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Forbes
5 days ago
- Business
- Forbes
Why Opening A Restaurant Is Harder Than You Think
Recently, something happened that has happened countless times throughout my career in restaurants: a guest told me how much fun they felt that owning and working in a restaurant seemed to be, and how cool they thought it would be to open one themselves. I can understand the allure. Anyone who has worked in restaurants for as long as I have has had the same idea. Owning a restaurant can allow you to express yourself creatively, engage with a community, receive acclaim for your talents and spread positivity. There is also the added potential of making a solid living doing something that you love. However, while the most attractive parts of such a pursuit can be genuine, the reality is that opening, owning and operating a restaurant is a lot harder than you think. "The perception is that it's all fun and games because it's just food and drinks," says Christian Irabien, chef-owner of Amparo Fondita in Washington, D.C., in a phone interview. 'It's not.' Once he opened his restaurant, Irabien says that finding the time for the simple, enjoyable, and what many see as some of the most attractive experiences of the trade soon fell by the wayside. "The times that I get to cook or make a drink or research and develop something with my team are precious little magic moments," says Irabien. "Because everything else is just reigning in chaos." The Buck Stops With You Behind the curtain of every restaurant's hospitable facade is a world of problems waiting to happen or happening. Owners have to make sure that the bank accounts and taxes are working, that they're going to be able to meet payroll, that all the permits are in order and that any issues that arise are fixed. And every role that isn't staffed by someone else falls squarely on their shoulders. "You have to make sure things work, you have to learn how to use the tools needed to fix and build things, often on the fly, because there's no one else but you," says HK McClendon, a partner and bartender at Mommy's Bar in Brooklyn, in a phone interview. "You're the maintenance man, the manager, the host, the server, the cook. You're a little bit of everything." Tristan Wraight, chef-owner of Oakhart Social in Charlottesville, Virginia, agrees. "We're talking about a complex economic structure that requires tons of moving parts to work in harmony while relying on individuals doing shift work," says Wraight, in a phone interview. "If your cook doesn't show up, you're cooking, if your dishwasher doesn't show up, you're washing dishes, and if neither shows up, you're doing both because there's just no alternative." The responsibilities and pressures of this position also take priority over every other aspect of your life. "It's at least 80 hours a week, every week, for a year or more, with minimal sleep, and not being able to see friends or family unless they come to your establishment," said McClendon. This kind of hands-on restaurant ownership means late nights and early mornings, missing birthdays, holidays and important family milestones and only having the rare day off when your friends and family are at work or in school. It means sacrifice. "You have to make sure that you have the support and blessing of the important people in your life," says Wraight. 'Because, in the beginning, you have to grind and grind and grind just to stay alive.' Those kinds of hours, labor and familial separation take their toll. The U.S. Bureau of Labor Statistics recorded 93,800 nonfatal injuries and illnesses in full-service restaurants in 2019. According to a survey by the U.S. Substance Abuse and Mental Health Services Administration, the foodservice and hospitality industry has the highest rates of substance use disorders and the third-highest rates of heavy alcohol use of all employment sectors. Sleep deprivation, depression, anxiety, and increased stress levels are also commonplace. "Restaurants are living organisms and they will eat you up if you let them," says Irabien. Spending Money to Make Money All of that work and commitment come only after you've spent, on average, anywhere from $95,000 to over $2 million before even opening your doors. Steven Carvell, professor of finance in the Cornell SC Johnson College of Business, says that those costs generally start in the kitchen. "Kitchen equipment is very expensive, very specialized," says Carvell, in a phone interview. "The stoves, the prep space, the storage and refrigeration, it all adds up." The total cost to build a restaurant kitchen can range from $15,000 to $250,000 or more, depending on several factors, including size, location, equipment needs and whether it's a new construction or a renovation. Obtaining the required permits and licensing for the equipment and the dining and kitchen space burns through even more time and money, often costing thousands of dollars. In New York City, for example, just a liquor license can cost between $4,300 and $10,000 and take anywhere from 40 days to six months to receive. "Securing financing and finding a brick and mortar space is not as straightforward as just renting a place, putting down your deposit, and paying your rent," says Irabien. "You have to turn in financial projections and forecasts, landlords and banks want to know who you are and why you're worthy of taking the space, and while big restaurant groups already have huge infrastructures in place to do all of this, when you're doing it on your own, that just doesn't exist. It's just you trying to figure it all out." This reality is especially true when it comes to finding the large amounts of money needed to invest in a restaurant. Without angel investors or a serious amount of independent wealth, new owners often have to take on a considerable personal financial risk with a bank to break ground. "You're going to have to put up collateral, family collateral like real estate, to get a bank loan," says Carvell. "And if you go belly up, you're still going to have to pay off that loan and the interest rates are not going to be cheap." A study from UC Berkeley found that 17% of restaurants fail in their first year, while around 80% fail within five years, in both cases due, in part, to poor financial management. "Restaurateurs are a very optimistic breed," says Carvell. "They believe they can make it just because they have a great idea, and sometimes that works, but only if you think about what your shelf life is going to be." That shelf-life also depends on finding the right people for the job, a reality that many professionals and owners say has become more difficult than ever in the wake of the COVID-19 pandemic. Finding the Right People For the Job The Los Angeles Times reports that restaurants and bars nationally shed 5 million jobs in March 2020 alone, with those businesses still down 1.1 million jobs by the end of 2021. Today, that mass exodus is an ongoing challenge for many restaurant owners. "It's a struggle to find and maintain good, experienced and dedicated people these days because so many of them have left the industry," says Wraight. "So, what we're dealing with now is a lot of people who are new, and when 80% or 90% of your staff are first-time employees, that's an immense amount of additional work and training for you." Training any new staff member usually takes roughly one to two weeks, beginning with trailing shifts where they follow someone in every position, from busser to chef and everything in between, to observe precisely what and how to do each role and learn the products they're going to be selling. You have to quiz them on the proper steps of service, knowledge of beverages and food and any other pertinent information about your establishments. If the new hire passes these tests, the next step is to do a reverse trail, where a veteran staff member observes the new employee as they take on a small number of tables and corrects any errors they may make. Once this final step is complete, the new hire is usually off to the races, if they have significant prior experience. However, fledgling employees who come into this business blind can take months and require constant attention before they are ever competent and reliable. "Training and retaining staff takes an astronomical amount of management and oversight that just compounds the stress load of ownership," says Wraight. "Especially with fewer and fewer experienced people to work with today." Under these circumstances, an owner who wants to achieve even a modicum of success must also be sure that they can manage those people effectively, professionally, and fairly. The National Restaurant Association reports that one in three restaurant employees cite inadequate training as a primary reason for leaving their jobs. The average employee tenure is 56 days, with people choosing to leave due to complaints including insufficient compensation, lack of opportunities for growth, no access to benefits, and ineffective communication. Cornell's School of Hotel Administration reports that losing and replacing just one hourly employee can also cost you as much as $5,864. "You can't run a restaurant, which is already bred in chaos, if you can't manage people," says Irabien. "You have so many people with different personalities, different backgrounds, from all different cultures, and without a vision of the kind of workplace you want to create, it's impossible." Loving What You Do But, despite the difficulties, the stress, the labor, the physical, mental, and emotional wear and tear and the potential for failure, people around the country continue to open restaurants. According to Oysterlink, a national hospitality jobs site, roughly 50,000 new restaurants open each year in the U.S., at a steady pace of 550 to 650 new openings per week. The National Restaurant Association reports that the restaurant industry could reach $1.5 trillion in sales and add more than 200,000 net new jobs in 2025. Those who've found success say that the love of the job, of providing a warm experience, serving food and drink that's savory and creating a safe and welcome environment for all is the only north star that will get you there. "I've always loved the idea of creating a space that people feel at home in," says HK McClendon. "And if you're that kind of person, with that kind of goal, you can make something great." But if you only have fun and money on your mind, you'd be wise just to make a reservation. "You're not selling shoes or t-shirts, you're selling consumable art curated a certain way," says Carvell. "It's an act of passion."
Bloomberg
05-08-2025
- Bloomberg
The Sungold Also Rises: America's Great Tomato Debate
There is a small sandwich—three bites, give or take—available as an add-on to the four-course, $85 tasting menu at River Twice, a contemporary American restaurant in Philadelphia. To make it, chef-owner Randy Rucker toasts two sourdough brioche slices, then adds a thin layer of applewood smoked mayonnaise and a crispy sheet of the Korean seaweed gamtae. At its heart is a thick slab of heirloom tomato, lightly seasoned with sea salt from Delaware. Even though it's loaded with more than $50 worth of caviar, Rucker calls it 'the Tomato Sandwich.'
