Closings of Owner-operated Restaurants Trending Upward
There’s almost always a snide comment or twenty from the armchair experts on user-generated websites when an owner operated restaurant closes. And there seem to have been a disproportionate amount of these closings in the past twelve months: Rivals Steakhouse, Mizu, Mesa Ranch, Mirabelle Bistro, Maria Maria, European Bistro, Chon Som, Romeo’s, Old School Grill, Manny Hattan’s, Shoreline Grill, BC Tavern (formerly Zoot), Cannoli Joe’s, Gumbo’s, Hills BBQ/Market and many others. Maybe the reasons were a terrible dish or two, a dysfunctional waiter, an owner who just doesn’t get customer service, prices that were simply too high, an unappealing ambiance. I could go on.
And sometimes the reasons ARE that simple. But there are often a host of other negative variables operating in consort that many restaurant patrons and contributors to user-generated sites frequently fail to see when a place closes.
The biggest problem that besets local restaurant operators is plainly and simply: acquisition and management of money. I’ve seen many business plans that are simply unrealistic. Restaurants that plan on running the place from positive cash flow after three months for example. That reality is virtually unheard of: as is a new start-up restaurant getting money from a bank. Exaggerated cash flow expectations and under-funding kill more restaurants than any one other factor. When the money is short, everything starts to slide.
If you’re too thinly budgeted, a bad weather weekend can make the month very difficult, or an unexpected jump in the price of beef, or a grease trap that goes on the fritz, or even a less than perfect report from the health department (these can be extremely subjective: just ask Ronald Cheng). And then there’s the entire madness of getting that final sign-off from the city to open your doors. Far too often two weeks can run into two months or more. And that’s at a time when you expected to have cash coming in to offset your initial labor, food and capital costs.
And there are the restaurants who are in a relationship with a number of limited partners. This rarely goes well. Limited partners have usually invested a relatively small amount of cash, and yet are inclined to invite their friends to dinner at “their” restaurant and of course, don’t expect to have to pick up the tab. Ugh.
There are also times when the front of the house and the back of the house don’t see eye to eye. This lack of communication can be fatal to a new owner-operated restaurant. And some more temperamental chefs are simply better off staying in the kitchen (the highly-acclaimed Will Packwood comes to mind).
I’ve also met a lot of new owners who really didn’t get the idea of “owner-operated”. They thought that once the restaurant had opened they could simply show up now and then, and simply dial it in the rest of the time. Ask successful owners like Chez Zee’s Sharon Watkins how long it took her to be able to day or two off. I think the answer would surprise most people. Ditto for Marion Gilchrist at La Traviata or Freda Cheng at Freda’s Seafood Grill. These ladies have paid their dues, in spades. And despite their success, they are still very visible.
So as a new restaurant, you’ve dotted your i’s and crossed your t’s and avoided all the mistakes cited above. Can you still fail? Yeah, you sure can. In fact the odds are greater than 50% that you won’t last 5 years. Starting a new restaurant is an enterprise fraught with peril. Only the smartest, most talented, mentally toughest and most resilient folks will make it as an owner/operator. And good for us Austin foodies that they do. Because a South Congress with nothing but Olive Gardens, Appleby’s and Red Lobsters would be my idea of restaurant Armageddon.
