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Wisdom from the pros on restaurant success
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Wisdom from the pros on restaurant success
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| Photo l Felicia D'Ambrosio |
| L to R: Paul Kimport, Munish Narula and Alfredo Aguilar |
Last night, community development corporation The Girard Coalition hosted three of Philadelphia's notable restaurant owners for a panel discussion on what it takes to survive and thrive "in the biz."
Munish Narula (Tiffin), Alfredo Aguilar (Las Cazuelas) and Paul Kimport (Standard Tap, Johnny Brenda's) shared their accumulated knowledge with a diverse group of would-be restaurateurs. S.C.O.R.E., a free, nonprofit small business counseling service, facilitated the discussion and added "the lender's perspective" to the workshop.
The discussion ranged from acquiring financing (be prepared to personally guarantee all loans with your own assets, and you better have 20 percent of what you are asking for on hand) to the thorny problem of employee healthcare (anything you offer, you must offer to every employee). Though the discussion covered more topics than we have room for here, find the most critical points below.
The Business Plan Is All
Every restaurant owner could not over-emphasize the importance of having a well-developed business plan, including projecting the numbers on best and worst case scenarios. "Too many people run through all of their start-up money just to get open," said Narula. "You have to have enough money, and a plan to obtain more, to pay your employees and vendors for at least 18 months to two years. Sixty to 70 percent of restaurants fail in the first two years because they did not have the money to sustain operating losses."
Clarifying and expressing your ideas in writing, in the business plan, is critical to obtaining initial financing. "Every idea you have," said Kimport, "bounce off other people, finance professionals especially, and vet every idea. You have to defend your ideas and let everyone insult your precious plan to make sure they are solid."
Start Small
All three restaurant owners took the hammer-in-hand approach to opening their first restaurant. They all advised doing as much yourself as possible, as well as shopping around for used equipment, which can save thousands of dollars � except on refrigeration, which Kimport pointed out "you want the warranties and service for, because refrigeration is both tricky and critical. You could lose thousands of dollars in inventory if you have refrigeration failure."
Aguilar stated that he started Las Cazuelas with just one small dining room, then when word spread and guests started waiting an hour for a table, he expanded to a second dining room, using savings from the restaurant's cash flow. He later expanded once again to an upper floor, and purchased the building he was leasing. "Organic growth" and "sweat equity" were the watchwords for all three entrepreneurs.
Know Your Numbers
Narula's background in finance has served him well in operating Tiffin, evidenced by his brand's rapid expansion. "Too many restaurateurs do not know their numbers," he said. "If you don't know your expenses, your food cost, your overtime, you could have a very successful restaurant and still not make it." Though all three owners had extensive experience (15-20 years, on average) in restaurants before they struck out on their own, due diligence with the numbers, not cooking a mean omelette, was what kept them showing profit.
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