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Restaurant Business

Want to Start a Restaurant Without Experience? Stop and Read This.

If owning a restaurant is your dream, please consult a psychiatrist.

Two weeks ago, Dallas Innovates, an online source for what’s new and next in the North Texas innovation ecosystem, hosted Dallas Startup Week. The five-days of free events took place in different locations downtown. The goal was to inspire entrepreneurs through a series of panel discussions, talks, and seminars. Thousands of smart and creative people from different industries showed up. I picked up on one discussion about restaurants titled “No Restaurant Experience? That Didn’t Stop These Dallas Eatery Founders.” Oh, but it has certainly ruined the lives of many who tried and failed. Here’s a brief synopsis of the panel. I added a few thoughts of my own.

The panel of Nick Backlund, Javier Heredia, and Joe Groves was moderated by Joe VanOflen. Although their names are less familiar, their stories mirror many restaurant operators who opened restaurants without any experience. Backlund was a Minor League Baseball player with a dream to open a bar. He now operates Hide in Deep Ellum. Heredia was a commercial pilot who wanted to open a socially conscious restaurant. His Social Pie is open on Maple Avenue. Groves, a Dallas businessman, decided to fill the niche of indigenous food in the West End. He opened Ellen’s Southern Kitchen in 2012.

The full report of their session is here. Here are some of the points you need to consider if the insane desire to open a restaurant without experience ever crosses you mind.

Location

“Opening a bar in Deep Ellum is a challenge.” To that I add, opening a bar anywhere except your living room is a challenge. A huge, 24-7-7-to-infinity challenge. If you are over 40, pass go, collect $2,000, and become a newspaper writer. You will have a better chance of succeeding.

Workforce

“Finding good employees is also a challenge.” I will be blunt. Finding any employees is almost impossible these days. Finding good employees will cost you at least twice as much. And you’ll be lucky if they stay with you for six months. You’re even luckier if they don’t take your secrets to their next boss.

To Tip or Not to Tip?

I was not at this seminar so I can’t tell you how they jumped from workforce to tipping, but it’s timely discussion. Many restaurants are suggesting 20% tips to consumers. Others are contemplating the “no tip” policy. Chef-owner Mansour Gorj of Canary by Gorji is the first one to try it in Dallas. The panel didn’t come to a clear decision. Blackland tossed out the incentive argument noting the tipping system “works fine the way it is.”  Groves agrees and said, “I look at waiters as sales people. Their tips are commission in a way, the more they ring up, the more they make.” I’ll agree with them. I think service would go down—if it can get any lower—without cold hard cash on the table.

The Issue of Health Insurance

This is a hot topic and one you’d better pay attention to if you are sitting in front of a closed Whataburger and thinking about pulling out grandma’s recipes and opening a diner. The panelists touched lightly on the issues. They sighted a closure in Fort Worth that the owner blamed on insurance premiums. Honestly, I’m not sure if many restaurateurs have a firm grip on the health insurance issue because nobody in the country has the problem in focus. That said, don’t open a restaurant if you can’t afford worst-case-scenario premiums.

I hope this little recap has brought you to your senses. Yes, I am a bit of a Debbie Downer on this subject. I’ve seen too many people lose everything they owned to get into the restaurant business. It’s sad to see them concentrate more on the restaurant than the business.

 

 

Comments

  • Hunter

    The reason to do a “no tipping” or, rather, a flat service charge (usually 18-20%) should be to better compensate the criminally underpaid cooks and chefs and pay them a livable wage. Having a service charge also might allow (gasp) a business like hospitality to better afford health coverage for their employees.

    Your meal at most restaurants doesn’t adequately reflect the real cost of putting your food on the plate. This is more clear the more expensive the restaurant is. Customers essentially subsidize the server’s pay (by tipping) so that the restaurant owners and managers can pay sub-minimum wages for almost all front-of-house employees.

    The problem is that many customers would balk at paying even more for their meals, and reluctant restaurant owners fear raising menu prices.

    I personally don’t see what the big deal is between paying approximately 20% more for a steak (say, it costs $25 instead of $20) but I know i won’t have to leave a tip. In reality it is sort of a wash for the customer (assuming you tip like a non-a hole) and allows the restaurant to distribute the money better.

    People worry about sub par service if the “incentive” is taken away from the server…I say BS. It might serve to more professionalize an industry that is already severely lacking in professionals, and actually attract workers who are into a steady paycheck, health care, and flexible hours. It is basically what they do all over Europe where the hospitality business is seen more respectful and professional.

    Saying the tipping system “works fine as it is” is spoken like a true bottom line number crunching owner who feels like it is OK to pay his employees sub-standard wages. And saying that will result in service going “way down” is hyperbole…because, as stated in the article, how much worse could it get?