tips for opening & running a restaurant in

8/14/2019 Tips for Opening & Running a Restaurant In

1/15

TIPS FOR OPENING & RUNNINGA RESTAURANT IN

NEW YORK CITYEW YORK CITY

Presented byE. Charles Chuck Hunt,

Executive Vice PresidentNew York StateRestaurant Association

The Ultimate Entrepreneurship


2/15

The Restaurant Industry employs an estimated 12 million

people, making it the nations largest employer outside ofgovernment.

Restaurant Industry sales were 4.4% of the U.S.

domestic gross product in 2004.

The Restaurant Industry provides work for 9% of thoseemployed in the United States.

With direct sales of $440 billion ($440,000,000,000), theoverall economic impact of the Restaurant Industryexceeded $1.2 trillion ($1,200,000,000,000,000) in 2004,

including sales in related industries such as agriculture,transportation and manufacturing.

FACTS About the Restaurant Businessin the United States


3/15

There are 24,600 Restaurants and Foodservice

establishments in New York City.

There are only seven states* that have moreRestaurants than New York City.

Their gross annual sales exceed $12 billion($12,000,000,000).

The New York City Restaurant Industry employs225,000 people, making it the largest employerhere, too.

* Ca l i fo r n ia , Texas , New York , Flo r ida , I l l i no is , Penn sy lvan ia , and Ohio

FACTS About the Restaurant Businessin New York City


4/15

The Restaurant Business is a GREAT Business:Its the Ultimate Entrepreneurship!

The restaurant industry presents and opportunitywhere you can start as a dishwasher and dream ofowning your own restaurant and actually realize

that dream!

Its being done every day in New York City!

But it takes dedication and a w illingness to worklong and hard to accomplish your dream.

(and t o do i t RI GHT.)


5/15

However, I ts a Risky Business !!!

70% of all restaurants that open either close orchange hands w ithin the first FIVE YEARS.

The 3 Major Reasons Why?

Poor Location

Insufficient Capital

Lack of Industry Experience


6/15

How Can I Avoid .

Poor Selection of Location

Obtain a HISTORY of what else has been in the

location. (A succession of previous restaurantsthat failed would suggest that its a bad location!)

Make sure your CONCEPT fits the space and theneighborhood.

Obtain and study the DEMOGRAPHICS:

Population, foot traffic, accessibil ity, visibility,competition


7/15

How Can I Avoid .

Insufficient Capital

Even after all your construction and pre-openingcosts are covered, you need to have enough

WORKING CAPITAL to sustain your operationthrough several months (or more) of slow timesor unforeseen circumstances beyond your control.

You need to pay promptly to receive the bestprices for what you buy.

When you think youre out of the woods and are

making money, dont spend it too quickly andabsolutely DONT SPEND IT ALL.


8/15

How Can I Avoid .

Lack of Industry Experience

Dont think that you can succeed if all you knowabout restaurants is what youve heard and seenas a customer or because you love food and are a

good domestic cook or self-taught w ine expert.

Work in the industry, both in the front and back ofthe house, make your mistakes on someone elses

dime.

How can you train your staff if you dont knowhow to do the job yourself?

You need to know what goes onon both sides ofthat swinging door in the back of the dining room!


9/15

A statement about the businessfrom a pro written over 35 years ago, in a place

far from New York City, but STI LL TRUE ! ! !

I ts a complex business. The combination of purchasing,manufacturing, sales and service are only the beginning. The rawmaterial is costly and perishable. Do you freeze the unsold portionof flounder, or do you feed it to the cat? The result is the same.

The nature of the customers varies from that in other businesses by

their expectations: they do not only buy food, they expect to buy itappetizingly prepared and pleasantly served. They expect goodvalue, comfort provided by compatible dcor, good comfortableseating, lighting, heating, cooling, cleanliness, courtesy, and w iththe absence of noise, drafts, odors and long waits.

The equipment is expensive, out of proportion to its fragility. Dishwashing machines, exhaust fans, ovens, refrigerators, slicers,toasters, food processors, fryers and broilers are delicate and

sometimes dangerous. The loss of linen and silverw are, thebreakage of china and glassware, and the pilferage of foodstuffsand beverages can be f inancially fatal.


10/15

A statement about the businessfrom a pro written over 35 years ago, in a place

far from New York City, but STI LL TRUE ! ! !

Well-trained help is hard to find because wages are often less than inother industries, the stress is high, and the work is hard. I t cancost $800 to train a dishw asher, but he or she gets to be profitableand cost effective only after another $8,000.

While hairdressers and beauticians have to be licensed by the state,cooks do not. But the restaurant owner is subject to licensing,inspections, and scrutiny by nearly 20 regulatory agencies and mustinsure against 15 or more risks.

Business volume is limited by seating capacity. The responsibility forthe safety and security of customers and workers is awesome. Theprofit margin is as low as the hazards are high.

Experience is the most important factor for success. Managementskills, courtesy and good manners, entrepreneurial ambition,w illingness to work hard and under pressure, attention to detail and

effective controls are vital.Wolfgang Heinberg, Lebanon, NH


11/15


12/15

Some Helpful Resources

How-To Books and Publications New Yor k Ci t y Res tau r an t Bus iness Gu ide

New York City Department of Small Business Services

www.nyc.gov/ html/ sbs/ nycbiz/ downloads/ pdf/ restaurantguide.pdf

The Com p le te I d io t s Gu ide t o St a r t i ng You r Ow n

Res tau ran t Howard Cannon with Brian Tracy, Alpha (Penguin Group), 2002

St a r t & Run a Rest au r an t Bus iness Brian Cooper, Brian Floody & Gina McNeill, Alpha (Self-Counsel Press), 2000

Financial Info & Ratios Re st a u r a n t I n d u s t r y Op e ra t i o n s Re p or t 2 0 0 4

National Restaurant Association and Deloitte www.restaurant.org

St a r t & Run a Rest au r an t Bus iness By Brian Cooper, Brian Floody & Gina McNeill, Alpha (Self-Counsel Press),2000


13/15

Income & Expense Categories


14/15

Formulas for Questions You May be Asked

= Food Cost %

= Beverage Cost %

= Cost of Goods Sold %

= Labor Cost %

Cost of Food SoldFood Sales

Cost of Beverages SoldBeverage Sales

Cost of Food, Beverages &Other Sales

Total Sales

Total Payroll and BenefitsTotal Sales

Whats your Food Cost?

Whats your Beverage Cost?

Whats your Cost of Sales?

Whats your Labor Cost?


15/15

Thanks ! . and

tips for opening & running a restaurant in

Documents