Thursday, February 12, 2009

Tough times for all. I hope everyone is hanging in there. It seems that restaurant sales are holding up. What is apparent though, is the lack of new start-up Ma and Pa restaurants. We are discovering that even large chain restaurants are having a hard time securing financing. There are many ways to raise funds to open a restaurant. If the funds are available, now is the time. Landlords are giving massive incentives for leasing, restaurant equipment companies are marking up equipment packages well under 10%. Contractors, plumbers and electricians are taking jobs almost at cost to keep the cash flow going.

Fast casual and fast food restaurants are cashing in on the population switching form fine dining to moderately priced restaurants. The food service industry historically has not been greatly affected by a bad economy. If you can, do it now.

We have been involved in studies that are trying to determine the reason for the large percentage of restaurants that close months after opening. Our findings have been unexpected. We always have been aware that one of the big reasons for restaurant failure is the restaurateur's lack of knowledge. They simply did not have a clue about running a restaurant. What we have discovered unexpectedly is that the great majority of people opening restaurants are highly qualified. So where did they go wrong? They did not know how to open the restaurant. Our great discovery is that most of the mistakes occur before the restaurant is open. The problem with pre-opening mistakes is that they are extremely costly. This is an undisputed fact. If you are opening a sports bar and you have made $30,000.00 worth of pre-opening mistakes you will not have enough funds to finish the project properly. It could quite honestly cost you your audio-visual system. That would substantially destroy the customer experience. Why do restaurants fail? The big reason; an extremely poor customer experience.

I am co-authoring an instruction manual to eliminate pre-opening mistakes. It is geared towards not only first-timers but also the most seasoned restaurant veterans. The goal is to help restaurateurs establish a pre-opening budget and stick to it. The only way to establish a pre-opening budget is to completely understand all of the requirements and issues that have a big effect on costs. Again, we know factually that the majority of mistakes are made prior to opening resulting in quick failure. I anticipate the publishing date of the instruction manual will be in early summer. Stay tuned.

Frank Stocco

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