POSTED ON DECEMBER 1, 2010:
Love 'Em or Lose 'Em
If you don't frequent your favorite spots, they might not last forever
Here Today… The more you try to stay with today’s trends — that is to say fresh, local, etc. — the higher your inventory’s volatility becomes, not to mention expensive, and the greater the risk of not making your margins because they just went in the trash bin instead.
How many times have you heard someone say or have you said, "You're kidding! That place went out of business? We loved it! We just ate there a month ago and it was great!"
A quick glimpse at the statistics will tell you a couple of things about the restaurant industry as a whole. One is that regardless of which numbers you believe, the success rate of new restaurants is remarkably low.
The number of establishments failing within the first three years in this country ranges from as high as 80 percent to as low as 49.6 percent depending on whether you get your numbers from the University of Ohio, The National Restaurant Association, The Small Business Administration or one of the other official agencies with a number somewhere in between. The bottom line is that even under the best of circumstances, a food establishment has a less than 50/50 chance of making it.
I have marveled for years at the number of people who have gotten into the food industry because:
"I love to cook!"
"My father in law had a bunch of restaurant equipment left over from a business reclamation."
Or my favorite:
"Hey I can make a pie for $4, cut it into eight pieces, sell each piece for $4. That's $32, minus $4 is $28 return on each pie! Let's open a restaurant!"
All three are excellent reasons ... to stay away! The real truth is that of every dollar a restaurant takes in, it only gets to keep an average of four cents. And that's if they're doing everything right!
It's a tough business when you know what you're doing -- forget about if you don't! Just because someone is an excellent chef working in someone else's kitchen, does not mean they are a good entrepreneur or businessman and are ready to handle the bigger picture. The person who is diverse in his or her talents will do better than the one who can make a flawless soufflé every time but is over-specialized and narrowly so in his or her talents.
Running a business is about getting the most from your people, managing your inventory, relating to and dealing with your customers, handling and making the right decisions about public relations and advertising and being a financial expert. The higher up the ladder you go, the less time you spend doing the thing you got into the business to do -- cooking!
I used to joke that the closer you get to the top, the closer you get to the bottom. I never mopped as many floors or bussed as many tables as when I became a business owner!
Consider this: If you own a business in which you carry an inventory with an indefinite shelf life -- let's say a plumbing supply -- and you end up with too much inventory on the shelves, you have the real and serious problem of tying up too much of your operating capital, not only in product, but also in terms of space, handling and so on. Your inventory to a degree is based on what you turn over, and what the public needs. This is in no way meant to detract from the difficulties of running a plumbing supply house, but now take that inventory, and pretend that 10 percent of it will go bad because people don't want it or you guessed wrong. Another 10 percent will be burned, overcooked, thrown away, trimmed or peeled wrong, eaten by an employee, stolen by an employee, or spoil because you over-ordered.
Another 5 percent will go bad because there was an outbreak of mad cow, salmonella, spinachella, tomatoella, or E-coli on the other side of the country, or because some lady got a bone in her sea bass and insists on another piece even though ALL fish has bones, lady! Or whatever else you can think of, and all the things you can't.
The more you try to stay with today's trends -- that is to say fresh, local, etc. -- the higher your inventory's volatility becomes, not to mention expensive, and the greater the risk of not making your margins because they just went in the trash bin instead.
OK, so don't get me wrong here. It's an exciting, high-intensity, and yes, even glamorous business. The people who choose it for a career, or more accurately for a way of life, do it because they love it. But it is hard, and it does have it's own unique problems to deal with that other industries don't. And a lot of days, especially when you are first getting going, you think of 100 reasons why you should just shut the doors, hand the keys to your banker and walk away. Going back to work for someone else never looked so good.
But you don't, because the reward is always just around the corner, or on the next plate that leaves the kitchen. It's the satisfaction you feel when a customer takes a bite, closes his eyes, tips his head back slightly and is transported to some other place in "flavorland" where there is nothing on their mind at all except how incredible the taste is of the bite that they just took. All their troubles and outside pressures go away, and that dish, if even just for a minute, is the center of their universe. THAT'S what it's all about. That's why so many of us put up with the hours, the pressure, the aching backs and sore feet that are inherently a part of this business.
So where am I going with all this? Simple! If you find a place you love, and you want to see them succeed, visit them on a regular basis.
Of all the restaurants referred to in the statistics above, most of them fail because they are undercapitalized or lack sufficient cash flow to weather the growing pains until they become established. A lot of good places go down the tubes because they can't stay afloat in their infancy.
Why do you think so many chain restaurants survive when a local independent right down the street can't? Because they have the capital to give them survivability. Even though they don't like to, a corporation can fund a new establishment in the chain from the coffers that have been created by the more established big brothers and sisters in the organization. Something the local guy can't do. So I'll say it again. If you find a place you love, support it, support it, support it, and hopefully they will be there for you to enjoy for years to come.
One thing is for sure, if everybody waits for everyone else to pick up the slack, that place you liked will be gone before you can say, "You're kidding! That place went out of business? We loved it!"
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