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April 14, 2009

Why restaurants succeed or fail

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In an interview recently I was asked why I thought restaurants succeed or fail. It's a pretty broad question, and I gave a sound-bite answer, which was what was called for. I've reprinted the question and my answer below.

But we all know the issues involved are much more complex, and if you want to tackle some of them, please post -- just to get the conversation going, even if you don't have the definitive answer. ...


What do you think are the most important elements of a successful restaurant? In contrast, have you noticed any patterns or signals as to why restaurants tend to fail?

Beyond the obvious (good food and service), it really is location, location, location. Also, restaurants fail because people don’t realize you can be a great chef but not a great business person, and you need to be both or have a good partner.

(Karl Merton Ferron/Sun photographer)

Posted by Elizabeth Large at 11:46 AM | | Comments (17)
        

Comments

All the lah dee dah of cuisine discussed (and reviewed) here have darn little to do with the **business** of delivering that product. Separating yet respecting these two distinct and oppositional forces (even in a strong economy) is extremely difficult.

The two principal factors? consistency and value.

Location, location, location makes it definitely easier to succeed in business,

The business's overhead matters a great deal, if you have high rent, it makes it tough to succeed

Staffing is very important, if everything in a restaurant is accounted for then it is very difficult for a place to fail. Food has away of walking out of the kitchen and line cooks love to eat filet for their employee meal.

Hands on ownership helps quite a bit, everybody loves to know the owner, even if they don't like him.

Marketing helps a lot, sometimes you just have to get the name out there. You can have great food and great service but without a great review, people will never know about you..

And finally, along with location, location, location, I always like parking, parking, parking, especially when they are redoing all of the waterlines in Baltimore;)

....you mean it's not my reviews!?!

I believe we've discussed this before in the Sandbox, but cash flow tends to be what dooms the vast majority of restaurants. Most restaurant owners (newbies and veterans alike) spend wildly on decor and equipment, and then have little working capital in the till to tide them over the slow days, weeks, or months. They juggle their payables, neglect to remit employee withholding to the various government authorities, and slide into oblivion.

Good business practices won't save a restaurant with bad food, but they apparently do enable a number of mediocre places to survive and even thrive. On the other hand, the best food in the world won't save a restaurant with poor cash flow management.

One "signal" you will notice as a restaurant is starting to, and ultimately will fail, is when you see multiple chefs leaving the same location. This happens when the owners are not the chef themselves. The owners end up trying to create their own menu, instead of letting the chef do what he loves. It's the typical "too many hands in the cookie jar" syndrome. The chef ends up getting frustrated with having to non-stop battle the owners for menu changes and eventually leaves. This is when the revolving door of chefs begin, and the restaurant starts to fail.

it has a lot to do with your reviews:)

Everyone's a Critic--
That leaves us to the question--who makes a better owner of a restaurant--
a former bartender or a former cook or a millionaire

To return to Mr. Rational's point, I think consistency is really overlooked. Sure location is important and parking is nice, but if the food is hit-miss, no one is coming back. Most people (me included) would rather go to a place they know is very good than one that might be excellent.

Like any business, you have to know your market -- and serve it. What do you have to offer that others don't? If you can't differentiatie what distinguishes you from other places, at least within a given geographical area, then you're just living on a hope and a prayer.

"who makes a better owner of a restaurant--
a former bartender or a former cook or a millionaire
?"

I would say the millionaire if she or he is smart enough to realize that they are only providing the capital and must hire competent kitchen, FOH, and management personnel.

The others are not likely to have sifficient skills in other than their former trade.

Do you know how Dan Rodricks talks about that indefinable quality called duende? Restaurants should have an indefinable as well, and I can't come up with a name for it, but call it pleasance, which is not a word, but it will do, or geniality or charm, and it's how a restaurant with so-so food can survive handsomely over the decades and a restaurant with the latest in haute cuisine exquisitely prepared can slide down the tubes as if greased with duck fat.

I think most of it has to do with staff, and it's a desire to make the customer happy he came. So if the kitchen's backed up, the wait staff figures out how to keep the tables happy while waiting--comp a glass of wine here, pay some extra attention there, chat 'em up over there. A great restaurateur creates a community every night, and the customers have a sense of belonging that keeps them coming back.

Of course restaurants should serve great food, but I don't think that's even 50 percent of the battle. I think the feel of the place is most important, and the cuisine is part of that but not all of it.

Even when Morris Martick was tossing fits, you knew he wanted you there and you were making his day. Martick's had the indefinable. Simon's had it. Ikaros has it, and so does Samos.

First, a quote from that famous person, "Anonymous", "The best way to make a small fortune is to invest a LARGE fortune in a restaurant!" What most folks don't understand is that most all restaurants run a "profit margin" on the food side of the business, at between 3 and 8 percent. This is a nationwide average. Obviously, this does not leave a large margin for error. In a "down" economy, any loss of business for any length of time, can, and will, spell disaster. It certainly does not help if your service lacks, or if the food quality is not up to the price points on the menu. As MrRational pointed out, one of the main reasons people patronize a restaurant is consistency, and the other is value. BUT, if the number of customers is not there, it really doesn't matter how consistent, or how much value. PLEASE Patronize your favorite restaurant during these bad economic times!!!

Ask me this question in a year or two

The new mom and pop shop near me is going to fail if they don't change some things they're doing.

First, no one wants to walk into a large table filled room and not be greeted - at least with a sign saying "seat yourself", "wait to be seated" or "order at the counter".

Second, a cheese steak sub should be on an Italian roll, and the topping should not be the majority of the sandwich. A "spicy vegetable roll" should have actual vegetables such as zucchini, peppers, onions etc - not the toppings for a cheese steak sub.

Also, a huge amount of staff with nothing to do is a bad sign too. I like the idea of having a local restaurant but this place won't last 6 months if they don't change some things.

Oh - and also, their chili has no beans. What's up with that?

Oh - and also, their chili has no beans. What's up with that?

Joyce,
I think that is Texas-style chili. But I like my chili with beans too.

Real chili ain't got no beans.

you mean no "stinkin" beans, Bucky?, LOL!

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About this blog
Richard Gorelick was appointed The Baltimore Sun's restaurant critic in September 2010. Before joining the paper staff fulltime, he contributed freelance criticism and features articles about food to area and regional publications. Along the way, he dispatched for short-distance trucking companies, shilled for cultural non-profits, and assisted in cognitive neurology research – never the subject, always the control.

He takes restaurants seriously but not himself, and his favorite restaurant is the one you love, too.
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