But why in the world would you want to?
So you're thinking about opening a restaurant. The allure of fame and fortune seduces you, your love of food drives you, and you want to heat up your life in an exciting industry. That's all fine and well--just as long as you make sure the flame isn't turned up too high. Even in a healthy economy, the restaurant failure rate tells a grim tale, but in a recession, the industry is even more unforgiving. Expensive food spoils, labor costs are high, restaurant-goers are harder to come by, restaurants close and life goes on.
But we also know we're talking to a special breed of people: entrepreneurs. Entrepreneurs have the drive to go against the grain and the nerve to try their luck in such a ruthless industry. We're not saying don't do it. We're just saying to equip yourself with the right tools or you might just find yourself at the bottom of the food chain. To help you get started, we reached out to a handful of industry experts and food entrepreneurs and compiled the perfect recipe for starting a restaurant or food business in a down economy.
Start with a Dose of Reality
Though you may be anxious to start stirring up business, you can't afford to skip this one step: building a solid foundation. "The biggest thing to avoid is 'Polaroid Syndrome'--here's me in my restaurant, here's me with my chef,'" warns Clark Wolf, founder and president of Clark Wolf Co., a food, restaurant and hospitality consulting firm. "That's not what this is. This is something very different and a lot more work."
Starting a restaurant requires in-depth knowledge about much more than just food. It's also about marketing, financing and people skills. Even if you're not single-handedly equipped with all that know-how, it's not necessarily a deal-breaker. "Take [on] a working partner, someone who's as equally involved in the business as you but brings something different to the table," advises Marilyn Schlossbach, a restaurateur and consultant who has been involved in the industry for more than 20 years.
Possessing the right knowledge is only part of the equation; having sufficient capital comprises the rest. "Historically, people have heard that undercapitalization is the No. 1 cause for failure in business," Wolf says. "It has never been truer. You really need to know not just how much money you need to open the restaurant, but also where the rest of it is coming from." Have enough capital to endure the first six months, Wolf advises, as well as an additional source of capital to get your business through several months after that.
Read the rest of the story here.