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Crazy to open a restaurant just so you can go to it?

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Is it crazy to open a restaurant (or a copy of a restaurant) just so that it's there, in your area, and you can go to it? Would you do this if you had the money, even if you don't PROFIT from it, you just break even?

You see, I wish there was a Shanghai Bun somewhere in Bergen County and maybe NYC. Shanghai Bun in Matawan, NJ is the best authentic Cantonese restaurant aywhere ever, other than China itself, as far as I'm concerned. They have a really special, specific selection of authentic Chinese things that rarely if ever come in one restaurant together. The usual lunch fare is bowl-noodle-soups, which are amazing. On the weekends there's the unusual but still awesome BREAKFAST stuff - whoever heard of Chinese breakfast? - Youtiao, hot sesame croissant thingies, sweet and savory soybean milk. There's xiaolongbao anytime.

Basically, I've never been to a restaurant, even in NYC with this stuff. Come to think of it, I can't find a restaurant that has either bowl-noodle-soups or the hot chinese baked goods. I managed to get Youtiao once at one place in Chinatown, but it was crummy, and not fresh.

I would so be willing to put up the money to start this place up in my area (and/or NYC) just to have it there. Doesn't have to turn a profit for me, as long as it doesn't end up being a loss, and dealing with it isn't too hard - anyway, if it worked out and it was mildly profitable or just broke even I'd just sell it, but the main point is it'd be in my area.

  1. In a word, yes. But it's your money and if you've done the research and have a realistic idea of how much it takes to open and run a place and you can afford it, and you think you can get the recipes you seek and hire/poach and train and run a staff to do them for you, then why shouldn't you?

    But be sure you know what's involved before you jump in, including how hard and expensive it generally is to do this, and how difficult it is to turn a profit or even break even given the statistical failure rate of restaurants, and how difficult it will be to sell if you get tired of working 20-hour days (or paying someone exorbitantly to do so for you).

    1. believe me, if i won the lottery,
      i'd be stealing sergio from coni
      and he'd be cooking closer to my house.
      he'd be cooking for every dinner party i made (too bad for the guests that can't stand shrimp with eyes and fish with heads and bones. i'll get veggie burgers for them)

      (of course, i'd give Coni a substantial consolation fee: one large enough so that she wouldn't be left high and dry as she had to train someone else to take his place. after all, they are a family operation and the whole family deserves respect and fairness)

      1. Yep, absolutely crazy.

        I could never be sufficiently wealthy to even consider this.

        1. "...and dealing with it isn't too hard"
          My understanding of the restaurant business is if you decide to do this, it will be hard. Very hard. However, if you find someone else who also has a passion to do this and wants to take it on, and you're able to provide the seed capital and oversee it, it might be less crazy.
          Though my guess is, it will still be hard.

          1. No, it's not crazy --- it's insane. Do you realize that fully 50% of start up restaurants fail within the first year. Does that sound like a sound investment just for a lark?

              1. Oyyyy, crazy as a loon IMHO.As others have pointed out, the success rate for restaurants is not great and the headache factor is huge. That's a lot to take on just to get some favorite food items. Flying in to the source when you have a craving would be much cheaper. :-)

                1. Oh by "not that hard" I meant YOU wouldn't actually be running the restaurant, like at all - you just put up the money with the condition the people running it make the certain kinds of food.
                  Again, ultimately, you just want your money BACK, not profit. Maybe don't ask for any money back for the first year or two, and even after that ask for the money back slowly. Basicaly you'd just be putting up money on the gamble that the resto would be a little profitable or break-even.

                  Would it necessarily require a HUGE investment, though? I mean, the very restaurant I'm speaking of has hardly any physical capital in it that wasn't probably already part of the space once they leased it. The most expensive thing is installing those special stir-fry burners. Outside of that, you'd go out of your way to look for a place that already has a kitchen and tables set up, of which there are plenty.

                  So you're talking a little construction/modification, first few months rent, stocking the kitchen, and first few months salary of the cooks. Not gargantuan costs. Not insignificant, but not gargantuan either.

                  I know it's a lot for most people, but I'm normally in circles where people have plenty of money, and my own parents are loaded. In other words, it wouldn't be impossible for upper-middle class or upper class people.

                  1 Reply
                  1. re: peanuttree

                    I wonder if you have run this idea by your monied circle and loaded parents? Chances are they did not get their money by investing in enterprises that were not-for-profit or by giving the money to others they did not make an effort to monitor closely.

                  2. If you don't want to lose money running a restaurant and not work too hard at running one, hire a car with driver that waits to take you to Matawan whenever you want. Heck, hire a plane to fly you to China. If you think running a restaurant without a loss and little effort can be done just because you want to, I have a bridge to sell you. Do you have any idea of the amount of money it takes to launch an adequately capitalized restaurant if you don't plan on being sweat equity? Best suggestion is from westsidegal. Go hire your own private chef.

                    19 Replies
                    1. re: Bkeats

                      again, you WOULDN'T be running it. It's called investing. Look it up.

                      1. re: peanuttree

                        Yes I know about investing. More than most. Actually invested in restaurants before. If you think you can be a passive investor and just hire someone to manage it, you're very optimistic. I'm looking at backing another one now. Nothing fancy, but the investment isn't de minimus. I'm curious to find out what you think it costs to open one. Have you done any due diligence? Drafted a business plan/cash flow model? By the way, when I make an investment, I don't want to get my money back, I want to make a profit. That's investing. I'm not interested in backing an eleemosynary venture when I make an investment.

                        1. re: Bkeats

                          So investing always involves tons of work in the actual day-to-day operations of cooking food and serving it? There's no such thing as restaurant managers and profit sharing with them? Every last investor of every restaurant is in the restaurant every week, helping out? I'm pretty sure that isn't the case. I could be wrong, but last I understood about investments, a lot of them are JUST investments, you don't have to be personally involved, just as much as any shmoe doesn't know how to build a jet engine but that doesn't stop him from owning GE shares in his mutual fund.

                          Like I said, I'd be more than willing to profit share, hire a manager, etc., since I wouldn't be looking to make a huge or any profit, just recoup my costs/investment

                          1. re: peanuttree

                            You are confusing buying shares in a public company with venture capital. Since you know so much about investing and can spend your friends and parents money to do it, go for it then.

                            1. re: Bkeats

                              don't be flippant. You know what I mean. The public shares thing was an anaolgy, so I wasn't confused, though you might be confused with reading comprehension and anaolgies. Ultimately, I'm not wrong, am I? There are ways to invest in a restaurant without running the day-today operations, I'm PRETTY SURE. Correct me if I'm wrong

                              1. re: peanuttree

                                Apparently DOnald Trump has offered to invest in Tavern on The Green. Let's say this happens, here's some things I'll bet will continue to stay true

                                A) DOnald Trump doesn't know jack !#@$ about cooking
                                B) He wont' even know the restaurants table numeration
                                C) He won't be in the restaurant helping out with the day-to-day stuff, and probably won't even be in there once a week consistently (particularly when he's not in NYC)

                                Do you think that sounds about right?
                                Look I get that you've worked hard, but that doesn't excuse saying silly things. Don't tell me I'm crazy just because In uderstand that there's such a thing as a person who can be hired (possibly with profit sharing) called a "manager"

                                1. re: peanuttree

                                  The thing is, having a restaurant, investing in a restaurant, being a venture capital or Angel for a restaurant-- whateverrrr-- the Restaurant part isn't limited to food, chef, and service.

                                  You'd have ALL the requirements, obligations, and legal strictures of a normal office start-up, plus the health department and labor codes and hospitality tax and seasonal fluctuation in the prices of all fresh ingredients.

                                  I think that people are objecting to your disparate "wants":
                                  1) put up the money
                                  2) dictate the menu
                                  3) have it be completely accessible to you when you want it
                                  4) have it be Not Intended to make a profit
                                  5) You not be involved in the daily process

                                  You seem to want to BUY a successfully operating restaurant and be able to dictate the menu whilst throwing money at it.

                                  Sounds like you should just develop your dished-wanted list, get the gov't permission to VISA a chef, spend 2 weeks in China recruiting, and then have a live in chef.
                                  You could hire out occasionally if your friends were interested so you could "break even."

                                  1. re: Kris in Beijing

                                    I think that what Bkeats --and Kris who beat me to it-- is trying to say is sound (if perhaps in not a very warm and fuzzy tone), and based on what sounds like actual experience. Point being that it is not as simple as throwing money at it and watch others do the work --as you make it sound by your posts; especially seeing as how you clearly want to recreate a particular experience, whereas Trump probably could not care less about the actual food (remind me never EVER to go to that restaurant).

                                    Remember after all, you are the one who posted asking if it was crazy. but as I posted earlier, if you want to use CH as your due diligence, then yes please throw your money at it.

                                  2. re: peanuttree

                                    Nope. But Donald Trump will know

                                    a)ROI

                                    b) P/L analysis

                                    c) risk management

                                    And lots more business principles.

                                    1. re: gaffk

                                      right, like I SAID, I'd have mostly bureaucratic type stuff to do - pay the taxes, collect ( or not) rent, utility bills, etc.

                            2. re: Bkeats

                              Points for using one of my favorite words, "eleemosynary," in a sentence.

                              1. re: Jay F

                                You guys are adding a bit more to it - menu doesn't have to be exactly the same, just have a lot of the same/similar stuff. I didn't say I would request to eat there free. And it would seem to me not worrying too much about making a profit would help someone do this, not hinder.

                                So far no one's said anything that negates my presumption that the stuff I would have to do would be mostly beaureaucratic/bookkeeping.
                                Ultimately it would just be some Chinese guy running a restaurant with the head-start of free start-up capital with no pay-back requirement for the first year or two and then after that still low pay-back rates, but with the catch that he would have to have certain menu items or quality standards.

                                In case anybody doesn't know/understand, Shanghai Bun is sort of a hole-in-the-wall Chinese Food place, it's not very big or fancy at all. Half the people order there just for the American Chinese food. They do also do really good authentic Cantonese food, and it's packed on weekends with CHinese and foodie-Americans, but still, everything's on the menu, authentic or American-Chinese is really cheap.
                                This is NOT a fancy place.

                                My start-up esitmation is somewhere between $50,000 - $80,000. It of course depends on how much I help out at first (do I even go so far as to pay a month's salary to the chefs to start, to cover the first month? Does the place we rent come furnished?)

                                Not to mention I could do it as part of a commercial real estate investment, the kind of thing I do expect to do in the long run. That would significantly lower costs (if you disclude the purchase/building price, since I would have done that anyway) and I'd only have to cover realty taxes not rent. Oh, and in this invstment, I wouldn't have much mortgage if any, I know I'll end up buying some real estate like that some day.

                                Perhaps people could help me with the specifics I don't know the details on. It's my understanding that there are types of contracts where the landlord/investor/owner demands more rent/profit share if business does well above a certain amount. ANybody know the details of these contracts? What are they called? What is the wording? Do they hold up in court? Is there regulations that effect them?

                                1. re: peanuttree

                                  "Ultimately it would just be some Chinese guy running a restaurant with the head-start of free start-up capital with no pay-back requirement for the first year or two and then after that still low pay-back rates, but with the catch that he would have to have certain menu items or quality standards."

                                  If you are serious about this project - and this quote makes me think otherwise - why don't you hire the current chef to cook for you? You will certainly need more than "just some Chinese guy".

                                  As a former invester in a restaurant, let me assure you that there is no such thing as a hands off investor.

                                  1. re: Sherri

                                    OK, then I expect to see Donald Trump waiting tables and inventing recipes at Tavern on the Green in the next few years *not*

                                    1. re: peanuttree

                                      Donald Trump aside, there are too many decisions affecting the bottom line to be a 'hands off' investor. Let us agree that being involved does not necessarily mean that the investor will be scraping plates or cleaning the grease trap. But, hey, it's your money. If you want to give it to "just some Chinese guy" then you should go for it and not waste time asking for advice.

                                      1. re: peanuttree

                                        The thing about Donald Trump is that he is a wizard about business. He is like an old school *wheeler and dealer* with superhuman instincts.He takes risks but they are well researched calculated risks.Nothing he does is impulsive or based on an emotional need.In other words he is in it to win.I am also certain that he actively listens to the financial advice given to him by his on staff experts regarding investment potential.Maybe he won't be at "Tavern on the Green" slinging hash anytime soon but you can bank on the fact he is aware that his notoriety and celebrity will be a draw for customers because of who he is and he will no doubt show his face there now and then.

                                    2. re: peanuttree

                                      You're describing a place that likely remians viable because of owner involvement. Meaning there's some human capital required in the equation to make it financially viable. As a hands-off investor you need to replace that body somehow, requiring added labor costs and likely throwing the place from profitability to loss.

                                      1. re: peanuttree

                                        If you are serious about this endeavor and have the funds, perhaps the best place to start is with a competent lawyer. Advice about the wording of contracts and regulations is a little far afield of these boards, and can very well vary depending upon your location. There is a lot of risk involved--as many of the others have pointed out--but if you are willing to take that risk then good luck and God speed.

                                    3. re: Bkeats

                                      The thing with Donald Trump is that he has an entire financial empire surrounding him. He's got lawyers, and and managers, and book-keepers, and accountants. These are the people who, at Trump's orders, are going to be doing all of the investing/legal work. And I'm sure his minions will be hiring things like an experienced restaurant manager, and someone to handle staffing, and so on.

                                      In other words, between Trump the investor, and the cooks and waiters in the restaurant, are multiple levels of professionals with specific expertise.

                                      Doing this yourself will require you to either have that expertise, or hire people with it. Someone to interview and hire staff - cooks, cleaning staff, wait staff. Someone to handle the legal aspects involving safety codes, building codes, employment law. Someone to keep the books - not making a profit is one thing, going bankrupt is another. Someone has to deal with suppliers who provide you with the ingredients, and make sure that you're getting what you buy, in the right amounts. If you're using other people's money to finance it, you've got investors yourself that need to be dealt with.

                                      The cook you hire isn't going to have these skills. So basically, you need to hire a competent staff with disparate skills (say, a lawyer, an accountant, and a manager, in addition to the people working in the restaurant). And you need to manage them, or hire someone to have oversight over all the various.

                                      Otherwise, you will need to do a lot of this yourself.

                                      For investments that are *just* investments, you need to invest in something that has a structure associated with it and has people that do all the dirty work. What you want to do is start your own business, but not actually have to do anything except pay money and dictate how it will work.

                                      So basically, yeah, opening a restaurant to satisfy your food cravings is batshit insane idea, and if you pursue it with the level of understanding of what's involve that you demonstrate here (and unwillingness to pay attention to reasonable, legitimate issues), it will financially ruin you and anyone else you convince to contribute money to it.

                                2. Why not just support the existing restaurant?

                                  1. As long as you are using Chowhound for your due diligence, and if the restaurant is THAT good, then as a CH participant I'd say, yes, please do make the investment -I like good Cantonese. And if you lose your investment, ah well, c'est la vie.

                                    1. It's no crazier than liquidating all your assets, getting paid out in bundles of $100 bills and then setting the bundles on fire.

                                      1. In addition to the fact that most restaurants fail in the first couple of years, it sounds like you really love this particular food. That means that you need THAT chef. It is extremely rare to find two restaurants with truly same flavors (except chains with preprepared stuff), so maybe your first step should be to befriend the chef.

                                        1 Reply
                                        1. re: mojoeater

                                          Agreed. It's not just a matter of finding 'some Chinese guy', it's finding the RIGHT Chinese guy, who knows how to make all of the desired dishes and can make them to the same standard the OP is looking for. Even if you got the chefs at the original location to consult, give their recipes, train new cooks, there is no guarantee that the new cooks/chefs will have the same taste or talent.

                                        2. two of my fantasy businesses to run would be a cool restaurant that serves amazing food in a really casual but contemporary setting that becomes insanely popular because of the great food or a food magazine dedicated to edgy and interesting writing about food and food culture.

                                          David Chang stole my idea twice is my point.

                                          Sort of jokes aside, the type of restaurant you would like to see is a really good idea, possibly not as uncommon or unique as you say, but not a bad idea. Your proposed method for establishing it and running it is just awful business sense.

                                          But you say you won't mind if it doesn't make money. My hunch is that in reality your investment would be completely wiped within a month, possibly two. BUT who knows and it sounds like you're not particularly phased by the loss of significant capital so good luck to you.

                                          My other suggestion would be to look at whether it needs to be a permenant thing or if you could trial it as a food event, pop-up or market stall.

                                          5 Replies
                                          1. re: Samuelinthekitchen

                                            THE POINT ISN"T TO TURN A PROFIT. OK, it's pretty clear people aren't even reading at this point. It isnt SUPPOSED to be good business sense. It's just supposed to be "how do I get this to exist?" sense.
                                            Again, just want to RECOUP THE LOSS of the initial investment. Again, there are ways to go easy on the manager/co-owner to do this. Give him a year or two off from payments, charge no interest on the "loan", only ask for it to be payed back slowly. Ideally I just wouldn't want the money to disappear.

                                            UGH!

                                            1. re: peanuttree

                                              Buy your own table @ Shanghai Bun in Matawan, NJ. The restaurant is 20 mins from where I live. My family and I would love to see you drop some $$$ on the place.

                                              1. re: peanuttree

                                                my point is to your original question, yes it is crazy and no you won't break even if you run it how you propose. I'd be surprised if you stayed open for a month. .

                                                1. re: Samuelinthekitchen

                                                  Any particular reason? Especially considering that I outright stated that the guys running the place would have the huge boost of my investment with extremely generous terms of paying it back?

                                                  1. re: peanuttree

                                                    I used to do sales to restaurants, and collections was the worst part of my job. I wish you could talk to my old credit manager about terms of sale and customers paying you back in the food trade. Especially with so many places going out of business daily, even before the recession. She was in court constantly trying to get big bucks back from our customers, or should I say ex-customers.

                                                    If you give someone money to start up a restaurant, don't count on getting a penny back (but make sure you have lawyers draw up some ironclad paperwork for your agreement anyway). Just some friendly advice!

                                            2. http://www.nytimes.com/2010/05/02/nyr...

                                              this place might help you with the breakfast aspect.

                                              can't help you with the authentic Cantonese aspect though

                                              Although, I do wish you would open a good Chinese restaurant. More options for me is always good.

                                              7 Replies
                                              1. re: mimolette

                                                OMG, THANK YOU!!!!IDWOIFWOIQFUF
                                                An authentic chinese restaurant, right in cliffside park!!! NOM NIOM NOM NOM

                                                1. re: peanuttree

                                                  There is quite a weekend lunch crowd because that's when the special breakfast items are available, so go early! They also have cold plate duck, jellyfish, smoked fish, pressed meats, and even pastries (sweet bean filling, walnut and prune filling, salty radish filling)

                                                2. re: mimolette

                                                  Being chow-related, I'll comment. I'd wondered why a place called Shanghai Bun was being praised for the best Cantonese food. QUITE different.

                                                  1. re: c oliver

                                                    http://chowhound.chow.com/topics/766820
                                                    Shanghai Bun Restaurant
                                                    952 State Route 34 Ste 6, Matawan, NJ 07747

                                                    1. re: HillJ

                                                      So that sounds pretty Shanghainese . But it's billed by OP as Cantonese. I remain confused :)

                                                      1. re: c oliver

                                                        The OP is speaking "Chinenglish"

                                                3. As someone who has invested in restaurants and actually made some money from it, my advice for a first step would be to invest about $8 in getting Tony Bourdain's book Kitchen Confidential from Amazon. Then read the chapter "Owner's Syndrome and Other Medical Anomalies". Then read it ten more times.

                                                  2 Replies
                                                  1. re: nocharge

                                                    +1. Also 'Restaurant Man' by Joe Bastianich. This should dispel any notion that you can 'just hire somebody' to run a restaurant. Who would work that hard for a salary? Here is what I can guarantee you: If you do as you propose, you will lose the money you invest. If that is OK with you, have at it.

                                                    1. re: nocharge

                                                      PS Don't even have to buy it, just Google 'Kitchen confidential owners syndrome' and read it for free

                                                    2. Running a restaurant is hard work. Even people who work hard and are knowledgeable about the biz frequently fail. On the other hand, if you have plenty of money to throw down the hole, and perhaps the ability to fund a restaurant and pay a simpatico and expert manager (and the money and knowledge to keep him or her from stealing your shirt), sure, have at it. If you have people who are willing to invest, even better.

                                                      1. If you have enough money to fund this thing but don't want to work long hours, I'd say your best bet is to import an expert breakfast cook from China to be your private chef. It would be way cheaper, you would make that person pretty happy probably, and you would have the food you want. Of course, then you couldn't swan around in your own restaurant.

                                                        1. Be easier and cheaper just to hire your own personal chef.

                                                          (And, by the way, you absolutely *can* find the stuff you are looking for in Manhattan's Chinatown and if you go to the Outer Boroughs (i.e., Flushing) in spades.

                                                          1. Peanuttree, I am sorry you are so offended by the replies to your post. By asking if you were crazy to consider this idea as the title of your thread, I got the impression that 1) you expected there would be negative opinions, and 2) that you were up for a good natured discussion of your idea.

                                                            It seems that I read you wrong and perhaps others did as well. From your replies to people who have responded, it seems you really just wanted someone to tell you what you want to hear.

                                                            I get that you are okay with not making money on this venture. You have said you are okay with breaking even. What I am not clear about is how well you understand that breaking even would be a favorable scenario for an independant start-up restaurant. There is a world of difference between not making money and losing buckets of money from the start. If you are not interested in the possibility (many would say probability) of losing money for a good long while, then yes, IMHO, it is a bad idea.

                                                            Many of us CHers complain about chain restaurants everywhere. Well, why is it that there are more chains opening by far than independent restaurants? Maybe because a new chain location has the backing and security of a big corporation that can afford to lose money on one location until it is established. Most independents cannot do that unless very well-funded, or unless they truly can afford to flush money away.

                                                            You may not care for the way it has been expressed here, but I believe that is what people are trying to get aross to you.

                                                            Re your question about contracts, I cannot speak to all of your questions but as a partner in a property management and real estate firm that handles commercial leases, I can speak to the percentage of sales question you had. It is very common (at least in the state where we do business) that a commercial lease will have a base lease rate, triple nets (utilities, repairs, property tax, etc), and percentage of sales. Not profit--gross receipts. And yes, that aspect of the lease is as enforceable as any other aspect of the lease. Tenants are required to provide documentation of sales--daily receipts, tax returns, etc. I have known of tenants trying to cheat on their records...not a good idea as it can end up with problems with the lease as well as getting a department of revenue audit.

                                                            Whatever you decide, best of luck.

                                                            1. I have to agree with everyone else here that this is not a good idea. As others have said, breaking even IS success in the restaurant business. In some cases, even leaking money for the first five years is a version of success. And the kind of restaurant you're talking about -- a small, cheap but excellent place serving authentic regional cuisine -- is the very hardest kind of restaurant to pull off. It's usually done by the sweat and blood of a small, tight family (free child/spouse labor) with a genius chef in it, who've got no other options and make it work because they have to. And are you Chinese? Because I think there's also a pretty significant network of Chinese restaurant people who kind of show each other the ropes and help each other get started. If that's not available to you, it's a further disadvantage.

                                                              That said, I know of a group of Indian IT guys in Pittsburgh who did what you're talking about doing, and who now own a pretty successful pair of restaurants, both called Tamarind. None of them cook, but they pooled their resources and hired a really strong, experienced chef from India who worked up a menu of authentic Andhra dishes. These men had done their homework, though. Pittsburgh has a sizable Indian population and had only one good Indian restaurant up to that point, a divey dosa-iddly specialty place, so they knew they were filling a void. (Is there a large population where you live of people who would regularly buy the Shanghai Bun-style food you'd offer, not just try it a few times and then move on?) Anyway, all of these guys in Pittsburgh ended up having to work at the restaurant,-- cleaning, waiting and bussing tables, and sometimes even cooking. Two or three of them ended up being there every single day. It seems to have worked out, but I think it's been a long, hard road, and I don't know if they're actually making money even now. Some of the original partners threw in the towel long ago, and at a certain point, their wonderful chef got his green card, left, and set up his own place, so now they essentially have their own food as competition.

                                                              If you're seriously considering this move, why don't you see if you can make an appointment to talk with them some time (the Greentree location is the original, and where you'll most likely find the owners -- 412- 278-4848). Perhaps other Chowhounds can refer you to other people without food backgrounds who've invested in restaurants, too. I think they'd be the best to advise you. But, really, wouldn't it just be easier to ask Shanghai Bun if they'd open a Bergen County location? If not, find out why not. Maybe they're just waiting for the right silent partner...

                                                              1 Reply
                                                              1. re: ninrn

                                                                But, really, wouldn't it just be easier to ask Shanghai Bun if they'd open a Bergen County location? If not, find out why not. Maybe they're just waiting for the right silent partner...
                                                                ~~~~~~~~~~~~~~~
                                                                exactly.

                                                              2. Ok peanuttree, I was going to ignore this thread as it was clear to me that you have already made up your mind that you had a winner of an idea. You think my last comment was flippant and I didn’t understand the points you were making. I understood everything quite clearly. Remember, you asked the question wondering if your idea to open a restaurant was “crazy.”

                                                                I have to wonder whether you have worked? Are you in school? Do you know anyone that opened a restaurant? How old are you?

                                                                The reason I ask those questions is that the additional comments you made reveals a certain naivety about business and investing. Let me parse some of your comments.

                                                                “you don't have to be personally involved, just as much as any shmoe doesn't know how to build a jet engine but that doesn't stop him from owning GE shares in his mutual fund”

                                                                This is exactly why the any shmoe investor should never buy individual stocks and should just hold a standard portfolio balanced between equities and fixed income with the equity component invested in index funds. You do know the single biggest business at GE was GECC? GE Capital Corp is basically an investment bank. If some shmoe decided to buy GE stock 5 years ago because they were going to make the jet engines for Boeing’s new Dreamliner, well that shmoe lost a ton of money. On the other hand, if you understood GE and read its annual report, you would have known that a significant part of its revenue and most of its profits came from the securitization of various financial assets. Things like leases and mortgages on commercial real estate. If you knew that, you would have viewed the stock as a bet on the financial markets, not jet engines. Oh by the way, when you buy a mutual fund you don’t make any decisions about what shares the fund buys. That’s the job of the portfolio manager. The guy hired to do that job. If you are making a decision to buy shares in GE, then you buy it in your brokerage account, not in mutual fund.

                                                                “ Don't tell me I'm crazy just because In uderstand that there's such a thing as a person who can be hired (possibly with profit sharing) called a "manager"”

                                                                You say your parents are loaded. Another indicator that you’re young. How did they get that way? Did they become successful by not being involved in whatever business they were in? They just outsourced all the decision making and sat back and watched the money roll in? If so, then they should be willing to bankroll your idea. If otherwise as I would expect, try your pitch on them and see how it goes. I think they will express the same skepticism that you have read on this thread though they will be nicer about it.

                                                                “since I wouldn't be looking to make a huge or any profit, just recoup my costs/investment”

                                                                Again, what you have described is not an investment. If I ever went to one of my investors and said “I have this great idea, you invest equity in X, if it works out which I’m positive it will, you will get your money back and if it works out really well, maybe you will get a “low pay-back rate.”” My investor would politely show me the door and every time I called back, the assistant would tell me that Mr. $ is not available.

                                                                Now to deal with the requirements to open a restaurant. You seem to think it’s so simple to run a restaurant that will at least break even. How did you come to that conclusion? You have made a comment that you can find a “place that already has a kitchen and tables set up, of which there are plenty.” The reason there are plenty is that they have gone out of business. Clear indicator of the challenges to running even a breakeven place.

                                                                You quote $50-80k to start. Where did you come up with that number? My experience has been it takes a multiple of that amount to adequately fund a start up if you are not sweat equity with family members as staff not working for pay.

                                                                As others have noted, you need to pay for various start up expenses before you even open. That $50k may cover a bare minimum makeover of the space. You have to hire contractors to do this as it’s an investor backed place, not a chef owned startup. The first restaurant I was involved with was opened by a friend who is a phenomenal chef. He basically begged and borrowed money from all his friends and family. Then he got all of us to help him fix the space up. So we were investors and free labor. Painting and light carpentry were my roles. If he had to pay for the labor, his startup costs would have been a lot higher.

                                                                That staff you want to manage? You do know you have to pay them while the place is being made ready to open? Chef, manager, bookkeeper…3 months of time, there goes another $25k. This is part of an investor backed place as compared to the small friends and family backed place. So you’re $75k in the hole and the doors haven’t even opened.

                                                                That lease that you think you will cover for a few months rent? You don’t have an understanding of commercial leases. They are typically for multi-year terms. When you go to sign the lease, the landlord will look for a guarantor as the business has no revenues or track record. That guarantor will likely be you. If the restaurant goes bust, you will continue to be liable for the lease for the remaining term.

                                                                I’m not saying that opening the restaurant you are thinking about is a bad idea. You’re just doing it for the wrong reasons. The only way a restaurant stays open is when it’s run like a business to make money. Otherwise it will close up like countless others. The costs of closing a business can be just as much as opening if not more since you will have all the liabilities to deal with.

                                                                I'm done. Said all I can about this. Signing off.

                                                                2 Replies
                                                                1. re: Bkeats

                                                                  Yes you can sign off now Bkeats, because you have covered so many bases here, with all the wisdom of experience. Plus you picked up a lot more about the OP than I did.

                                                                  I've dealt with thousands of restaurants in my career, and one of my favorite sayings was "I've seen then come, and I've seen them go". I've heard the figure 10% as the amount that stay in business for five years or longer. Most people go into it like a hobby, or a fun thing; it's so far from that it's not possible to explain in detail. I took two semesters in college just to learn about opening a food establishment, and it was just the tip of the iceberg. You did a bang up job, Bkeats.

                                                                  Now I too will sign off, I've said my piece!

                                                                  1. re: Bkeats

                                                                    You have serious reading comprehension problems. I repeatedly said it's not about turning a profit. I never said it wouldn't cost any money. You clearly just want to jaw. Please stop posting if all you want to do is play "I'm smarter than you"

                                                                  2. If you don't care about losing money, yeah, go for it. Otherwise, why not take a few grand and go to China and learn to cook these dishes?

                                                                    1. Folks, we don't think this thread is going well, and it's getting worse as time passes. We're going to lock it now.

                                                                      1. So far, all the answers have been about the business aspects of trying this. But consider your culinary goals, then realize that if you open a restaurant, it will not serve the foods you crave. Just is not going to happen, except in chain places (and not all of those---the Palm chain/franchise does not duplicate the quality of food at the original Midtown East steakhouse). You think as an investor you can dictate the menu, but you can't dictate cooking skills or experience. Especially if you don't speak Chinese, and the specific dialect of your cook. You will get lots of head-nodding, then he will do it his way. (Paragraph) If your ideal restaurant is not near you, and this is that important to you, here is an idea: Move closer to the restaurant. Easier, and cheaper in the long (and maybe short) run.