Love Food? Think Twice Before Jumping In
By MICHELINE MAYNARD
WHEN Linda Lipsky taught a course called “So You Want to Open a Restaurant” at Temple University in Philadelphia, she deliberately made the business sound like a minefield. She warned her students that it is possible to lose their homes, their life savings, and even the rights to their own names. Her goal, she said, was “to get two-thirds of them to quit.”
In fact, two of every three new restaurants, delis and food shops close within three years of opening, according to federal government statistics, the same failure rate for small businesses in general. “It’s very easy to fail if you know what you’re doing, and even easier if you don’t,” said Ms. Lipsky, president of Linda Lipsky Restaurant Consultants, a firm based outside Philadelphia that has advised restaurant owners and chains for 20 years.
While restaurants have long been a dream for the hospitality-minded, the industry has never had such a high profile, thanks to the Food Network and celebrity chefs whose restaurants have become launching pads to marketing empires.
The allure is easy to understand, said Peter Rainsford, the vice president for academic affairs at the Culinary Institute of America and co-author of “The Restaurant Startup Guide.”
“So many people love to cook, they like food, and they think, boy, I’ll have a job where I’ll do what I love,” Mr. Rainsford said. “They don’t realize how hard a job it is, both financially and physically.”
Charlita Anderson learned, but it was a painful and expensive education. Ms. Anderson, 47, went to law school at Cleveland State University, and has worked in the legal field for 20 years, most recently as a judicial magistrate in suburban Cleveland, hearing cases involving juvenile crimes and traffic violations. But she always longed to run a restaurant that would feature her mother’s recipe for gumbo, a family favorite.
So in 2002, she opened Pepper Red’s Blues Café in Lorain, Ohio, a Cajun restaurant and nightclub. She did everything at the cafe, from making gumbo to scrubbing the floors and singing torch songs, while still putting in a full day as a magistrate.
Today her restaurant is no longer in business and she is back to her previous career, where she has paid off the debt she incurred during her 15-month foray into the hospitality business.
Ms. Lipsky has repeatedly seen restaurant novices make the same costly mistake: vastly underestimating the money it will take just to break even. She counsels them to have enough money to cover every aspect of a business for the first six months, including food, salaries, benefits, kitchen equipment, rent and utilities.
Indeed, Barry Sorkin and his four partners were well aware that the odds were tough for Smoque, a Texas-style barbecue joint they opened a year and a half ago on the northwest side of Chicago. But they were determined to beat those odds, with both research and financing.
The partners — Mr. Sorkin; two former co-workers at a technology firm; his uncle, who works in the building materials business; and a lawyer — were all barbecue fanatics who frequently met to grill in each others’ backyards. They spent more than a year analyzing the business.
Mr. Sorkin quit his job in 2005, and visited restaurants all over the country, including North Carolina and Memphis. (His wife supported the family while he traveled, before the restaurant opened and he started taking a modest salary.)
After tasting samples, the partners settled on Texas barbecue, known as “low and slow” because it is cooked at a lower temperature for a longer period than other styles. It was a variation they felt had been overlooked by Chicago’s numerous rib spots.
Mr. Sorkin, who has a degree in journalism, 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; a version of it is posted at the restaurant’s Web site, www.smoquebbq.com.
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, about 15 minutes north of the Loop and 10 minutes from Mr. Sorkin’s house.
Two members of the group pledged their homes to secure a $440,000 Small Business Administration loan to get the restaurant off the ground.
In the months just before and after Smoque opened, Mr. Sorkin and one of the partners spent 120 to 130 hours a week tying up loose ends. “I seriously thought we were going to die of exhaustion,” he said.
Since Smoque opened, Mr. Sorkin has scaled back to a relatively relaxed 90 hours a week. Now, he is at work by 7 a.m., for a day that starts with stocking wood in a smoker, accepting an order from a meat deliveryman, checking the previous night’s receipts and supervising as kitchen assistants chop peppers and prepare peach cobbler. He is on his feet all day, and rarely gets home to see his two toddlers before their bedtime. He can only occasionally catch a beer in a bar near his house.
But he is not complaining, because Smoque has served many more customers — thousands more — than the business plan forecast.
“My old job was challenging, even interesting at times, but I never got the same buzz from knowing that someone got their e-mail fixed,” Mr. Sorkin said. “I love barbecue. I love to feed people barbecue, and I love to watch them enjoy it.”
Ms. Anderson began in a far less ambitious way, relying on her family’s encouragement far more than on financial planning, a step that Ms. Lipsky said often proves fatal.
Her suburban Cleveland cafe was named after her late uncle, whose nickname was Pepper, and her father, dubbed Red. The cafe was the culmination of her lifelong dream to gain more exposure for her mother’s gumbo, a recipe handed down from generations of cooks in Louisiana and Mississippi.
“People who have tasted that gumbo say it’s the best this side of New Orleans,” she said. “It’s a big deal in our family.”
Still working as a magistrate, she began to shop for a location in downtown Lorain, a working-class town, in 2002. Ms. Anderson chose a former Woolworth’s store about 40 miles from Cleveland on the shores of Lake Erie, on the hope that long-rumored casino hotels would soon be built.
Ms. Anderson also felt that local residents, who had few options to hear live music, would patronize a club in their collective backyard rather than drive into the city.
Even an economic slowdown that gripped the area after Sept. 11, 2001, did not deter her, because, she figured, “people have to eat, they want to be entertained.”
She had a truly secret recipe in her mother’s gumbo. Her mother, Claudia Anderson, who had never shared her methods with her daughter growing up, required that she learn the gumbo recipe by heart and make two batches from scratch, without help, before she would agree to let her offer it on the menu, which also featured Southern classics like red beans and rice, cornbread and crawfish.
Meanwhile, family members, including her husband, son and a flock of relatives, volunteered to work there, meaning she had to hire only one employee, a waitress.
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. She was responsible for every detail. “I went from a highfalutin position to scrubbing the floors,” Ms. Anderson said.
The summer after the restaurant opened in May 2002 was promising. Acting as the hostess, Ms. Anderson rushed every evening from the courtroom to the cafe, where she tied a custom-designed apron over her business clothes to seat the guests.
Ms. Anderson, who is not a trained musician, learned to sing blues songs and regularly took a turn on the bandstand. “It was the most fun I ever had, notwithstanding the stress,” she said.
But the joy did not last long. The hotels did not open, and by fall, the crowds that she anticipated would fill the restaurant every night had thinned. The friends she expected would be her regulars were often missing. “People will encourage you,” she said, “but they won’t show up every night.”
Ms. Anderson, who had borrowed $17,000 in a small business loan, fell deeper into debt.
Despite a bump during the 2002 holiday season, her business dried up over the first winter and did not rebound to her first-year level the following summer. Ms. Anderson did not have enough money coming in to cover the rent, $1,000 a month, and she could no longer afford to keep on her employee. In September 2003 she decided to close, a move that left her depressed and embarrassed.
“How could someone with a law degree and as smart as you blow it this big?” Ms. Anderson said she asked herself. But she ultimately decided that it was better to be realistic. “You have to appreciate that this might not work,” she said. “If it doesn’t, get out.”
Ms. Anderson’s experience is far more typical than Mr. Sorkin’s, said Mr. Rainsford. He should know. For five years, when he was a professor at Cornell University’s hospitality school, Mr. Rainsford ran a restaurant called O’Malley’s on a lake just outside Ithaca, N.Y.
Mr. Rainsford and his wife soon discovered that the restaurant was not a sideline to his job, but a full-time undertaking for the entire family, especially during the summer. Eventually tiring of the disruption to their routine, and with their children losing interest, the Rainsfords sold O’Malley’s to a young couple for a small profit.
The experience has helped him give advice to students at the culinary institute, where about half are traditional undergraduates and the rest are older students, many of whom have changed careers or want to enhance skills they have picked up on the fly.
Many of those students have a romantic vision of life in the food business, he said, fed by the success stories of people like Ina Garten, known as the Barefoot Contessa, who was a White House budget analyst before buying the shop in the Hamptons that started her food career.
Back in Ohio, former customers still rave about Ms. Anderson’s gumbo. She often passes the cafe, now reopened under new ownership and with a new name, on her way home from court.
Each time she passes, she said, she is tempted to give the restaurant business another try. “But then I just keep driving, and I say to myself, don’t look, don’t look, don’t look.”