Opening a Restaurant: From inception to reception

By Geordy Murphy and Christina Boyes

This easy-to-read volume includes everything you need to open and run a successful restaurant: 

• Checklists to help you through every step of the project and keep you on track
• Sample manuals, business plans, contracts, and more
• Tips on defining your public and designing your space
• Shopping lists

• Language: English
• Publisher: Opening a Restaurant
• Release date: Oct 30, 2015
• ISBN: 9780996347501

Geordy Murphy

Geordy Murphy is a restaurateur and restaurant consultant with decades of industry experience. His early successes include Wolfgang Puck's Postrio and Geordy's on Union Square in San Francisco, a restaurant that topped Esquire's Top Ten Best list. Geordy is also the Founder and President/CEO of the renowned Cypress Hospitality Group and of Fobesoft, where P & Ls are Served Fresh Daily. He's made restaurants around the world successful. Today, he'd like to do the same for you.

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Opening A Restaurant

From Inception To Reception

Contents

Publisher’s Notes

Disclaimer

Dedication

Acknowledgements

Preface

Chapter 1: From Dream to Reality: Defining your Concept

Takeaways

Checklist

Chapter 2: Size Matters

Takeaways

Checklist

Chapter 3: Real Estate

Takeaways

Checklist

Chapter 4: Design

Takeaways

Checklist

Chapter 5: Seating and Staffing

Takeaways

Checklist

Chapter 6: Labor and Check Average

Takeaways

Checklist

Chapter 7: Revenue

Takeaways

Checklist

Chapter 8: Budget

Takeaways

Checklist

Chapter 9: Business Plan

Takeaways

Checklist

Chapter 10: Raising Money

Takeaways

Checklist

Chapter 11: Sources and Uses of Funds

Takeaways

Checklist

Chapter 12: Construction & Your Lease

Takeaways

Checklist

Chapter 13: Timeline

Takeaways

Checklist

Chapter 14: Shopping and Selecting

Checklist

Chapter 15: Interviewing and Questions

Takeaways

Checklist

Chapter 16: Training

Takeaways

Checklist

Chapter 17: Handbooks and Manuals

Takeaways

Checklist

Chapter 18: Operations

Takeaways

Checklist

Chapter 19: Events and Catering

Takeaways

Checklist

Chapter 20: Marketing

Takeaways

Checklist

Chapter 21: Accounting/Fobesoft

Takeaways

Checklist

Chapter 22: It’s Opening Day

Professional Associations, Organizations, and Important Contacts

Geordy Murphy

Christina Boyes

Contributor Bios

James Famularo

Frank Miller

Bob Puccini

Melody Wendt

Christine Wayne

Faye Fisher

Additional References

Publisher’s Notes

Disclaimer

This publication is intended to provide helpful and informative material. It is not intended to provide legal or financial counsel, nor is it intended to replace the advice of a lawyer or certified financial professional. No legal or financial action should be taken solely on the contents of this book. Always consult your lawyer or financial dvisor on any matters regarding your business and before adopting any suggestions in this book or drawing inferences from it.

The author, writer, and publisher specifically disclaim all responsibility for any liability, loss, or risk, personal or otherwise, which is incurred as a consequence, directly or indirectly, from the use or application of any contents of this book.

Important Things to Know

Manufactured in the United States of America.

ISBN: 978-0-692-34575-7

Here’s the deal. You know plagiarism is bad. We’re just going to remind you of the basics before you crack into this book. No part of this publication can be reproduced in whole or in part – yup, none of it. That means you can’t photocopy it, record it, or reproduce it electronically, mechanically, manually, or otherwise, without the written permission of the publisher. Feel free to quote the material and cite it correctly, however.

©2015 Opening a Restaurant LLC. All rights reserved.

Dedication

To the entrepreneurial spirit that starts all restaurants.

To you – for taking the first step towards making your dream a reality. We’re looking foward to dining in your restaurant someday soon.

To our families, for supporting our dreams with love and patience.

And to the public, without whom every restaurant would sit empty.

Acknowledgements

A book is a monumental achievement. One that takes years to bring to completion. Geordy Murphy began this text nearly a decade ago, and lost it all when his computer died. Back in the day of the floppy, saving everything to a remote server wasn’t possible, and disks damaged all too easily.

The rebirth of this text is the work of a team of experts. Melody Wendt, Bob Puccini, Frank Miller, Christine Wayne, and James Famularo, thank you for your efforts and contributions to this book. Without you, the text would be missing tips and insider secrets that beginning restaurateurs will find priceless.

To all of the professionals and restaurant owners who we interviewed, your words are valuable. Thank you for sharing what you’ve learned as an ally to restaurant owners, or as a restaurant owner yourself. The lessons you’ve shared are sure to save future restaurateurs stress, time, and money.

Thanks to the crews at Fobesoft, Cypress Hospitality Group, Rusmexus Writers, and Intertwine Marketing for your individual efforts to make this book a success.

Geo extends special thanks and love to his wife Nancy and his children, Daniel, Lauren, and Alex, for their belief in his dreams, and their loving support as each new restaurant, business, and book is created. Thank you to the teams of every restaurant I’ve been fortunate to be a part of, and to the chefs, owners, and managers whose input and advice on this manu-script proved invaluable. Working with you all is an honor, and I am grateful for it.

Christina would like to extend special thanks to her husband, for tolerating late nights and ceaseless conversation about the restaurant industry. And her son – for keeping those tod-dler tantrums to a minimum while mom buried herself in research. You are both loved more than you realize. She would also like to thank Max & Erma’s for her first job in the restaurant industry, and Dowe’s on 9th for the one that changed her life. PJ, Chris, Scott, Renee, Al, Etta, Gabe, Gila, Steve, and all the rest, you are a part of this book. Mom and Dad, thanks for supporting my passions for writing and food – you were right on both counts.

Preface

The volume you are reading was inspired by calls for help from industry veterans – not just beginning restaurateurs. They came to me, wanting to know the answers to important questions, including:

•Could I run a set of numbers to see how much it would cost to build out 3000 square feet?

•If a restaurant owner wants to go raise money or take on partners and do a full-on start-from-scratch restaurant, how should they structure the deal?

Knowing that the people asking these questions were very good at what they did in the restaurant business was eye-opening. Despite their significant experience, they were never exposed to the end-to-end process of opening and operating a restaurant.

And then it hit me…what about the people who are new to the restaurant industry?

People like you.

The answers to these questions could prove invaluable. That epiphany was the deciding moment for me. I knew this book had to be written. I wasn’t sure when, though. After all, my schedule was packed. And it soon became even MORE full - I started Cypress Hospitality Group in 2002, and the calls from pros and novices in need increased. As a result, I started to consult on a few projects each year.

The experience I gained as a consultant, restaurant owner, and running Cypress Hospitality Group gave me what I needed to create a volume you can USE. Not a textbook that sits on your shelf unopened, collecting dust, and boring you out of the business.

This book is intended to guide you from A-to-Z through the process of opening an eatery in the most efficient and economical way. You’ll find tips I wish I’d known before I opened my first restaurant, and info on general business practices. From insider information and a few key recommendations to a checklist with hundreds of items to help you along the way, you’ll find everything you need to run a restaurant on these pages. It is my sincere hope that you see past those questions, and the hard work and long hours of food service to the fun side of the industry.

Restaurant ownership takes a lot of work and sacrifice, but it’s worth it. Without the proper training, it’s an industry that can exhaust you. This book will help you master it – you’ll have everything you need to open and operate your establishment as a profitable business, and the role of restaurant owner as a job you look forward to daily. It’s a great business, and a fun one.

Welcome to the world of restaurant ownership. I’m excited to dine in your restaurant someday.

All the Best,

Geo

I

Before you can open a restaurant, you need to have a clear idea of what type of place it will be. Will you serve sushi? Italian food? Chinese? Is your ideal atmosphere a gastro pub, or do you fantasize about a menu based on molecular gastronomy? Do you dream of a farm-to-table urban eatery?

The public has certain expectations when they enter a restaurant. You don’t expect to order a Caesar salad at a family-style Chinese restaurant, and you wouldn’t look for seared foie gras in a sushi restaurant.

So how do create your concept?

First, envision your ideal. Make sure that you can describe the restaurant in a very short phrase. If your description is more than a few carefully chosen words, you may need to work a little harder at defining the concept.

What’s in a Name?

Naming your restaurant can help define the brand vision, and it’s not a task you should take lightly. Choose a handful of names that you think best match your concept. Test them by asking a group of people from your target demographic which name they feel best aligns with the idea you are trying to portray. I don’t recommend asking them yourself, however. There are survey companies that will tackle this task for you and have methods that prevent the introduction of an accidental bias into the results.

What Are You Opening?

The modern diner craves hundreds of flavors and the possibility of creating a successful concept for your eatery is high, but you need to know what you want to open. From food trucks to trattorias, the world of the dining facility is changing rapidly. Trends, themes, and flavors are often subject to whim, and the public’s preferences can change as quickly as clothing and exercise fads.

The idea of theme-based dining was once very popular, but poses a significant risk. If you create a concept around a theme, be careful not to go overboard. You’ll wind up with a concept that falls under the been there, done that, didn’t bother with the T-shirt category. That’s not the way to make a lasting impact on the restaurant industry or create a business that thrives.

Carefully conceptualize your idea and the amount of time and energy you are willing to invest in the business. A food truck may only require a few hours of your time each day, but running a successful restaurant may require that you work 16-20 hour days at the start. How much time are you willing to commit?

Next, consider the type of food you would like to serve. The frozen yogurt store, dessert bar, and pizzeria are examples of eateries with extremely limited menus and (often little or no seating, but they can thrive in the right places. Do you picture yourself operating a full-service restaurant, a small café, or a franchise? The answers to these questions will make a significant impact on how you proceed from inception to opening day.

As the title of this book alludes, my primary focus is on helping restaurant owners. If your dream eatery is not a restaurant, don’t fret. You’ll still find information of value in these pages. I believe in creating the circumstances necessary for good food, a profitable business, and a happy owner, and if the answers to your questions aren’t here, just ask me. I’ll gladly help you on the path to a successful career in the restaurant industry, no matter how large or small your operation.

Pick Your Cuisine

Let’s go with a relatively simple and popular example. The American public loves Italian cuisine – pizzerias and trattorias number among the most popular eateries in the United States. The Italian cuisine sector isn’t limited to these types of restaurants, however. Northern Italian, Southern Italian, Coastal Italian, and Mediterranean with French influence are just a few of the many possibilities available to restaurateurs looking to open an Italian eatery.

If you choose to go the American route, are you looking at hot dogs and hamburgers, or sustainably-sourced and produced dishes with a European pedigree and a New World flair?

The public is fickle. They like what they are used to, or at least what they know to expect from a particular type of restaurant. As a restaurant owner, manager, or chef, your goal is to know your public. What will they eat? What do they love? What don’t they love yet that they would be willing to try? There are many ways to introduce new items to the public, but familiarity breeds comfort. If you decide to bring unknown foods into your menu, make sure to also offer items that are easily recognizable.

I’ve traveled the world in search of good food, and often found it. Unfortunately, the negative experiences are the ones that tend to stick. Some chefs open eateries with the idea that the public should like their food on its own merit, because it is what the chef wants to cook. They don’t research the market, and they don’t necessarily care about public opinion – a fatal flaw. Restaurants that adopt this attitude soon close.

One example comes quickly to mind. I love food, but sitting at a bar in a restaurant that appeared promising, I found myself perplexed with the menu. Nothing – literally NOTHING – caught my attention. I was surprised. The chef is a household name and of excellent quality, but the menu was too far from the norm. Instead of being fun and experimental, it disconnected with the public. The result? That restaurant is now closed.

Location, Location, Location

Location is the most important factor in the real estate market, but you don’t need to examine the socioeconomics of a neighborhood strictly to get an idea of why it matters. You need to look at the food being served nearby, too.

Don’t open a gastro pub in front of one that is well-loved and established in a community. You’ll be setting yourself up for failure. No matter what you serve, it will always be compared to the other pub’s standard. Open in front of a failing gastro pub, and you’ll encounter a public that is disillusioned with the concept.

Competition is great. Good restaurants thrive on it. Just make sure that your restaurant has a concept that is unique and differentiates you from the competition, or fills another need in the local market.

Familiarity Breeds Success (and Contempt)

If you are a trained Italian chef, opening a German ale house probably isn’t on your short list. If it is, it shouldn’t be. Go with what you know. You specialized in something; make it work for you. At the same time, be careful. You need to be familiar with your food. Your public needs to be excited by it.

Serving seafood from the coast is a wonderful concept. If you want your restaurant to be seen as an Italian-themed eatery, make sure to include a few go-to items, as well. Dishes that are stereotypical for your theme may not be as fun and exciting to prepare, but they will put butts in the seats. At the end of the day, that’s what matters. Choosing the right dishes can also define your image as a brand. For example, a menu based on coastal seafood dishes will peg you as a seafood restaurant, and not an Italian one. That is, unless you also serve pizzas, pastas, and other American Italian standard dishes.

Don’t breeze through planning your concept. Give it a lot of thought, and consider the pros and cons of each idea that appeals to you. Planning a good concept takes effort. If it feels too easy, it is. Many new restaurant owners and individuals interested in opening restaurants have difficulty defining a concept. To get a better grip on how to determine your concept, visit my website. I provide a downloadable PDF presentation on concepts for development. The presentation provides several conceptual ideas that you can use to help identify the details that make the difference in restaurant concept and design.

Don’t venture too far out of your comfort zone, however. By keeping the concept in your arena, you know that the details feel authentic. The public loves authenticity.

Let’s look at a sushi bar as an example. Finding a high-quality sushi chef is a challenge. Many restaurants are on the lookout for talent in this area. If you aren’t a sushi chef, you need to hire one that you can trust. If you find a talented sushi chef, your restaurant could be the best around. Don’t let everything revolve around the chef, however. You may wind up held hostage by their demands, and if they leave, so does your public. Ambiance, attention to detail, and a unified feel can save your restaurant in a scenario like this one.

If you are a chef, follow your passion. But don’t try to educate the public too quickly. You may love organ meat, but your public is probably intimidated by it. Introduce new foods slowly. Provide a safety net for people whose palates aren’t as exposed to new flavors and combinations. Give your guests a chance to play the foodie for their friends, but without stepping too far outside of their comfort zone.

Restaurateurs, make sure your chef cooks good food AND takes input. Your menu needs to include food that the public will eat. On Beale St. in Memphis, TN expect southern food – ribs and catfish are standard. New Orleans’ French Quarter comes with the expectation of good gumbo. Know what your public expects, and deliver. Add your own touch, and keep your menu exciting by including a few items they aren’t familiar with, but don’t overdo it.

Entertainment

Opening a jazz club? A night of live rap may not sit well with your clientele, although the blues might draw a crowd. An Italian restaurant that keeps American country music on the radio on will lose a few points for authenticity, too. No matter what your venue is, keep the theme together.

Live entertainment is great, but make sure you have the room for it. And don’t host belly dance performances in a Chinese restaurant. Aim to include details that provide your audience with the chance to enter a new reality. Think of yourself as a theatrical set designer. Your guests are the theater’s patrons. They have certain expectations that need to be met, or they won’t be returning. Music and entertainment are a large part of the ambiance. For many restaurant owners, live entertainment is also out of budget.

When is the last time that you went to a restaurant and noticed the music? Often, it slips our mind. If it stands out, the reason tends to be a clash in styles. For entertainment venues that serve food, make sure that the combination is appropriate. For example, jazz lends itself easily to a Louisiana-inspired cuisine. If you own an Irish music pub however, Dublin Coddle, Colcannon, and soda bread may be more appropriate menu items.

The Big Picture

The French painter Seurat was a part of an art movement called Pointillism. He painted full scenes using tiny dots. Seurat understood the importance of details. The same attention to minutiae is necessary for eateries of all sizes.

Once you have an idea of the concept you want to convey, be it French, Italian, sushi, or any other cuisine, you need to establish the feel. An organic restaurant with neon plastic décor probably wouldn’t appeal to the target market. Ease your customers into the concept of your restaurant by providing the appropriate details, both outside and inside. From your exterior décor to the floor covering you use in the bathroom, make sure everything screams your concept, and that it combines in an aesthetically pleasing way.

Choose furniture, lighting, and even silverware and menu printing (or lack thereof based on what your customer would expect. Try to visualize the experience that a customer has when they enter your establishment. From the bathroom fixtures to the food itself, you need to create a uniform feel.

And yes, bathrooms matter.

Some customers judge a restaurant by its lavatories. A friend of mine used the women’s room in a Tampa, FL restaurant and came out laughing. The painting of a naked woman in the women’s bathroom still has her talking and laughing.

In Erie, PA, a restaurant called Pufferbelly has been a community favorite for over two decades. The secret to the restaurant’s success is in its details. Pufferbelly’s owners built the restaurant in a decommissioned firehouse. Antique fire engine parts are used as elements in the décor – even suspended from the ceiling. The garage door exits for the fire engines were left in place and converted into windows. Period furniture from the firehouse’s operational days, badges, and photos of former firefighters, as well as a simplified menu with a down-home feel, are the restaurants’ draws.

Pufferbelly’s story is not unique.

Across the United States, a clear concept is the key to success for eateries ranging from the Josephine House in Austin, TX to the Stinking Rose in San Francisco, CA, and the details make all the difference. The part that many restaurateurs have difficulty with is uniting the details with the décor and food, and making sure that the location matches.

Before deciding on a location, determine your concept. Know your target demographic, and find a suitable locale. If your aim is to provide sustainable, organic cuisine, source your ingredients locally and use design elements that radiate the natural and organic concept. Do something that makes you unique and authentic. Grow herbs on a vertical wall in the eatery, refuse to use a paper menu, and define who you are in the tiniest details.

Your public will love you for it.

Takeaways

1.Define your idea, the best type of establishment for it, and your concept

2.Know the type of cuisine you want to serve.

3.Feed your public what they want to eat, but stay true to your concept and vision in the process.

4.Evaluate your location carefully.

5.Details may seem minute, but they add up. Pay attention to them.

Checklist

- Pick a concept

- Hire a designer/architect

- Talk with your designer and architect about the space, your needs, and what you want the customer’s experience to be

II

Once you’ve nailed your concept, or perhaps while you are still working on it, think about the size of your space. Size has more impact on a restaurant’s feel than many restaurant owners realize. Don’t assume it will be easy to find a space that meets all of your requirements quickly, though. Keep the following things in mind when looking for, or building the perfect location:

• A restaurant’s size is partially dictated by two factors: the desired location, and the available real estate.

• Design makes a major impact on the feel of your completed space. Choose your designer carefully.

• Your kitchen will take up 25-33% of your restaurant’s space.

• By law, you will be required to devote a portion of the space to ADA bathrooms.

• Your entire restaurant should be ADA and code compliant.

That’s quite a lot to keep in mind when hunting for the perfect location. Over the course of this chapter, I’ll break the information down into morsels that are easy to understand and recall.

Back of the House

The kitchen is where the magic happens, and it should be equipped properly. Give your chefs, cooks, dishwashers, and remaining back of the house staff the room they need to work. Make sure you have adequate food storage space, too. Just don’t go overboard. The smaller your kitchen is – within reason, of course – the more revenue you can generate.

You read that right.

Spoiling your chef with all the bells and whistles and a large kitchen is great if you have the extra space and cash to spend. If you don’t - and even if you do - spend wisely. A standard restaurant kitchen occupies 33% of the available floor space. Trim that to 25% if possible.

Why?

To maximize the seating in your restaurant. The more seats you have available to fill, the higher your potential profits. That’s not the only advantage to keeping your kitchen to about 25% of the total floor space, either. Kitchen equipment is expensive. Less unnecessary equipment equates to lower costs for outfitting the space.

This doesn’t mean skimp on the equipment you need. Make certain that your kitchen is correctly equipped to execute your menu. Just don’t indulge in the space and money-consuming extras that you don’t need. Remember, buying kitchen equipment is like buying a new car. Once you drive it off the lot, or install it in your kitchen, the value drops quickly.

Do invest in two things, regardless of your kitchen size – work mats and employee lockers. Your kitchen staff stands for long hours, and your floors must be surfaced properly to prevent falls. Offering comfortable work mats is a great way to increase productivity, maintain safety, and decrease worker fatigue. Your chef may never say it out loud, but he’ll be grateful for this touch, as will your cooks and the rest of your back of the house staff. It wouldn’t hurt to put a few work mats in the bar, either.

Employee lockers are a smart move because they minimize theft and keep your staff’s personal belongings from getting in the way during work hours. Make sure that lockers are kept locked, and that management has a master key for all locks. You need to let employees know in writing and keep a sign posted that says the lockers are company property, and that anything kept inside is subject to search in case of suspected theft, drug or alcohol policy violation, or in a medical emergency.

We’ll discuss the equipment options for a professional restaurant kitchen later in the book, but for now just keep in mind the amount of space that should be dedicated to seating versus meal preparation and food storage.

Code Compliance, Your Restaurant, and Your Restrooms

The amount of space you dedicate to a bathroom may surprise you. Each state, and occasionally individual municipalities and cities, governs the number of bathrooms required in a public dining facility. The American Disabilities Act (ADA also comes into play when determining the appropriate amount of space dedicated to bathrooms.

Before confirming any design or architectural plans, double-check to ensure that you are in compliance with ADA regulations and local building codes.

To be on the safe side, I recommend that restaurant owners include two bathrooms, even if your space could technically meet the code with one unisex ADA bathroom. ADA compliance requires ensuring that individuals who use wheelchairs can enter and use the restrooms comfortably.

Make sure to coordinate carefully with your designer and architect to ensure that the plans for your eatery meet municipal, state, and federal codes. For example, in Florida you are required to have one bathroom for each gender for every 75 seats. If you have 150 seats, you will need two restrooms for each gender, and at least one of each must be ADA compliant.

Bar

Think back to your concept. Does your space need a bar? If so, how big does it need to be? Do you envision your customers dining at the bar?

In a typical restaurant, the bar occupies approximately one-quarter of the space, including the bar’s seating area. If you decide to include a bar in your space, my advice would be to serve your full restaurant menu in the bar as well. Use Wolfgang Puck’s philosophy; give the people what they want, where they want it. This should be one of your key areas of investment, along with the remainder of the front of the house. Make sure that your bar is a part of the unified design of your space.

Where to Spend

At the start of this chapter, I warned you not to go overboard in the kitchen. Now I’m going to tell you where you should spend a little extra.

Look at your revenue generating areas. Spend in the parts of your space that customers will see. That doesn’t mean that you shouldn’t spend wisely on the back of the house as well – without a quality facility, your chefs and cooks won’t be able to produce high-quality product that generates revenue. In poorly designed kitchens, timing can also be problematic, which can decrease customer satisfaction.

Spend your money on a smart, economical kitchen and a well-designed and inviting front of the house. Make sure that the décor of your dining room, bar, private party room, and yes – bathroom, are welcoming and comfortable for the customer. These are all revenue generating areas.

Interview with an Owner: Lisa Paterson of Golden, Colorado’s The Briarwood Inn

I sat down with Lisa in the summer of 2014 to talk about the restaurant business. She acquired The Briarwood Inn in 2008, but the restaurant had been her father’s for decades before she took over. The Briarwood Inn’s charm is also one of its challenges – the old world feel has made modernizing an interesting task.

Today, the restaurant earns $2.5-5 million USD annually, hosts weddings and private events on a regular basis, and makes good use of its numerous indoor and outdoor seating areas. Lisa offered the following advice for new restaurateurs:

"OpenTable is a very powerful tool. I consider it a full-time employee. Build a database with it, practice smart email marketing social media using it, too. Today’s market is much more competitive. You have to spend more on marketing and advertising, and you can’t overlook publicity. TripAdvisor ran an article on afternoon tea at The Briarwood Inn that was very important to our business. Be careful when you enter