Pretty Witty and insightful article regarding business planning in general, though its specific to the restaurant business (fish restaurants in particular), the experiences / learnings are more broadly applicable to any business.
Doug
NY Times
September 30, 2009, 4:09 pm
My So-Called Business Plan (Enter Laughing)
Do I have a business plan?
Do I have a business plan? You think a man with 100 rules for a waiter wouldn’t have one business plan for himself? In fact, I have had, like a fecund humpback whale, two in two years and another one on the way.
Before purchasing the bedraggled Wild Rose Café, I sat down with an expert who had owned, built and run a half dozen restaurants. We went over a year’s ledger — debits and credits, ins and outs, weekends, walk-ins, winters, holidays, sommeliers and sous chefs, income from the second-floor apartments, a catering business down the line. Lunches? No thank you. Mid-day martinis are out and lunches require an additional shift. Weekend brunches? Pass the mimosa, please.
We crunched numbers and then re-crunched them. We had arguments about New Year’s Eve and did separate research and reconvened with our findings. We used the best available data. And despite having no chef and no experience, we came to the conclusion we searched for: a clever, well-run, upscale restaurant could be successful in the Hamptons.
Duh.
Nick & Toni’s opened in 1988 and expanded three times. The Laundry has been in business for 28 years. David Lowenberg co-owns three restaurants. Robert Durkin has two. Mirko’s has been around forever. These people are not philanthropists or saints. They work hard and they make good money. It is no coincidence that they operate the best restaurants in the Hamptons. Pricey places attract good customers, good customers attract staffers who can earn a living, and the cycle feeds and nourishes itself.
Conclusion: the better the restaurant — on every level — the better chance it has of surviving, maybe thriving. If it doesn’t, chalk it up to bad timing, bad location, bad food, or bad mojo.
Still, my business plan was mainly fancy dancing and guesswork. Guesswork based on real numbers, but guesswork nonetheless. Man plans, God laughs.
Shortly after the purchase, the recession kicked in. We changed the numbers. Shortly after that, Lehman Brothers kicked the bucket. We changed the numbers. And then Minimalist Mark Bittman wrote in the Times that maybe people shouldn’t be eating fish at all: If the fish are endangered, he suggested, leave them alone; if they are abundant, eating them may endanger them.
Mayday! Mayday! Numbers overboard!
Man plans, God’s ribs hurt from laughing so hard.
Three contractors gave me their best estimates in the renovation versus knockdown debate. (I favored the former for three reasons: continuing a tradition, loving the eccentric zigs and zags of the old footprint and hiding behind the inherent limitations — “Hey, that’s how I found the place.”)
The first builder told me rehabbing was smarter and less expensive than starting from scratch: $350,000 versus $750,000. The second contractor said just the opposite — it would be wiser to trade in this old clunker and begin anew: $500,000. And the third contractor swore that both jobs would cost exactly the same, so take your pick.
I felt like an overgrown kid caught in some grim fairytale. I wanted to run all the way home and promise never to buy a strange building ever again. (Goldilocks had her three bears, three chairs, three bowls, three beds. Bruno Bettelheim thought the number three was unconscious sex: penis and two testes, or vagina and two breasts. Others found Freud’s id, ego and superego. Buddhists might see Goldilocks’ best choices — not too hot, not too cold — as the noble middle path.)
Me? I had three builders and none felt right. One wanted to blow my house down, one wanted to rehab it, and one didn’t seem to care either way. I ended up hiring a fourth.
I believe in plans. I do. They focus the mind and sharpen the concept. I just don’t believe in believing in their predictions. Man plans, God clicks to Comedy Central.
So here’s my so-called business plan:
•Avoid a hefty key fee and a long, ever-increasing lease by buying a place with important permits in place. Eateries are finite around here and therefore always in demand. Every penny spent will come back one way or another. If the restaurant fails, change the concept or rent the space or sell the property.
•Create a folksy place with funk.
•Assemble a crackerjack team.
•Open the best fish restaurant in the Hamptons (where none exists west of Montauk).
•In October, after your first full summer season, sit down and read the numbers, not the tea leaves. You will know where you went astray and where true you stayed. Adjust.
Does this translate into success?
According to the New York State Restaurant Association, 70 percent of all restaurants fail in the first three years or change hands within five. (Those are pre-recession stats.) My best guess is that 98 percent of all those failed restaurants had what their owners considered pretty good business plans.
Man plans, God sends his head chef down to the Bowery to pick up some great deals on pre-owned kitchen equipment.
Doug
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