Food & Wine Thursdays: Thoughts On Why Restaurants Fail

I imagine this is self-evident by now, but just to be clear: the views expressed in this blog are merely educated opinion; the opinions aren’t particularly scientific, just some light analysis based upon extended observation; I’m not offering The Answer, I’m just furthering the discourse so we can find An Answer.

There’s an oft-thrown about quote used when describing the folly of getting into the restaurant business that is something to the effect of “more than half of restaurants fail in their first year.” While perhaps true, it’s rather meaningless as businesses of all types fail in their first year and, I think, the restaurant business also draws in some uniquely unqualified people and that skews those statistics, like the California State Bar Exam.

I’ve worked closely with quite a few restaurants as they’ve gone from business plan to grand opening and it appears to me that most restaurants that fail do so because they start out undercapitalized. Very few businesses turn a profit in their first three years, let alone in one year. Restaurants can take much longer to open than anticipated–Los Angeles in particular has so much red tape that restaurants are routinely delayed by a year or more. That can eat up whatever cushion a new business has in the bank quite quickly. My guess would be that any competently-run restaurant in a decent location could become profitable if they open with 3-5 years of operating capital.

Because that’s what it takes to be a truly successful restaurant: you need to build that repeat business. It’s fantastic to be the new hotshot on the block, but that can only last for so long (cf Dolce Hollywood, Goa). People pick up and move on to the next hotspot quickly. But if you can build a reputation of quality, consistency and value so that you get that repeat business, then you will succeed. Patrons who return weekly and bring their friends along are key to a restaurant’s success and it takes a long time to build that critical mass of regulars.

But there’s another barrier to a restaurant’s success and that is that a lot of people with virtually no food and wine background whatsoever seek to get into the business. I’m not talking about financial backers who open a restaurant but hire professionals to run it, I’m talking about wealthy doctors, lawyers, et al who figure: I like to eat and drink, I have money, I should open a restaurant. How hard could it be? Actors and college dropouts work at restaurants, I have a medical degree so clearly I can do this better.

As a food and wine professional, I find this puzzling and more than a little bit offensive.

Should I go argue in court because I know Law & Order: SVU by heart? Should I hang up my shingle as an Ob/Gyn because I’ve watched a lot of porn? (A lot.)

(Yes?)

I don’t intend for this to be an elitist screed. In fact that’s why I love food and wine: it draws people from diverse backgrounds who are moved by its sensory experience and by the acts of creation that the cooking and wine making require. There are probably as many successful people who came from other careers into food and wine as there are lifers who have worked in restaurants since they were two. The barriers for entry are quite low and it’s one of the few industries that still rewards passion, dedication and ability as much or more than training and education.  A true meritocracy.

But the presumption of ability based upon knowledge as opposed to experience is frustrating because inherently knowledge not coupled with experience will limit your ability to further your knowledge because you are (unknowingly) hampered by your own lack of experience.

It’s a sliding scale to be sure. Exceptionally intelligent and studious people can make up for a dearth of experience while those who have put in their years can draw from a library of past experience in lieu of analytic mental gymnastics and encyclopedic knowledge. But it does require a combination of the two; one cannot open a successful restaurant from a textbook alone nor can one merely rely upon a long history of successfully showing up to work.

Restaurants are particularly susceptible because they deal with something most human beings identify with and take pleasure from: food. We like to eat. We also like to share that experience with others and there are few pleasures greater than sharing a great meal with others, whether that’s at home or out at a restaurant. We want to share the act of consumption and we want to share the act of creation. By sharing these acts we affirm our relationship to each other as human beings and, more cynically, we indulge the pleasure of impressing our peers whether by a show of culinary aptitude or simply the good taste of knowing a cool new restaurant.

But unlike working for several hours to prepare a great meal at home to share with friends, restaurants have a panoply of real-world exigencies that cannot be presumed without spending time in the proverbial trenches.