A lot of people want to open their own restaurant. They like to eat out and talk about how they could do it better.
It all looks fun – and so easy. But restaurants have a high failure rate: research indicates that roughly 60 per cent of them fail in the first three years.
What does it take to do it well? Tim Pater, the founder of three restaurants in Kingston, Ont., has a deep understanding of this difficult industry.
Mr. Pater got the food bug in France, where he attended his final year of high school. When he returned home to Canada, he studied urban planning at university, worked in restaurants to pay the bills, and cooked memorable meals for his roommates and friends. “Everyone said I should open a restaurant,” he recalls.
After graduation, he started a catering business and continued to work in restaurants while it got off the ground. On the side, Mr. Pater also invested in a friend’s business: when it took off, the investment gave him a nest egg which, combined with support from his family, enabled him to open his first restaurant.
Mr. Pater launched a classic French bistro called Le Chien Noir, in 2000. Rather than follow a traditional approach to restaurant growth –opening clones in different locations – he grew his business by opening very different restaurants in close proximity to each other. In 2003, he opened a second restaurant, an Italian pizza and wine bar called Atomica, and last year he opened gourmet burger joint Harper’s Burger Bar.
What has he learned from the experience?
Mr. Pater has five pieces of advice for would-be restaurateurs.
1. Know the industry. Make sure you work in a restaurant before you start one, so you know what’s involved. As Mr. Pater says:” It’s not that glamorous. You can’t prance around the place giving free drinks to your friends. It’s a difficult industry and there is a challenge every day.”
The years he spent working in restaurants gave him a depth of experience in all aspects of operations, such as designing the facility, pricing menus, managing staff, selecting suppliers, and dealing with the complex regulatory environment that surrounds food and beverage service.
2. Love the industry. If you can’t stand the thought of waiting tables or dealing with the public or working evenings and weekends, this is not the business for you. Your spouse or partner also has to be on board given the brutal working hours and frequent chaos.
It helps to be tuned into the trends. For example, Mr. Pater saw the growing gourmet burger craze in the United States, and he figured it would resonate with native Kingstonians and the Queen’s students who spend most of the year in the city.
3. Work on your business, not in your business. “If you’re cooking, bussing tables and bartending every night, you won’t have the time and energy to pay attention to the business part of your business,” Mr. Pater explains.
The margins are thin in the restaurant industry, and someone has to focus on the money and on keeping costs down. In doing so, you also have to deal with constant turnover in staff. Although Mr. Pater has instituted managerial positions and profit-sharing to provide career paths for valued employees, he recognizes that for most people, “working in a restaurant is something you do until you figure out what you want to do with your life.”
4. Choose your location with your target clientele in mind. Is your restaurant more likely to attract walk-by traffic, or will it be a destination in itself? Mr. Pater thought eating at Harper’s would mostly be a spur-of-the-moment decision, so he located it on Kingston’s main street. Le Chien Noir, on the other hand, was expected to be a destination, so it was housed a block off the main street, where he found the ideal setting.
It was in a row of centrally located heritage buildings that were being renovated, where the design – as well as the intersecting courtyards and pathways – fit the bistro theme well. Atomica was located next door to Le Chien Noir, allowing the two restaurants to share an office and wine storage.
5. Be flexible. “The advantage of having your own restaurant, rather than being part of a chain, is that you can quickly change something that’s not working,” Mr. Pater says. “You can change a menu item that’s not popular or close at 9 p.m., if business is slow.”
He learned the importance of flexibility soon after opening Atomica: “My vision was an authentic Neapolitan pizzeria, but the menu just didn’t catch on. It took us a while to readjust and find out that our customers preferred to have a broader choice of Italian cuisine.”
Two of Mr. Pater’s restaurants have beaten the odds, and the third is well on its way. He’s made enough money from each restaurant to be able to obtain financing to open the next one. He’s community-minded – he embraced the local food movement early on and he is a big supporter of local producers.
He’s also active on the board of the Kingston Business Improvement Association. He feels lucky to be contributing to the community while doing something he loves. As he explains: “Owning a restaurant is a wonderful way to be at the heart of a community, because you’re helping people to interact and celebrate with each other.”
Special to The Globe and Mail
Becky Reuber is a professor of strategic management in the Rotman School of Management of the University of Toronto.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Your Business website.
Join The Globe’s Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT
Follow us on Twitter: