing employees, keeping your diners coming back, and handling customer service situations. We explain how to keep your place spick-and-span and ensure food safety. We show you how to get great information about what your customers want. And we wrap it up with a lesson in watching your numbers, with tips on which reports to run, how to analyze the numbers, and how to make changes to your business when necessary.
Here, we dispel ten common myths about running a restaurant, and we give you some of our favorite only-in-the-restaurant-business stories.
Icons are the fancy little pictures in the margins of this book. Here’s a guide to what they mean:
In addition to what you’re reading right now, this book comes with a free access-anywhere Cheat Sheet. To get this Cheat Sheet, go to www.dummies.com
and search for “Running a Restaurant, 2nd Edition For Dummies Cheat Sheet” by using the Search box.
We think that you’ll find the information in this title valuable enough that you’ll want to read it all. Doing so provides you with a strong, general foundation for starting and running a restaurant.
But one of the great things about a For Dummies book (among the hundreds that we can count) is that you don’t have to read it word for word, front to back, cover to cover. If you’re more interested in one particular topic than another, that’s fine. Check out the corresponding part, chapter, or section and read up on that issue. You can find out about your topic of choice without first having read the information that precedes it, giving you get-in-and-get-out convenience. Interested in tips to create or improve your menu? Turn to Chapter 8. Are you currently looking for a location to plant your new shop? Check out Chapter 6. Is sanitation your thing? Chapter 17 has your name written all over it. Need help understanding how to make social media work for your restaurant today? Hop on over to Chapter 15.
You can jump around, start wherever you want, and finish when you feel like it. So tie on your apron and get going.
Part 1
IN THIS PART …
You’re standing on square one. In the chapters that follow, we introduce you to the restaurant business and help you determine whether you have what it takes to make a go of it in the restaurant world. We help you choose the kind of restaurant that fits your geographic area and your expertise. We help you understand that in order to be successful, you have to create food that people want to buy, again and again. We also help you nail down your concept, come up with a name, and start researching everything from your potential customers to the competition. And we show you how to develop a restaurant-specific business plan.
Chapter 1
IN THIS CHAPTER
Understanding the basics of the business
Deciding whether you have the necessary skills
Restaurants are fun. Whether you stop by to celebrate a special occasion, grab a quick bite for lunch, meet friends for a drink, or pick up dinner for the family on the way home from work, the experience is usually enjoyable. (At the very least, it’s more enjoyable than not eating or being forced to cook!). Just about everyone associates restaurants with having a good time. So it’s natural for people to think, “I enjoy going to restaurants, so I may as well get paid to do what I enjoy — hang out in bars and eat at great restaurants.”
And you know what? Living the restaurant life is fun. We’ve been doing it for many a year, and we love it. But the problem comes when people see only the fun and never the struggle. Viewed from the dining room or barstool (or from the kitchen, stockroom, or anywhere else other than the seat marked “Proprietor”), it’s difficult to see the 95 percent of the picture that’s pretty tough work. In the restaurant business, you have so much fun that you can hardly stand it. It’s kind of like wishing every day was Christmas and actually getting your wish. You get tired of wrapping the presents, preparing the eggnog, and checking that the elves are on time for their shifts, and if you have to look at any more roasted chestnuts, you’ll die. The restaurant business quickly becomes more work than fun, so don’t be fooled.
In this chapter, we take you on a quick tour of the business. We introduce you to all the upfront work that you must do on paper before you can even think about picking up a pan or laying down a place setting. We move on to the physical preparations that will consume your every waking minute on the way to opening your doors. Then we remind you that when you first open your doors, the work has only begun. Finally, we help you examine your motivations and expectations for pursuing your dream to determine whether both are rooted in reality.
In this section, we discuss planning your restaurant, hiring experts to help you set up shop, and attracting customers.
Sometimes the business of the business is tough for people to relate to. Your product is packaged in many layers, including your exterior, your lobby, your staff’s attire, the music playing, the aromas emanating from the kitchen, the friendliness and knowledge of your staff, your silverware, your china, and your glassware. All these things make up your packaging, affect the costs of doing business, and influence your diners’ decision to come in and, ultimately, to come back.
As with any business, the planning stage is crucial, and you have to survive it before you can enjoy any of the fun. Right off the bat, you have to develop your restaurant’s theme and concept (see Chapter 2), research the market (Chapter 3), develop a detailed business plan and use it to find and secure financing (Chapters 4 and 5), and find the best location for your new restaurant and get the right licenses and permits (Chapters 6 and 7).
Buy your products at the right price and sell them at the right price. This simple tenet can make or break your business. Check out Chapter 13 for tips on getting the best price and look to Chapter 8 for pricing your food and beverage menus right from the start.
Depending on how new you are to the restaurant biz, you may need accountants, attorneys, contractors, and a host of other characters, all at the ready and working with you at various stages of the project.
When starting any new business, you need to review contracts, file your permits, or maybe incorporate your business. Depending on how you set up your business, you may need to draft a partnership agreement or two. Before you sign franchise agreements or vendor contracts or fire your first employee, make sure that you’re working with a good attorney, who can help you with all these tasks and more. Watch for details in Chapter 7.
Most people starting a new restaurant or taking over an existing one change a few things (or a few hundred things) at their new location. Maybe you need to set up a new kitchen from scratch or improve the airflow of the hood over the range. Maybe you want to upgrade the plumbing or install air filtration in your bar. Contractors can save you lots of time and trouble. Don’t hesitate to ask them questions and check their references.
Check out Chapters 9 through 11 for the scoop on designing your exterior, dining room, kitchen, and bar — with or without the help of contractors, designers, and architects. Interior designers and architects come in very handy around renovation and revamp time. Sometimes they can give your place a face-lift for much less than you imagine.
All the hard work you do to get to the point where you can open the doors means absolutely nothing if no one shows up. Start thinking about how to draw customers way before you open your doors (and every day after that). Develop your marketing plan based on what’s special about your restaurant. Maybe it’s the food, ambience, price, or value. Study your competition, watch what they’re doing well (and not so well), and understand where you have the advantage.
Different groups respond to different messages, so figure out what works for the diners you’re going after. Check out Chapter 15 for details on telling the world about your place and getting them to beat a path to your door. After you get the customers in the seats, you have to keep them there. We’ve heard that you can’t use restraining devices in most states and municipalities, so you do have to let diners go and hope they come back. We want you to do more than hope. Chapter 18 gives you concrete tips for building your clientele and ensuring that most of them come back — and bring their friends.
Culinary prowess, a charming personality, and an ability to smile for the cameras — that’s about all you need, right? Wrong. Take a step back. Running a restaurant successfully takes a lot more. Anyone can run a restaurant, but not everyone can run one well. (In fact, we should’ve titled this book, Running a Restaurant Really Well For Dummies, 2nd Edition, but the publisher wouldn’t go for it.) In this section, we help you evaluate your motivations and expectations, and we identify the key traits of a successful restaurateur.
The restaurant business is a tough business, and if you want to succeed, you have to have the inner motivation — the drive — to sustain you through all the downs that accompany the ups. This isn’t a venture for the faint of heart. If you want to own a restaurant to have a place to hang out with your friends and get free drinks, we say take the bar bill and avoid the hassles.
There are lots of great reasons to want to run a restaurant. Here are a few of our favorites:
If one or more of these red-flag reasons sounds familiar, don’t be completely discouraged. Just make sure that motivations such as these aren’t your only, or even your primary, reasons for wanting to get into the business. Do some further investigation before making the financial, personal, and professional commitment to the business.
Running a restaurant, either yours or someone else’s, is a huge commitment. It requires long hours, constant vigilance, and the ability to control potentially chaotic situations — on a daily basis.
Think about Cocktail, the great (or not-so-great, depending on your point of view) ’80s movie in which a salty old bartender marries a rich lady and uses her money to open his own place. Just before he kills himself, he pours out his soul to his younger bartender friend, played by Tom Cruise, about what it’s really like to own your own place. He confesses, “The only thing I know about saloons is how to pour whiskey and run my mouth off. I knew nothing about insurance, sales tax, or building code, or labor costs, or the power company, or purchasing, or linens. Everyone with a hand stuck it in my pocket.”
Then determine whether the expectations on your lists reflect the reality of the situation. Reading this book is a great place to start — our goal is to present a balanced look at the joys and pains of running a restaurant. (If you want an instant reality check, skip over to Chapter 20, where we confront ten common myths.) But don’t stop there. As we state in Chapter 2, you have to start researching every aspect of the business on Day 1, and you don’t get to stop until you close your doors for the very last time. So you may as well start now. Minimize the mystery by getting out in the restaurant world — talk to owners, managers, waiters, and suppliers about their experiences and what you can expect.
Based on our experience in the restaurant business, successful restaurateurs exhibit a few common traits. We list them here. Don’t worry if you possess more of some traits than others. Just being aware of them is a great step toward making them all part of your world and succeeding in the business.
The ability to keep your cool under pressure, thrive in chaos, and handle multiple points of view and personalities serves you well in the business. Whether you’re dealing with customers, employees, purveyors, changing trends, or a fickle clientele, you have to develop a thick skin. The inherent stress of the restaurant makes for short fuses. Your job is to dampen those tempers, smooth the rocky waters, and calm the storm.
The restaurant environment changes from minute to minute, so you have to be able to adjust and think on your feet. Seek a good balance of process- and product-motivated people. Process-motivated people micromanage what’s going on in their organization. Product-minded people focus on the end result. Sometimes you’ll wear both hats.
Infuse creativity into every facet of your business, from how you approach your customers and your food to how you promote your business. That creativity affects how your business performs.
Whenever you’re in the restaurant, you have to be “on” — all the time. Restaurants that have a positive vibe are the ones that survive. Positive energy is key, as intangible as it is, and your restaurant can’t have positive energy if you don’t.
Coveted by many, achieved by few, the ability to handle one’s liquor has been the downfall (physically, financially, and spiritually) of many a restaurateur. Per capita, no industry drinks more than the restaurant business. For some people, managing a restaurant is like getting the keys to the grown-up candy store, and the temptation is too much to resist. As a restaurateur, you often drink as part of your job. No matter what the circumstances, you still have to count the money at the end of the night, and you have to be ready to go first thing in the morning.
Restaurateur /res-tuh-ruh-TUR/: n. doctor, babysitter, marriage counselor, bail bondsman, parent, mediator, conscience, seer, sage. See Patton, George; Ghandi; et al.
Being a leader in this industry means being able to balance an entire range of different management approaches, knowing when to lead by example, and knowing when to give the troops their marching orders. Most importantly, a successful restaurant leader is able to find her own leadership style and deal with employees fairly, consistently, and respectfully.
You have to connect everything to your passion. You have to get the wait staff wired with it, because they’re selling your vision to the customers. You have to get the prep guys pumped, because they’re cranking on a tough schedule, without the natural excitement of a restaurant full of people. You have to get the dishwashers psyched about cleaning the dishes, because the dishes frame the experience for the customer. Diners should experience a buildup of expectations for their experience from the first time they come into contact with anyone from the restaurant (whether on the phone, in person, or online). Imagine doing all that without a passion for your restaurant, and you see why passion is mandatory.
Being in the restaurant day in and day out has no substitute. Absentee landlords need not apply. Just stopping in to say hello or giving off an aura that you know what’s up ultimately won’t allow you to run the restaurant. If you’re not there, those who are there in your stead will be the de facto rulers. If you’re not physically present in the building most of the time, the schmoozing, the energy, the passion, and so on can’t get to your staff and ultimately to your diners. You can’t positively impact your restaurant if you’re not there.