Ask a successful restauranteur what advice they’d give to someone opening a restaurant, and they’d most likely say the best first step is to seek the insights of other restaurant owners.
At the recent Google Lake FX Chicago Summit, a cross-disciplinary educational symposium, many of the most successful restaurateurs in Chicago offered just such insights about their own experiences opening successful restaurants to a group of aspiring restaurateurs — and this Rewards Network correspondent.
“The idea of opening a restaurant sounds great,” said Brendan Sodikoff, owner of 11 Chicago restaurants including Au Cheval, Gilt Bar, and High Five Ramen. “There’s a sort of glamour and the entertainment value of opening your own restaurant. But the mechanics of running a restaurant are very different. They come down to very mundane tasks.”
After hosting local dining program “Check, Please!” in Chicago for 10 years and becoming the youngest female Master Sommelier, Alpana Singh knew the recipe for a great restaurant — and put all she learned into practice when opening her own restaurants The Boarding House and Seven Lions. And, like Sodikoff, she knew that it would take more than just creating that environment to open a restaurant.
“Yes, the food has to be great, and yes, the ambiance has to be terrific,” said Singh. “But at the end of the day, it has to hit that visceral sense [in the customer] that ‘I trust you with my money, I trust you with my time…and you’re going to take care of me.’”
To her, as well as many of the other restauranteurs speaking at Lake FX, opening and operating a restaurant ultimately boils down to three key elements: cash flow, talent, and real estate.
Rick Bayless (Frontera Restaurants; left), Brendan Sodikoff (Hogsalt), Michael Kornick (MK and DMK Restaurants), Alpana Singh (The Boarding House and Seven Lions), and David Manilow (“Check, Please!” creator; right)
The Cash Flow
“You can get caught up quite quickly in the glamor and sort of the romance of owning your own place, but numbers don’t lie,” said Singh. She noted that one of the most common mistakes new restaurant owners make is forgetting to pay themselves for expenses. “Every little thing in a restaurant costs money, down to the toothpicks, and it’s all-encompassing.”
According to Singh, another other trap new restaurant owners may fall into is not researching their financing options enough. “You get so excited about opening a place that you don’t do your due diligence and homework,” said Singh.
Chef Beverly Kim experienced the importance of financing options firsthand when opening her own restaurant, Parachute, in Chicago. Kim was a “Top Chef: Texas” cheftestant, but she knew fame alone wasn’t going to be enough for her to open Parachute. After struggling to find an investor and a space, borrowing from family, and filing for a bank loan, Kim and her husband opened the restaurant with a meager budget of about $240,000. “We started off bare bones,” said Kim. “Half of the equipment there was used, and we kind of blew through it in the first quarter, so we had to purchase new equipment.”
Only by being able to properly manage the restaurant’s cash flow could new restaurateurs like Kim be able to operate on such a small budget, yet grow to see so much success in the just the first year.
According to Singh, the employees are the key drivers to success at a new restaurant. “You’ve got to have talent to open a restaurant, whether that’s the management team, the chef, the line cooks,” she said. “If you don’t have the talent, you have to have the patience to breed the talent.”
As dean and executive chef of the Washburne Culinary Institute, Kristopher Murray is an expert on breeding restaurant talent, as well as what it takes to open a restaurant. In addition to his role at Washburne, he frequently helps colleagues open their own restaurants and has experienced the challenges of keeping a good labor force.
“You definitely need to have a level of understanding as far as when you source people,” Murray said. “When you talk about investing in that labor force…you really have to understand what needs to get done for that person to be valued when going into that business. If you don’t score that loyalty piece, that thing where it’s more than just about money, then you may fall short as far as the success of the business because it’s based on the people that you have.”
Billy Dec (Rockit Ranch Productions; left), Kristopher Murray (Washburne Culinary Institute), Beverly Kim (Parachute), and Jim D’Angelo (Lou Malnati’s; right)
The Real Estate
Singh said the one question restaurateurs need to ask when it comes to finding the best space for a new restaurant is, “How’s the deal?” She pointed out that in some areas, the cost per square foot on a ground-level space may be so high that one can only consider spaces on the second floor. However, this would change the dynamic of the restaurant, so it’s important to weigh the benefits of the geography against the logistics of the space. “It’s just the economics of supply and demand,” said Singh.
Sodikoff, however, also factors gut instinct into his restaurant real estate decisions. “I think when I open a restaurant, locations [are important] for different reasons. Sometimes I fall in love with the building, sometimes I fall in love with the concept or an experience I’ve had.”
That’s what restaurants are really all about, after all — creating a memorable dining experience that will keep your customers coming back, building a lasting road to success for your restaurant.
To open and operate a successful restaurant, you’ll also need to create a successful business plan.