No, we’re not going to try to talk you out of it. Everyone knows that restaurants have a high rate of failure. And you’ve already heard that old stat that two out of three restaurant start-ups go under. But what you may not know is that there are certain things you can do to improve your chances that don’t involve using your five-year-old as a dishwasher. An article in today’s New York Times illustrates the point well : luck aside, if you’re going to go into the restaurant business (or any business for that matter), go prepared.
Two restaurateurs are featured in the Times piece—one who failed and one whose business is a success. Here’s the difference: Barry Sorkin, the entrepreneur who made it, went in with a detailed business plan.
“Mr. Sorkin…wrote a detailed business plan that ran for more than 40 pages, comparing his concept to the menus of his potential competitors. It featured a heartfelt essay, ‘Our View on ‘Q,’ that set out the group’s philosophy on barbecue….Along with a simple menu of ribs, brisket, chicken and side dishes like macaroni and cheese and twice-cooked fries, the plan also included an extensive analysis of the expenses the restaurant expected in its first three years…Determining that the North Side of Chicago lacked sufficient rib outlets, the group zeroed in on a storefront on North Pulaski Road…”
While we’re not proposing that you write any “heartfelt essays” in your business plan (please don’t, actually), the detailed planning, research, and analysis Sorkin and his team did prior to launch is worth copying. They knew they competition, they knew their expenses, and they—generally—knew what to expect. The same wasn’t true of the entrepreneur whose start-up didn’t make it. While multiple factors contributed to the failure of Charlita Anderson’s business, a lack of planning was obviously one of the major problems:
“But before the cafe opened, unexpected costs appeared. To pass inspection, the restaurant needed doors that pushed outward so customers could easily exit. The two doors each cost $1,000. Toilets for the restrooms arrived with no seats. ‘The tiny little things you don’t even expect, they’re going to pop up at any time,’ Ms. Anderson said.”
And even if you have exceptional food, a great location, and an even better team (and the stars are perfectly aligned), it’s those little things that can kill a business.