Friend of mine runs a tiny and successful to-go cafe. His most unexpected problem was competitor restaurants around him constantly phoning city hall to "complain" about his business in hopes they regulate him off the street. The most common complaint at first was cooking smell, so the tiny cafe is forced to install expensive filtration exhaust.Then the complaints turned to signage. A city inspector showed up numerous times to measure his sign, how far his little sandwich board was placed in the sidewalk out front, the brightness of the lights on his sign, that the artwork on the sandwich board was offensive or violated one of the thousands of regulations regarding public advertising. Then the complaints turned to patio, there was too much noise, chairs were too far into the street, garbage was left too long on tables, ect.
Anybody with a restaurant/cafe startup idea should have some kind of contingency plan to deal with the inevitable use of city hall to try and close you down.
I find very depressing that the emergent behaviour of competitive companies resembles psychopathy. If all those complaints came from the same individual we would surely call him out! Instead morality suffers the death of a thousand cuts.
I hope local behaviour is not a predictor of global behaviour.
Otherwise mankind is not going to solve existential threats such as global warming. It reminds me of the tragedy of the commons.
Science writer Lewis Thomas observed this decades ago:
> The solitary Ik, isolated in the ruins of an exploded culture, has built a new defense for himself. If you live in an unworkable society you can make up one of your own, and this is what the Iks have done. Each Ik has become a group, a one-man tribe on its own, a constituency.
> Now everything falls into place. This is why they do seem, after all, vaguely familiar to all of us. We’ve seen them before.
> This is precisely the way groups of one size or another, ranging from committees to nations, behave. It is, of course, this aspect of humanity that has lagged behind the rest of evolution, and this is why the Ik seems so primitive. In his absolute selfishness, his incapacity to give anything away, no matter what, he is a successful committee. When he stands at the door of his hut, shouting insults at his neighbors in a loud harangue, he is city addressing another city.
> Cities have all the Ik characteristics. They defecate on doorsteps, in rivers and lakes, their own or anyone else’s. They leave rubbish. They detest all neighboring cities, give nothing away. They even build institutions for deserting elders out of sight.
> Nations are the most Ik-like of all. No wonder the Iks seem familiar. For total greed, capacity, heartlessness, and irresponsibility there is nothing to match a nation. Nations, by law, are solitary, self-centered, withdrawn into themselves. There is no such thing as affection between nations, and certainly no nation ever loved another. They bawl insults from their doorsteps, defecate into whole oceans, snatch all the food, survive by detestation, take joy in the bad luck of others, celebrate the death of others, live for the death of others.
Eh. The city passed laws to regulate how much for-profit businesses impinged on the public. Food smells in the air, signs and patio chairs on the public sidewalk. Especially if we're talking about a typical patio that actually impinges on the public sidewalk. Regulating that doesn't seem unreasonable.
And if everybody else has to follow those laws, why should your friend's place be any different? Why should a competing business have to bear the expense of installing a filtration system, then sit idly by while someone sets up shop next door and flouts that regulation?
This is where part of the criticism of cabs is unfair. Cabs aren't allowed to maximize their profits through the perfect price discrimination offered by dynamic pricing. Stuff like Pool and $1 fares are illegal for cab companies to do. So why shouldn't they complain when Uber competes with them without following regulations they have to follow?
Your complaint sounds like those people who get mad when someone rats them out for cheating in class.
Cab companies agreed to those rules in exchange for the privilege of picking up random hails off the street. That used to be an enormous competitive advantage over competing transportation providers (e.g. SuperShuttle, limo services, etc). Thanks to mobile phones, that's no longer a significant competitive advantage. Everywhere that Uber operates legally though taxis have the option of giving up that privilege in exchange for being released from those regulations (essentially becoming Uber). Nobody is forcing taxi companies to stay in the regulated taxi business.
>Your complaint sounds like those people who get mad when someone rats them out for cheating in class.
The legal system is so complex that we are all always cheating.
People only call for strict enforcement of the rules when they don't like you. It is a wonderful thing to get the government to attack your enemies for you.
OP's examples were not obscure subsection g part 4 item iii-type stuff. They are basic things you'd think about if you were considering the impact of your business on the public.
That's a strawman attack. You imply that the entirety of applicable law was contained in that URL, which is false. The actual corpus of law a citizen and business owner must be aware of is the entirety of the law from Federal, State, County, and City, plus all private contracts to which I am bound, covering every activity you do. You're a lawyer sarcastically chastising me with a link to the specific law, and that is poorly done. The very existence of "lawyer" as a profession implies that the law is too complex for individuals to understand.
The computer science version of this would be some poor guy confused about TCP/IP and I could link to the precise part of the RFC that answered his question, with a sarcastic, "Right, that's so complex". I'd be an asshole if I did that.
Easiest way to handle this is invite the local alderman over to lunch and contribute a few hundred dollars to his campaign.
Also invite the cops in. If you give the impression that you're connected, these things go away. Plus, a few hundred bucks means your phone call gets picked up.
1000 times yes. I don't even own a restaurant, but I own a small business in a regulation-heavy industry/municipality, and this is what I deal with on a regular basis. And I don't even have competitors who try to drive me out of business - the local government does it all on their own. Can't even imagine how bad it would be if I had a bad actor in their ears, notifying them everytime I violated Section 109(b)(c) of their cleanup code.
Doesn't seem to work. I regularly get sick eating here, and I've had my worst bout of food poisoning ever (week long). I never had food poisoning before in my life. I never eat anywhere below A either.
Did you ever read Jamie Zawinski's blog about setting up DNA Lounge in SOMA? Neighbors absolutely do care about this stuff, and will make enormous pests of themselves.
For that matter, are you a member of any local social network thingies? I've on NextDoor, whatever that is, for the last few weeks, and I'm surprised to discover that every local business I knew about (and several that I've only now become aware of) are defined primarily by the random, petty (to me) seeming complaints they generate from the neighborhood.
I wouldn't be too quick to jump to the conclusion that complaints like these are "enemy action".
I've been on the other end, with a nearby diner's grease vent getting off-calibrated and thus noisy and basically ruining my life, and the owner and city insisting it's perfectly fine. I'm not alone as people have filed lawsuits over this.
Except the 100s of people walking by and having another obstruction they didn't ask for and don't want in their path. Or stupid sign hanging from the roof.
It is not unreasonable NOT to want these things in your neighborhood.
Sorry, but only an unreasonable person would say this. Aren't there enough problems in the world, that we have to care about a sign not being positioned correctly?
In NYC, I can imagine "the world" comprising home, the route from home to work, work, the route from work to home, and home. Don't mess with any of them.
But Uber and AirBnB are giant companies that actively flaunt city policies. I imagine OP's friend probably doesn't have an army of lawyers and probably wasn't aware he was violating any.
Minimal viable product/lean startup. This is not that. For a restaurant that means:
1. Have good food, that sells. Nothing else matters. No big up front investments. Have a killer product, which you make in your home kitchen if you have to. I thought Americans knew this, with their food trucks and shared kitchens.
I see this all the time. People thinking about how to name their company, how the logo looks, or in this case which forks to use. These things matter, but only in the long run, when you're able to sell your product successfully already.
Access to money and people like the author make this difficult, you aren't forced to survive.
A restaurant near me has started without a name, no interior decoration and a less than good but not too bad location. After six months they had a line out the door, every night. After a year they had a name. After two years they renovated, but just a little bit. Now it's 5 years later, it looks fancy, they have a logo and it's nicely renovated. But they started with the product.
I think it's a good idea to do everything in reverse, especially when we are worried how we are perceived. We see finished, well working things and think we need to emulate everything they are doing, including the expensive business cards, when it's really the other way around. Product first, being forced to survive, the details come later. Makes for a much more relaxing atmosphere as well, with much less meetings that go nowhere.
This sounds like it was written by someone who has no direct experience (side note: selling people food you made in your home kitchen is illegal) and I am pretty sure restaurants, generally, aren't like tech startups, where you experiment to get product-market fit and so on.
People like food, they want to eat it, and chances are high you're making food that's generally recognizable as such and part of a general culinary category and price range. There are acceptable standards for service, wait times, cleanliness, and so on, that you can meet or exceed to provide a certain level of experience.
From what I understand, and being around the business, restaurants almost invariably sink or swim based on how good a real estate deal they've been able to get, and their ability to have a stable staff and be relentless about controlling costs, things like spoilage, advance planning, etc.
Software based startups are all about growth. You fuck around as you describe and when you nail the product it grows like crazy at a very low marginal cost.
Restaurant economics essentially look nothing like that. They aren't about growth, they are about margins, and since they have to be highly price competitive, that means fundamentally the business is about managing expenses.
Responding to your side note: while home kitchen prep is illegal, there are plenty of options for commercial kitchen prep off-premises. A successful cafe in my city started by baking in a church's commercial kitchen, for example. Another is a food truck that also gets some time in another restaurant's kitchen.
> selling people food you made in your home kitchen is illegal
That depends. Minnesota passed a new law in 2015 called the Cottage Food law that allows certain types of food (primarily baked and canned goods) to be made in a home kitchen and sold to the public. See http://www.mda.state.mn.us/licensing/licensetypes/cottagefoo... for details.
I think this is pretty great. Regulation has its place, but there's a lot of value in allowing people to easily make an income too.
From what I understand, and being around the business, restaurants almost invariably sink or swim based on how good a real estate deal they've been able to get, and their ability to have a stable staff and be relentless about controlling costs, things like spoilage, advance planning, etc.
This sounds like it was written by someone who doesn't like food. What I've seen in NYC, over and over again, is that of course you don't want the worst location (or financing terms), and you don't want to shoot yourself in the foot with incompetent operational management or an ever-churning staff. However, those are simply the prerequisites; they're necessary, but not sufficient for success.
If you want to thrive, you absolutely have to have a kick-ass product† (that you also happen to wholeheartedly believe in). If your menu just isn't inspiring (or it's too expensive or otherwise not right for the neighborhood / night-time crowd) -- it doesn't matter what your staff turnover is or much forethought you put into the operations. Inevitably you will fail.
But if your menu is truly awesome, people will make a beeline to your little hole-in-the-wall, wherever it is, and jostle for a spot at your narrow formica sitting counter and a chance to wolf down your product, nevermind the styrofoam bowls, plastic sporks and tissue-thin napkins.
† By product I mean the combination of "menu offering, ambience, staff and cultural vibe." The interplay between these can be quite subtle, and it's tricky to get them right (which is why it's really to believe in what you're doing, and have taste in all things, not just food). The point I'm trying to make is that from what I've observed, it's definitely not primarily a matter of managing your margins and not getting screwed by your lease.
I think you have it backwards. Generally edible and tasty food at a non insulting price is the prerequisite. It's not that hard to cook good food, I bet you know many amateurs that cook very well. And the subset of people with actual restaurant experience who can't make food people are willing to pay for is pretty small.
Nearly everyone in the restaurant business cooks good food. Many however can't figure out how to do it profitably.
There are always edge cases. If your food is incredibly good then people will beat a path to your door sure. But in a city of 24,000 restaurants the exceptions, the hundred or two out of the way culinary sensations tend to prove my general rule not undermine it. And even most of those don't make it to a seventh profitable year.
I already acknowledged, in my post above, that of course you shouldn't have a "shitty" lease.
My point is that (along with all the other boxes one should tick in starting a restaurant in a cutthroat market like NYC) -- and in particular if your goal is to run a business that's actually thriving, and not just marginally surviving -- it's not sufficient.
Xianfoods is far from an example you want. It is a large space that is relatively clean and has a strong brand in its area in an absolutely prime location for its food.
You'll more likely want one of the tens of hole in the wall spots around xianfoods that have no website, no name, not even a Yelp or a Google map indicator. Things that serve steamed buns out on the street or shops that are little more that hallways to order food and leave.
But that't the whole point - Xi'an foods started as exactly the kind of a no-name, hole-in-the-wall like you describe.
How'd they get to where they are now? Because they get food, they get what what people really want, and they found a culinary niche that until that point had been widely ignored.
"...restaurants almost invariably sink or swim based on how good a real estate deal they've been able to get..."
This. One of my online contacts was the general manager of the world famous Armadillo World Headquarters in Austin, and that ended in 1983 because they lost their lease.
That's not exactly a restaurant, but it's close enough IMO for comparison.
When's the last time you dined out --- had a whole meal --- on a "unique dish" in something other than a conventional table-service restaurant? Pretty much just food trucks, right?
I once had an entire meal at an exclusively vegan/vegetarian Malaysian cuisine restaurant. The people serving were apparently staunch Buddhists. It was unconventional and great.
Was the restaurant itself unconventional in some meaningful way? Did it not have table service? Was it in an outdoor pop-up space?
I guess I'm wondering:
The comment at the root of the thread suggests restaurant aspirants can address the risks of opening a new place by adopting the "MVP" ethos of startups.
Some discussion ensues suggesting that's unlikely to be the case.
Someone suggests that diners are likely to accept "MVP" restaurants, without the dominant expenses (notably: commercial real estate, staff expenses), if the dishes are original enough.
I'm wondering, outside of food trucks, does that ever happen?
It happened quite frequently in my hometown of Buffalo, NY – I think. I want to double check before I write up some examples, what do you envision that isn't a food truck, yet has no commercial real estate? Does opening a restaurant in a residential district count?
EDIT: I remembered one of them was featured in the NY Times this week, that makes it very to explain :) They started without a store front, selling bread to co-ops and food markets. It became a cult favorite, then it became a staple at local restaurants and coffee shops. They partnered with a excellent coffee shop, Public Espresso, to do a food truck, and launched this beautiful restaurant, in a light commercial corner in a heavily residential district. http://www.nytimes.com/2016/09/18/travel/breadhive-buffalo-r...
Just because that restaurant had a line out the door, doesn't mean that it was a successful business. Often food and beverage "businesses" will be incredibly busy, but not be turning a profit.
Restaurants have horrendously low margins[0] - from 1% - 5%, so even if you're selling hundreds of plates of pasta/burger/lobster it's quite possible that your restaurant is making a loss.
Yes but an Internet tech company has the potential to expand its scale without increasing its costs and so may, might be able to turn small amounts of money per customer into profits. A restaurant basically can't - food costs money no matter what. Selling food at below your costs may bring in customers but it will lose you money no matter what your scale.
Edit: (remembering article from years ago) A few, very few restaurants have been successful based on low-prices through economies of scale these are a very exceptional group I believe.
That's one way of doing it, sure, but some restaraunts are themselves the product. My parents, for instance, would be completely lost trying to eat in a startup type restaraunt like you describe. They want familiar menu items served in a nicely apportioned, comfortable restaraunt. The operators of those kind of places are usually more business people than artists. Getting a restaraunt like that up and running on time and within budget is it's own challenge, requiring a different set of skills.
1. You can't sell homemade food in a restaurant with the exception of a few items like bread that don't require refrigerators or a grease trap or a ventilation system (stove hood). There are slight variations on this theme per locality
2. Compliance, permitting, inspections and so on make your idea of a restaurant MVP literally impossible in Manhattan and the state of New York.
Execution matters too. Where I work, there's a limited number of restaurants in walking distance, and a number of office parks in close proximity. A restaurant recently opened up. It has good food, and initially, there were lines out the door. Unfortunately, their execution has been shoddy. Bathrooms not always stocked, not always able to give change for cash purchases, frequently get the orders wrong, slow customer throughput due to poor layout and poor planning. They're at only a handful of customers at prime lunchtime now, which is a pity since the same old restaurants have gotten beyond boring, and it's nice to walk instead of spending the entire day indoors.
I guess this is a long way of saying "make sure you have good food, that sells, and make sure you can actually sell it (at a profit)".
Restaurants are about ( for lack of a better term ) UX. I'm not familiar with the situation in New York City, but out along the Interstates and big suburban road-pipes in flyover country, the most popular restaurants have pretty medium-quality food.
And it depend son what sort of restaurant. It'd pretty clear that, for example, Mexican food places tend to be more interested in selling (higher margin) Margaritas than enchiladas.
Montreal has/had much better restaurants, but it seems that was much about immigrants wanting to have their own place in the New World. I was there between 2002 and 2003 and the best places seem to have vanished.
case in point regarding primacy of good product: Pepe Rosso in SoHo [1]. True that it is a charming place and has a definite take on presentation, but seating, utensils, etc. are all subpar. But the food is great and it is always packing them in. The nearby Tomoe Sushi is kinda the same deal. It is a hassle because of the ever present line and the interior is ~shabby but it has an excellent product.
I could never understand how come people are patient enough in order to stand in line at a restaurant. I understand lines in front of things like doughnot shops, where you're sure that in 5-10 minutes you'll have a precious and delicious doughnot in your hands, but having to wait 30 minutes to 1 hour in front of a restaurant in order to have some food that will satisfy your appetite it's just to much, it borders on food fetishism.
If you are living on expenses, so can/must eat out every night, you quickly notice that empty restaurants have shocking food; and conversely the ones that are full, and have lines, have the most awesome food/atmosphere.
"Have good food, that sells. Nothing else matters." Not
I have zero experience in the food industry. But I tell you two things from observation:
1. First, learn where the profit is made. For many restaurants the profits are made with alcohol, not with the food.
2. I have seen restaurants with the most delicious and affordable food bite the dust. It is my impression that in places like NYC you are more in the real estate business than in the food business. Your landlord raises the rent and you are out.
I respect people that run successful restaurants. I think the difficulty is often highly underestimated.
I second this. I have a lot of family in the restaurant business, and you don't need amazing food. Don't poison people, of course. But it doesn't have to be special.
Booze is the easiest thing to make money on. The only labour involved is opening the bottle and pouring. My parents were always happy to keep the place open if there was a table of drinkers at the end of the evening.
Buy into a brand that is cool. Not an actual brand like coca-cola, but a cuisine type like Thai or Vietnamese. Those are way more in fashion at the moment than Chinese (bad rep for unhealthiness), but you can make them with the same staff.
Decor and ambience matter more than anything. Being in a fine restaurant is as much about being seen in the right place as eating good food. It's like art; most people can't tell the difference between mediocre and great. But a gallery in Chelsea sends a different signal to one in Shoreditch.
Finally, running a restaurant is indeed difficult. You're competing with people's own cooking, ready-made meals, and every other eatery in the area. Sure, there's three meals a day to sell to each person, but there's also a constant influx of people wanting to give it a go.
Even if I had the money, I don't think I would open a resturant, other than a pizza place, or a burrito place with a long lease. I heard the failure rate of resturants in New York City is 95%. Those odds might be wrong, but I wouldn't want to try to beat them.
I worked in three restaurants. I was a cook at two. I'm aging myself, they are called chefs now. I was making roux based soups, and bread, so I guess I was a chef? All the resturants I worked in failed, and I always felt like a cook.
If I ever owned a resturant, I would try to minimize risk.
I'm not a foodie anymore, so it would probally be a pizza/burrito place. My food costs would have to be low. And yes--the food would need to be good, and plentiful. I would want to have customers take the leftovers home, and remember why they ate at my resturant.
It would be located where young people interact/spend money. Example--near a university.
It would have a long lease, or a lease tied to profitability. The business would be a corporation for bankruptcy purposes.
Their would be no wait staff. (People can pick up their own food). Then again, I have seen a pretty face bring in masses. First dilemma!
I would definetly want a liquor licence. My place would only need a beer/wine license. Next dilemma! I gave seen little dives do great because they have a full liquor licence.
I would fire all my help every six months. Yes--gasp! Harsh, but I have read two of the better books on resturant managent, and both say this in a round about way. I don't belive everything I read, but this one rang true. There's a lot of theft in the business. A bad attitude by a server/manager can empty a place slowly. I would be upfront in the interview though. I'm not sure how I would verbalize the fact they they will get fired in nine months from now though. I might keep the right people? Then again, at the places I worked in, the nicest/wardest working person was usually embezzling money. I will say that I was accused in high school of embezzling money fron a resturant, and honestly, I wasen't. I just wanted to do a good job. After all I just said--I couldn't just fire good employees after a period of time. Then again, I will probally never open up a place. Third dilemma!
I would Never load my resturant up with cheap labor. I will walk out of any resturant that loads up their resturant with cheap help.
I'll get a lot of flack for this next one, but if I opened up a resturant/bar, I would load it up with pretty women. I am still shocked how much young guys spend in order to impress a pretty women. The demographics of the men were from 20's to late 30's--no wonder? I was one of those guys. "Oh Ari--the tips I gave you."
Isn't the resturant business lovely? It's too bad we have so many resturant positions available in America. It's a horrid job on so many levels. I feel bad for everyone, especially the owner because so many of them go out of business, and so many went in with the right attitude.
A lot of dilemmas? That's why it seems like every successful business owner I knew had a successful/helpful father. A father that can take on financial risk, and wanted to help his kids. I sometimes think success in America is comming from a enabling family that can take on risk?
To be precise, the people in the kitchen are: the chef, zero or more sous-chefs, zero or more specialists (gard-manger, pastry...), zero or more cooks, an expediter and the dishwasher(s). In a very large restaurant, each specialist may have cooks working under them.
I'm a musician, so I've been in a lot of restaurants. At one, I struck up an acquaintance with the chef. He told me: Every chef dreams of being in the food business, but they all realize after a while that they're making all of their money at the bar.
Coincidentally, his restaurant was financed by his dad.
The problem with investing in something cool, like owning a restaurant or a bar, is that you're competing with a lot of people who are less mature than you. They are less mature than you because they're willing to risk their financial future just so they can feel that they are cool guys who own a restaurant.
It's always dangerous to compete with people who are less mature than you because they are okay with losing the important things in life in order to beat you, so you'll be forced to either go down to their level or lose to them. It's like playing chicken against someone who has suicidal tendencies.
The fact of the matter is, this article explains why restaurants are money losing.
It's an intrinsic good to own a restaurant. You get satisfaction from simply owning a restaurant, no matter if you make or lose money.
It feels good to treat your friends, and get preferential treatment at your own place. Making money sometimes is secondary.
It's sort of like programming for the games industry. A lot of people just want to be in the games industry, cause it's "cool". That's why they accept long hours and poor pay.
The ROI for a scrap metal yard or a sewage plant will always be higher than the ROI for a comparably priced restaurant.
Everyone who thinks about opening a restaurant should be forced to read 'Kitchen Confidential' half a dozen times, especially the sections about what it actually takes to win in the business.
In their case, it was certainly because of the overpowering yet enticing smell of fresh grilled spicy lamb kebobs wafting across the block that drew the "I wouldn't eat meat off the street in a million years" nabobs ;)
The only way you can make money in a restaurant is via booze. I know a couple of restaurant owners, and they admit it: if they just sold food, they'd be losing money. The profit margins on alcohol are insane. A $1 bottle of beer can easily go for $5 (a 400% markup). And wine? A decent $12 bottle of wine will easily fill 6 glasses, at $7 a pop.
So if you're planning on opening a restaurant, be sure to get your liquor license. You'll depend on it.
The markup is the same on food. It's just that people only order one main dish each but can order several drinks, and it's altogether another additional revenue source that you need.
You know those tiny lunch places in downtown San Francisco? Closet-sized and to-go only? That's what people should try as their first restaurant. Unfortunately, people usually try that second.
I don't get it. If your gross margin is 3% you can raise your prices by 6% and triple your operating income. Are NYC restaurant-goers really that price-sensitive?
the problem is all these stats are lumped together for all types of restaurants all over the spectrum.
yes, a high end place can easily raise prices and make more money. plenty of them do exactly that.
low end places are squeezed both on supply and demand side, and can not easily do this, or the owners are simply afraid.
if you raise your prices by 6% but business drops by 10% because your customers are price sensitive, and the same month you are hit by an unexpected cost, then what?
OK, but done better by Anthony Bourdain in his famous book:
“To want to own a restaurant can be a strange and terrible affliction. What causes such a destructive urge in so many otherwise sensible people? Why would anyone who has worked hard, saved money, often been successful in other fields, want to pump their hard-earned cash down a hole that statistically, at least, will almost surely prove dry? Why venture into an industry with enormous fixed expenses (rent, electricity, gas, water, linen, maintenance, insurance, license fees, trash removal, etc.), with a notoriously transient and unstable workforce, and highly perishable inventory of assets? The chances of ever seeing a return on your investment are about one in five.
...
“The easy answer, of course, is ego. The classic example is the retired dentist who was always told he threw a great dinner party. 'You should open a restaurant,' his friends tell him. And our dentist believes them. He wants to get in the business — not to make money, not really, but to swan about the dining room signing dinner checks like Rick in Casablanca.”
> Manhattan restaurants seem to be the original example of the business model taken to its extremes by Uber and others in Silicon Valley, of investor capital subsidizing, semi-permanently, the customer experience.
That's the key take-away (haha). I liken it to poker. If you're at a table with an idiot, you'll get his money. If you're at a table with a bunch of them, they'll get yours.
It feels like building owners capture basically all of the excess profit of restaurants, which is to the significant detriment of the quality of a neighborhood.
And for anyone dreaming-the-dream, but thinking a hip new food truck is the way to go... a reasonably well equipped truck will run you upwards of $400K+.
Besides permits and competition, some other issues with trucks:
* You might not be able to make much money on liquor sales.
* There's a price point for food truck food ($10-$15 for the whole meal) and it's much lower than that of a fine dining restaurant.
* Even with an off-site kitchen, your menu is probably limited --- that's why two of the food truck people I've met in Chicago opened restaurants after a year --- and also possibly why their trucks went idle (in one case, parked behind the restaurant) once the restaurant opened.
Only restaurants I've known that did well owned the real estate they were in or were super cheap high margin places that were popular with a good location.
Lots of restaurants are just fronts for money laundering.
Correct, half of the pallets get delivered and the dairy farm is owned by the launder too via a series of shell companies.
Best way to learn about money laundering (ML) is to study anti-money laundering (AML), since most laundering outfits aren't going to write a book about how they do what they do.
Most interesting thing about ML is that in cooking the books, they've got to keep very good records of what's been done, otherwise they've got no idea what's going on; which is counter intuitive, since you would think they would not keep records.
What are some good resources to understand costs of setting up a restaurant in bay area? I know the general concepts involved, but its hard to get specific info like labour rates, rents etc
Probably even worse. Most states require you to buy an expensive 'liquor license' to sell alcohol. And if your municipality doesn't have any to offer you, you might end up buying one for hundreds of thousands of dollars on the open market.
"New restaurants, with too-easy access to financing from people like me, invest too much in design, tableware, food, and service, driving up every customer’s expectations of every restaurant in a cyclone of unprofitability.
Landlords, with enough dreamers to fill their spaces, can command nightmare rents."
And of course, the explicit connection drawn to the raison d'être of this site: "Manhattan restaurants seem to be the original example of the business model taken to its extremes by Uber and others in Silicon Valley, of investor capital subsidizing, semi-permanently, the customer experience."
> That is, New York City, with all its pastrami-and-pizza-hungry tourists and residents fleeing their pocket-size kitchens and young people too busy taking phone pictures of one another to cook, generates enormous demand for restaurants. There are twenty-four thousand of them in the five boroughs. That demand should (...)
24,000 restaurants is not demand, it's supply. This is the Mr. Market fallacy.
I understand that the author understands that "that demand" is tourists. What I meant is that you can't measure the amount of demand (tourists) by looking at the amount of supply (restaurants), which the author does.
That's not a sound way of thinking about economics.
Seeing that a certain level of supply remains stable over time tells you a great deal about the amount of demand present.
Of course it does. Much like looking at the skyline allows you to make some basic assumptions about aggregate demand for office space in Manhattan versus Kearney, Nebraska.
Except where it doesn't work, such as in the restaurant business, where some non-trivial percentage of the supply is superfluous and will go out of business. Of course, they will be replaced, so there is an argument that it is at least stable, even despite the high turnover - perhaps that's what you're meaning?
The author writes as if he was looking for entertainment, not profit. The journey from investing* to losing half of it over 7 years does sound entertaining, so I guess he got what he wanted.
So you don't think obeying the law is a good thing? Don't you think regulations exist for a reason? In the case of the medical field for example, I'm very happy it is heavily regulated and I would expect everyone in that field to follow those regulations.
Now if you think think some of your industry's regulations are unreasonable, that's a whole other discussion. But it seems like what you are complaining about here is that your business has to follow rules/law/regulations.
This is an example of where it would be better to have applied the Principle of Charity, i.e. responding to the strongest plausible interpretation of an argument, rather than picking a weaker one that looks bad.
I agree in the sense that I did not express myself very clearly resulting in the tone of my post not following the Principle of Charity. I corrected myself in a sub post, but still think I could have done better even in that correction. So thanks for pointing this out so I learn to communicate more charitably next time.
But I disagree that the subthread is off topic and resulted in digressive snits. The topic of the thread from the start is about regulations, lame regulations and response to them. I think my posts stuck to the topic. I felt we were having thoughtful discourse on an important topic, although I didn't appreciate the sarcasm on icelander's part, but given my uncharitable first post, perhaps it was deserved.
So for example, rayiner's comment is also about whether following the law is right.
> And if everybody else has to follow those laws, why should your friend's place be any different?
I don't think that's what he means at all. Nowhere in his statement does he say he shouldn't have to obey the law. Think the complaining is more about the vast amount of regulations that there are. I'm sure you break laws on a daily basis that you have no clue even exist (if you live in the US).
There's overly complex regulation, and then there's "this type of business is required to have an air filtration system and yours has been operating without one for months".
My brother just opened a coffee roaster and cafe in suburban Chicago. It's just him, my sister in law, and a couple friends, none of them with any hospitality experience. There were a lot of regulations, and they had to go several rounds with the city during their build-out. But they got through it.
The weird thing about the comment upthread is that they were "forced to install" a filtration system. How did that get past inspection? The dumb little coffee shop --- no food, no cooking smells --- had to have one just to open up.
> There were a lot of regulations, and they had to go several rounds with the city during their build-out. But they got through it.
So far as you know. The problem is that it's entirely possible that there's some little-known codicil of some code which they are in violation of, the rectification of which could at the outside cost as much as they've already invested.
I have friends running small food businesses in Chicago --- I was an investor in one of them, a butcher --- and while my friends have run into problems after inspections and suchlike, none of them have been shut down or really jeopardized in any way. The inspection drama I've seen has, I hate to say it, been mostly reasonable.
(The neighborhood complaints, less so.)
Am I just "lucky", and this is a commonplace problem with other people's companies?
For a sample size of two, one a painting and repair garage, and another a trucking company, the level of annoyance and apparent post-facto requirements for opening these businesses were right up to the threshold of madness.
That is correct. I think disobeying the law in all forms is a good idea. Excellent strawman.
Or perhaps it is simply because 2,500 regulations including distance signs can be from the curb because one person tripped over a sign while not watching and then sued the city leads to a ridiculously over-litigated atmosphere.
My response was flagged for some reason. I don't think that is a fair flagging. It skews the discussion and is tantamount to censorship. I believe I responded to the counterpoint in good faith. To whoever did it, I welcome your explanation as to why you felt it was justified.
Here is my original response that was flagged:
Well, the reason why I came to the conclusion that you don't value obeying the law is because of your example about the hassle it would be if someone kept notifying the authorities about you violating Section such and such. It's a hassle because someone is forcing you to obey the law. The implication is that when no one reports you, then it's fine for you to conveniently violate that law because you think it's a bad law. If that is the wrong implication, then please correct me.
I meant my rhetorical question about obeying the law to be in the context of your example. But I should have been more clear about that. A better revised question is "so you don't think you should have to obey laws you disagree with?"
Our opinion of a law does not have any bearing on our responsibility to obey it. If we think a law is stupid, we can try to get it changed, but until then, we obey it. That's how rule of law works.
I have no doubt that your industry is ridiculously over-litigated. But I'd rather all businesses obey all the laws (and work to change the stupid ones) than decide for themselves which ones they'd like to obey and which they get to violate with impunity.
I see, yes. Do you feel the same way about sodomy laws and other non-executed laws on the books about oppressing minorities and such that went ignored instead of actually changed under litigation? I assume that those should be obeyed to the letter as well.
Regardless of whether or not I agree with a law, I as an individual, should not have the right to decide whether I should obey it. In the case of a law that I vehemently disagree with on moral grounds, the proper form of protest is in the context of group; e.g. organize group protests, petitions, etc. The difference here is individual vs group. If a critical mass of people think a law is wrong, there's a good chance there's something to that. A group context offers accountability and helps filter bad thinking/decisions, etc. I'm operating under the assumption of a working democracy here (working but far from perfect).
If tomorrow, the government passes a law commanding everyone to kill children, I will not obey it. Why?
Because it's wrong and I'll know it's wrong because there's going to be a heck of a lot of people agreeing with me.
Letting individuals alone decide leads to undesirable results.
A cook thinks the requirement to wash his hands after using the bathroom is ridiculous. So he concludes it is immoral for the government to impose on his freedom to choose when to wash his hands and he disobeys this law. Yuck! This example is not far fetched as many cooks are immigrants from countries that don't hold to that practice legally or culturally.
If we leave it up to the individual to choose which laws to obey or not obey with impunity, then law becomes meaningless. They are not laws, but nice suggestions.
OK then. Let's get to work on executing all those laws, such as:
Washington: It's illegal to walk around in public while sick with the common cold or anything you can transmit through the air. Anyone who is sick can no longer leave the house. It's also illegal to buy meat on Sundays.
Texas: Illegal to own six or more dildos.
North Carolina: Oral sex is a crime, so get on jailing them.
We both agree that there exists stupid laws. That is beyond a doubt.
Our disagreement revolves around what to do about the fact that there are stupid laws.
Your argument is individuals should be allowed to decide which laws are stupid and obey/disobey accordingly.
But I'm not sure what your premise is.
My problem with your argument is that it renders the concept of law meaningless. Then, for example, doctors are free to decide whether they want to follow certain required safety procedures based on their own opinion, etc.
My argument is an individual should not be allowed to decide which laws should and should not be obeyed. Instead, that decision should be made in a group context, whether than be Congress, referendum, organized protest, etc. My argument is based on the premise that letting groups decide what is a good law is better and safer than letting an individual decide. A group context (in general) is self-correcting.
I'd rather put up with the hassle/ potential injustice of having to obey stupid laws (with the option of trying to change those laws and in the case of egregious injustice, the option of group civil disobedience) than risk the possibility of a biomedical company skipping some important tests because they think they're frivolous and know that they won't be held accountable.
So again, I'd apply this group decision making principle to the laws you just listed. Btw, I don't have time to research all your examples, but in the case of the law against walking around with a cold, I believe you are referring to this law[0]. I see it as you can't purposely sneeze on someone or donate tainted blood, etc. But that's beside the point.
Well, I think that's all I have to say on this topic. You have your opinions on it and I have mine. Although, to be honest, I'm not clear on your arguments and premise. You just list examples of stupid laws. The implication is why should anyone have to obey these stupid laws? My answer is they shouldn't if a critical mass of people decide they are stupid/unjust etc.
Thanks for the discourse. Also, I need to apologize to you for my uncharitable first comment.
Anybody with a restaurant/cafe startup idea should have some kind of contingency plan to deal with the inevitable use of city hall to try and close you down.