COLUMBUS, Ohio – It takes a lot more than just having a passion for food to get a restaurant off the ground.
Several restaurant owners who have enjoyed and endured the ebb and flow of the industry offered advice to anyone thinking of getting into the business at the two-day Mid-America Restaurant Expo trade show in Columbus.
Bac Nguyen, chef and co-owner of Ninja City Kitchen & Bar in Cleveland’s Gordon Square neighborhood, Wendy and Letha Pugh of Bake Me Happy in Columbus, and Prakash Karamchandani of Toledo-based Balance Pan-Asian Grille shared personal experiences in a seminar titled “Knowing When to Grow: From Pop-up to Brick & Mortar and Beyond.”
The practical advice is welcomed at a time when restaurants are seesawing with opening and closings in Northeast Ohio.
The four took different paths to the restaurant business but have common ties about challenges they faced.
As Karamchandani put it: It hasn’t been a straight line to get here.”
1. Understand what you are getting into
“This is not the most lucrative profession. It can be over time. The margins are razor thin,” said Nguyen, whose restaurant initially opened in 2014 in University Circle. It offers “Pan-Asian fare and American pub grub with an Asian twist.”
Nguyen grew up around the business – his mother and grandmother had restaurants – but he went to Case Western Reserve University and entered the business world before jumping into his culinary endeavors. He also owned Bac Asian Bistro in Cleveland’s Tremont neighborhood before closing it in 2018.
“I was always wanting to be doing something creative where I can share my vision for something,” said Nguyen, who growing up wanted to be a comic-book artist.
2. Keep a sharp eye on your money
“Be a good steward of your funds,” said Letha Pugh of the gluten-free bakery. “When you first start out friends are gung-ho – ‘Buy 12-top ranges’. If I can go back and make smart choices … What’s the best bang for my buck? How often are we going to be able to use it?
“Cash flow is important,” she said, warning against tying up finances with unnecessary equipment or niceties.
“We don’t have a lot of waste; we try to keep our costs down. Then eventually you see more money coming in than going out.”
Added Wendy Pugh: “The best advice is if you are the person who is the creative one and does not have this (financial) side of it, get that person. You need both halves to make a business.”
3. Watch your lending
Nguyen doesn’t say don’t borrow from family and friends, but says that type of borrowing comes with a caveat.
“My first restaurant performed really well,” said Nguyen, but he “cobbled together” his next opening with investments from family and friends.
“Know if you borrow money from family and friends it can strain personal relationships. Know that you muddle a relationship when you do that. … If a good friend has given you $40,000 and it doesn’t work out, you don’t talk to that person that much.”
He added: “Bank debt is something to be very careful about. In my haste to open my first restaurant I was feeling very invulnerable. … I went from one restaurant to two to zero to avoid bankruptcy. It was also a strategy.
“The takeaway is there are lots of ways to get money for a restaurant. They all come with pros and cons. Think it through before you personally start guaranteeing (payback).”
4. Understand how valuable time is
“There’s another resource being spent, and that’s time,” said Karamchandani, who goes by P.K. “As operators we are exchanging time for money. I took time for granted.”
A spreadsheet will show you in a glance how much money is being spent and saved, but time isn’t so clear. Karamchandani said for a while, he lost balance in his life: He was juggling multiple restaurant projects – including opening the company’s 9,000-square-foot aquaponics pond where they grow their ingredients – plus his wife was pregnant and his parents were helping shoulder the burden of some of his work.
“I misgauged these projects,” he said.
“I should have done what I do with a financial budget; I should have allocated time.”
He and his business partner have settled into a rhythm: Pan Asian-Balance Grille has enjoyed steady growth, and this weekend marked its 10-year anniversary.
5. Pay attention to details
“This is a career of passion for a lot of people – ‘Hey I make awesome barbecue, I should be doing this for a living’ – but you have to look at all the logistics to do it for a living,” Nguyen said.
His gave a salient example: If a restaurant owner wants to put on a special dish, you have to balance the willingness to think creatively with a business sense ahead of time.
“I immediately think ‘How is this going to play out in the kitchen as I make this?’ This product has a short shelf life. … I have to mitigate the desire to do certain things.”
A restaurant is so much more than what lands on a diner’s plate: “Having good food is essential, but it’s probably 10 percent of the equation.” Business decisions, financials, rent, debt load and other non-cooking concerns compose the remaining 90 percent, he said.
“Those are things that determine a successful restaurant,” Nguyen said. And, he added, “You can create a downward spiral if you don’t stay on top of it.”
6. Location, location, location
“It really is all about location,” Nguyen said. His University Circle spot looked good at first; Ninja City was one of only two Asian-focused restaurants and the area appeared to be the “next big neighborhood.” The first year went well, but within a year and a half of opening and with multiple developers not working in sync, “all of a sudden we were one of nine Asian places.”
“Our new location is a perfect fit,” he said of Gordon Square. “That’s hard to tell. You can’t predict the future. The new place is doing great.”
7. Treat people well
The panel also addressed employee retention – a key component in many industries – by stressing the importance of communication and problem solving, creating a culture based on transparency while engaging employees and fostering camaraderie.
“Listen to them and value them,” Wendy Pugh said. “Realizing that work is not their life. Honoring that. On every paycheck we write a note – ‘We appreciate it’.”
Nguyen bases his approach on honesty.
“We’re not perfect,” he said. “People don’t want to work for someone if they don’t respect you – ‘Hey I’m putting money into someone’s pocket who I know is not a scumbag.’ … You don’t have to kiss employees’ butts, but positive affirmation (can help). Treat them with respect.”
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Source: Thanks https://www.cleveland.com/entertainment/2020/02/want-to-start-a-restaurant-7-things-to-know.html