Restaurant Owning Discussion - Different Models - Time Needed? (1 Viewer)

Hey Guys,

Side Tangent from @pollardsvision 's great thread.

I'd love to get some feedback and discussion on the idea of how much is required of an owner to start / maintain a restaurant.

It seems to me restaurant owners fall into two camps.

Most seem like @pollardsvision or @tipsy mcstagger to me. Super talented hard-workingg guys that spend a ton of time doing multiple jobs at their business. 

The other, smaller group are guys like some other friends of mine with an extremely successful restaurant. I asked them one time about how you have a place a like that and not feel "owned" by it and he laughed and said he came by the restaurant just every so often. I asked how that was possible. He pointed over to a guy and said, "That's my GM. He makes 80k a year. My kitchen guy makes 50k a year. My front of house guy makes 48k a year." 

The trick obviously is the restaurant has to be generating big revenue to afford staff like that. He said, "Yup. That's on you." 

It occurred to me then that restaurants are sort of unique in that they can start with a bang. Opposite of many companies (like FBG) where it starts small and grows. We didn't open with 450,000 subscribers. We opened with 20 and then 30 and then 100 and then 500 and then 20 years later, we're at 450,000. But we've all seen restaurants that open up to huge crowds and keep it going. 

It seems to me looking at it from the outside that it's kind of an "either/or" thing. If the restaurant isn't generating enough revenue, it falls on the owner to do tons. 

And for sure, that's perfectly great for a ton of owners. It's just not something I'm able to commit to with the other things I have going. But going at with the bigger scale might be a thought if I thought I could do it without it requiring all my time. 

Would love to hear thoughts on this from folks. 

A model I’ve seen work for owners is giving a GM type a smaller percentage ownership and have them handle the headaches if you don’t want to be a hands on owner. Having ownership vs being an employee brings another level of dedication and helps you keep money from walking out the back door. 

I think your friend is big timing you a bit. From what I've seen you either have to have full processes with controls or be hands on at least occasionally. Or get really lucky or maybe even not realize when you're getting ripped off.

Joe - how did your friends with the successful restaurant capitalize their places enough to afford/absorb the management overhead? How much did they put in vs diluting the ownership levels.

mostly a bad idea

I mean, if you have money and want to grow it, would you do that or buy some nice municipal bonds and maybe some berkshire?  

If you want a higher risk, and spend 16-18 hours minimum a day, on the chance that it gets bigger ...fire it up pard.

GoBirds said:

A model I’ve seen work for owners is giving a GM type a smaller percentage ownership and have them handle the headaches if you don’t want to be a hands on owner. Having ownership vs being an employee brings another level of dedication and helps you keep money from walking out the back door. 

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This is how I owned my restaurant, through “sweat equity”. 

Joe- You can either be the bank or be all-in (often both).  If you’re gonna just be the bank you better hire serious talent at the GM position. Also as they say, location, location, location. Concept is important too but location is king  

Opening a restaurant is a massive job and to do it right takes someone with outstanding leadership skills, desire and a great work ethic. The margins are razor thin and getting tighter with the rise of minimum wage.  There are many easier ways to make money, but the satisfaction that comes with the challenge of the open is hard to beat.  

I'm an overpaid line cook at a really upscale restaurant. The owner/executive chef is there all the time. He does all the morning prep on certain basics that are staples. Up until a few weeks ago, we had a GM that was getting 80k a year plus sales % bonus, but got greedy (long story). So now his wife is GM. And we just have 4 waitresses taking turns being MOD. And we have a kitchen manager that is in the 52k-55k range. Plus at least 3 of us cooks that are in the 42k-45k range. But.. to get back on point... Even if my boss isn't back in the kitchen all the time, he's there all the time. He only takes Sundays off. And that's not really true. Cuz he comes in Sunday mornings to make the house dressing, boil eggs, and make caponata. And he's always watching on the cameras. 

Joe Bryant said:

He pointed over to a guy and said, "That's my GM. He makes 80k a year. My kitchen guy makes 50k a year. My front of house guy makes 48k a year." 

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For an extremely successfully restaurant, these guys sound underpaid.

A solid executive chef should be well above 50k (depending on type of restaurant of course and location).

eoMMan said:

For an extremely successfully restaurant, these guys sound underpaid.

A solid executive chef should be well above 50k (depending on type of restaurant of course and location).

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Agreed. I left that alone as it might be due to the part of the country.  Here in Cali GM’s are closer to 100k (and can absolutely go above) and Chef’s are in the 60-75 range.  

We all want to think restaurants are unique, but they are pretty much like most businesses. If you get investment capital up front and can afford to hire a great manager (or COO, or whatever), it gives you as the owner some freedom to step back from the day to day operations.

But, if you’re like most people (FBG, Kutta, Tipesey, etc.), you start your business and do everything from cooking, to building the mailing list, to running CAT 5 cable in your attic so you have Internet, and eventually you hire people you trust enough so you can step back from the business a little bit and let it run. 

I don’t own a restaurant, but the first 10 years of my business I was working 60-80 hours every week. Now after 18 years, I put in a good solid 40, and a lot of that is in meetings making decisions on this or that, and traveling to visit customers. It’s a much different dynamic, but there’s no way I could have done it this way 15 years ago.

It is hard to hire people that are good, especially if you are new.  A good cook, GM, waiter ,etc  unless he is close personal friends with the owner, would have  little incentive to gamble his time on a new restaurant .  If someone is good, his employer is not going to let him walk.  Even if you pay him more, there is a ton of extra work in getting a new restaurant off the ground., and there is a very good chance it won't be successful.