Considering cafe start-up - resources? ideas?

[cilla4progress]

I got laid off again this week. I am looking into taking over a bakery / lunch spot in my small town that was at one time successful, but failed for various mostly management reasons.

My only work in food service was 25 years ago waitressing in some nice places in our area. Grew up going out to fine dining places (family hobby) in New York City, Cape Cod, etc. Have dined a lot in nearby Seattle, a treasure trove of good food. Husband baked professionally for a short time years ago. I believe I have a fairly developed sense of what is good. I love to cook and am good at it. I think I am developing a sound plan.

My niche will include location - there is city park across the highway - captive audience in the summer (only lunch spot in town), and same for winter tourist traffic and city, school employees. Building is an old cinder block gas station. Funky, unique, unpretentious. I want to do the same with food. Can I get away with simple, good, consistent food? Nothing fancy, but fresh, healthy, and delicious? I have my own personal repertoire of items that have been popular with family and friends through the years, but never baked or cooked commercially before!

My primarily concerns are 1) start-up costs; 2) segregating our family's assets from the business; 3) how much work / hours it would entail; 4) how to make it profitable, or at least sustainable, cost of goods sold / income and return business.

I would love to hear your thoughts and suggestions!

Thanks!

[Auggie]

1. My wife owned a cafe for five years

The second-happiest day of her life is when she opened it. The happiest day of her life was when she sold it.

She was netting, for herself, about $20,000 a year at peak. The most trying part were employees, employee turnover, and the constant need for her to be present from 7 to 5, six days a week.

I think her suggestion to you would be to work in a cafe similar to the one you want to run to find out what works and what doesn't.

[cilla4progress]

3. I know that's good advice.

I don't know that I have the luxury...the building will sell before then.

$20K / yr. would be beyond acceptable for me! Sorry to say?

If cafe was only open 5 days a week, would that save the 6th, or is there prep, etc. on the 6th?

I do think I need partners /investors, an employee or 2. Want to stay small. Don't know if that is realistic.

My plan is to get my supplies from the local food stream, local producers. I lived in a rural part of Washington state and there are lots of growers, strong local food movement here. Also part of my "brand."

[Auggie]

7. The prep was done the day before

She was open 7 days a week, so prep was ongoing. That's why she needed good staff to ensure things were done right on her day off. If you were open 5 days a week I think you'd have to come in for half day to prep, especially if you're baking your own stuff. My wife had 4 1/2 hours from opening before the lunch crowd trickled in. She couldn't prepare her entire lunch menu in that amount time.

Another thing about being closed for 2 days -- leftover food spoilage. You might find yourself throwing away produce/meats/dairy you might otherwise be able to sell.

At first my wife bought all her breads, muffins and desserts from the food service supplier. After a few months, as she got the routine down, she started to make some of her own baked goods, eventually making nearly all of it. I think anyone would tell you to start off simple and add.

Since you're getting most of your food raw, you're going to spend a lot of time of time in prep, maybe more than makes sense. Local producers mean your menu is going to have change seasonally too. And you're going to have to coordinate food delivery so it comes at the same time, or at least so you have everything at the same time you need to cook with.

All of us here applaud your plan. Read up on it before you commit. Be ready for long hours. And good luck.

[cilla4progress]

8. Fabulous ideas!

May I keep you posted?

[Auggie]

9. Please keep us all posted ...

I had the pleasure of watching this from afar, and am hardly the expert. So please, seek other advice.

I am impressed by the need for routine, at least from my wife's angle. Knowing exactly when the food deliveries would come, exactly what you were serving everyday, and when everything had to be done by when kept things running pretty smoothly.

One more caveat: you'll probably have to work when you're sick. Colds, flu, cramps .. my wife worked through all of it.

[cbayer]

2. Tough work, I do know that.

When I started my own business (not food related), I found some great resources at the library. There were books that helped me answer the questions you are asking, including worksheets to determine the risks/benefits. They also went through all the possible scenarios for whether in incorporate, etc.

Some were also state specific, as the rules can be quite different, and those helped me assure that I understood all the necessary paperwork, inspections, tax laws, etc.

Having you own business can be so rewarding and it worked out great for me, but it's not without risk. You will always be the last one paid.

[kentauros]

4. Some of your primary concerns could be answered

by finding any message boards for people in that business. I know I've come across boards just for chefs, and often they're talking about the operation of their business. That could be a better source of information on running a business.

And does the Small Business Administration make loans for restaurants? I know banks are highly reluctant to make those kinds of loans, so the SBA is the better choice for start-up funds.

Find used restaurant supply businesses in your area for your equipment. New is good for some things (like say, the grill vents and fire-retarding system.) If it's a major piece of equipment that's bought used, you might have to get a professional to check it out before putting it in. Some of the workhorse pieces, such as Hobart mixers, don't wear out very fast, and are relatively easy to maintain.

As for workers, a cafe here that I frequent (and have become friends with the owners) doesn't have a high turnover rate for their employees. They treat them well, and have only gone through employees due to them wanting to move on, or were there temporarily to begin with (one of them now owns a gelato business in Houston's richest mall, The Galleria, and another is an engineer now.)

That's cool your husband used to bake for a living. I did as well as one time, and why I know a little about the industry, too

[Major Nikon]

5. Book recommendation

http://www.amazon.com/Flour-Water-Salt-Yeast-Fundamentals/dp/160774273X

You may have already read this. Forkish details his role from cube rat to professional Artisan baker.

[cilla4progress]

6. You guys are all AWESOME!

I have been talking to former owners of this cafe. I feel like I am starting to get in a flow, develop my niche in a location and size-appropriate manner ("branding" - have used that term more in the last 24 hours than in my whole life previously!).

I have an appointment with SCORE tomorrow - the volunteer non-profit associated with the SBA. A few other calls to make today. Oh, and I'm also going to bake a plum / nectarine flat pie / galette / crostata for my toughest critics: husband and daughter.

Thank you!!

[Nac Mac Feegle]

10. There are a lot of things that go on behind the scenes.

Last edited Wed Sep 4, 2013, 09:03 PM - Edit history (1)

You'll have to learn everything about the phrase "Food Cost". That isn't just how much the flour, oil, water, yeast, and salt that go into a bread costs, but how much does it cost to run the oven, the mixer, the proofer, the lights, the water, and your time.

Sanitation is another area of concern: You have to know that certain items not only have to be stored at certain temperatures, but they have to be stored in a particular place. (e.g: raw meats are stored lowest in the refrigerator, so they can't drip juices on anything else.) The health inspectors drop in for surprise visits to check you out, and everything has to be perfect ALL THE TIME, or you will get dinged. The sanitation rules are there for a good reason: You know where you've been you don't know where that customer has been.

Then there are the things that you have to do to the facilities to pass inspection. Sanitizer buckets close to the work area, hand wash sinks, floor coverings, dishwasher temperatures, record keeping for certain ingredients. (Keep the tags from the bags of clams for the correct amount of time, etc...) Just a few examples.

It isn't easy. It's a LOT of work.

50% failure rate after one year. Of the remaining, 50% failure the second year. Another 50% failure rate of the remaining in the third year. After that, you're pretty much established, and failures after that are usually due to things such as a critical person getting ill, dying, a fire, the city deciding to do major road work that cuts off all access to your business, a new highway that bypasses the town, that sort of stuff.

But if you consistently have a good product that fits your market and a good price, you can make it. You have to remember to know and control as many variables as you can. What happens if tomatoes go astronomical in price, and your biggest seller is a fresh bruschetta appetizer?

You might want to watch a few episodes of Restaurant Impossible and Gordon Ramsay's Nightmares to get an idea of what to watch out for. Those are extreme cases, but you might learn some tips of what behaviors and situations to watch for.

And you still might get hit by a meteor on the way to work.

But if it all comes together, then you have Something Special. You can become The Place To Go for lunch whenever someone is in town. And make a decent living at doing something you enjoy.

Whatever you do, best of luck. It isn't easy, but it can be done.


Just to explain why I made this kind of warning post:
My hobby is cooking, and I had an opportunity a few ears ago to get a Culinary Arts degree paid for by my company ( Live better. Work Union ) There were a lot of non-kitchen classes, mostly dealing with the business part of the industry. I want to give you an idea of what goes on behind the scenes.
My hobby is cooking,

[Auggie]

12. +1

[cilla4progress]

14. Nice -- Thanks!!

[Phentex]

11. Hey! Glad you made it over...

there are a couple of others I expect to chime in so yes, please keep us posted.

This is a great group for recipe ideas and methods. I think you'll find it very helpful!

[msanthrope]

13. A note on the business aspect--I suggest you take a class and

really, really put as much effort in the financial set up as you do the food set up.

When I used to do bankruptcies, I found that many small business owners made fatal mistakes when they conflated personal and business accounts, and, when the business went south, tried to use personal funds to help prop a failing business because they thought they would 'make it back.' They never did.

My husband's grandfather always told me to use other people's gelt when running a business. So loans that do not encumber your personal assets are something to look into.

[cilla4progress]

15. Thanks!

Just met with a SCORE volunteer and she said the same thing. Recommended I spend the next month developing my business plan, 1st, then financial plan.

[BlueToTheBone]

33. SBA has a plan layout on their

website. It's an excellent tool.

[japple]

16. I wish you luck if you decide to procede with this venture,

and hope that you'll keep us posted if you do. It sounds exciting.

[cilla4progress]

17. Thanks.

Just a little worried about the sacrifices I will have to make for it to work. Don't know if I can commit so much time and energy at this stage.

[Jenoch]

18. I agree with others that say you should

pose your questions on a forum for restaurant owners, I am sure there are some out there.

I have cousin who opened a small coffee shop/cafe/restauant in a small Wisconsin town. She is open 7a to 10p Monday through Saturday and 10a to 9p on Sundays. Her place has been open for over two years so she has beaten the odds. I don't know how she has done it. I know that she put in 18 hours days for a long, long time. She even had a pillow in her car (parked behind the building) so she could get a nap in when she really needed it.

I think the key for her success so far was in getting an experienced cook who could help with food ordering and help manage the others in the kitchen and she finally got someone she could trust to run the front of the house and could close up at night.

Frankly, I asked her why she open so much and her answer was if we're there in the back doing food prep, we can serve people breakfast and coffee. She added a drive through for coffee.

She also has a wine and beer license so she might be going after a differnet niche than you plans.


Good luck to you.

[cilla4progress]

19. Thanks!

[noamnety]

20. My suggestion:

Maybe it's not necessary if you already have a captive audience and not much competition in your area, but another thing that can help distinguish you and get you loyal customers is to have some consistent vegan dishes on your menu and put a little symbol by them, or have a vegan dedicated section in the menu. Something that guarantees there's a real selection for them. I know that's a relatively small segment of the population, but there is an even smaller selection of restaurants they can eat at and get a well rounded meal.

[cilla4progress]

21. Definitely.

And some gluten-free offerings, as well!

[HeiressofBickworth]

22. You need to consult an attorney, an insurance agent and an accountant

The attorney will help you with legal matters -- like incorporating in order to shield your personal assets and allocating responsibilities and rights to your owners and corporate officers. You will need to obtain a Master Business License as well as any food-handlers licenses the state requires. You will need to check your zoning laws to be sure that your type of business is zoned for that location. Your place of business will need a certificate of occupancy from your town -- certifying that the place is structurally sound and won't fall down when people enter the building. You will also need a business license from your town. If you plan on serving beer or wine, you will have another round of applications and inspections for a liquor license. You will need to have a discussion with utility companies to be sure that location is appropriate for the increased utility supply and discharge that may be needed to run the business. At attorney will also advise you on personal guarantees you may be asked to sign in order to borrow start-up money. You will also be instructed on how to sign on behalf of your business in order to prevent you from becoming personally liable for business debts.

The Master Business License application will register you for excise taxes, workers' compensation insurance and unemployment insurance for your employees.

An insurance agent will let you know how much and what kind of insurance you will need for your business -- in case of injury or illness of a customer caused by your product or in case of injury or illness to your employees.

An accountant will give you information on how to set up your books in order to create a record for the payment of your taxes at the end of the year and will advise you of your tax situation.

And yes, don't mingle your personal funds in the business -- creditors will be able to access your personal funds.

And, remember, this is also supposed to be fun -- you doing something that you really like.

You just need to be sure the paperwork supports you in the process.

[cilla4progress]

23. Oy!

So here's where I am in my evolution about the idea...

SCORE advisor was very helpful. I think the idea is doable. The primary question I need to answer for myself is: am I willing to sacrifice my personal life, time for this venture for the next 2 years minimum? That is, it will take all of my energy, time, and funds.

I've had some folks try very hard to talk me out of it in the last few days - folks who've been there.

Perhaps I should look at working at such a place, rather than owning it. I've been told restaurant partnerships are rarely functional.

I think I could use some overall career advice at this point. Going to go looking online.

Thanks, everyone!

[Phentex]

25. A lot of people do that with the exact intentions of

opening their own place. I think it's a good idea if you've got the time to do it.

[BlueToTheBone]

34. I think the only business harder than manufacturing

is restaurants. We have owned our own business for almost 30 years and everyday is an adventure (whether in learning, being ripped off, manufacturing failures, employee problems, you name it) and it is still an everyday job. For us, it is a lifestyle, not necessarily a living.

[sir pball]

31. I've always been told, the only person who will ever get rich off your restaurant..

..is your lawyer.

It's pretty much true, too.

[spinbaby]

24. My father in-law went bankrupt

He sold a successful and invested the proceeds--over a million--in a small restaurant and catering business. Went bankrupt some years later. You name it, he did it wrong: sloppy bookkeeping, bad hygiene, too much processed food, bad signage. Owning a small eatery is a fast way to lose a lot of money. That said, I envy you and wish I lived close enough to help. Good luck.

[cilla4progress]

26. Nice thoughts!

Thank you for your input!!

[pinto]

27. Wish you the best with your venture. Will echo the comments - it's a lot of work &

to keep personal and business accounts separate as much as possible. I helped relatives operate a restaurant in DC. Waited on tables and did the payroll. Learned a lot about the front and back aspects of the business, and how important it was to pay attention to detail, detail, detail.

Loved it. (But must say there were nights I literally slept in the restaurant to get the payroll done and be there to help with opening in the AM.)

A great experience. Best of luck.

[sir pball]

28. Startup costs are almost always astronomical, and the work is...insane. Not that it's a bad idea!

I've been in this business long enough to have opened a few places, and managed quite a few more, so in addition to this excellent post, here's the two biggest things a lot of people don't consider as seriously as they should when they start up a joint...

Money and LOTS OF IT. Even if the place is "turnkey", all appliances working, and you don't need or want to remodel or replace anything - you're looking at likely $75K+ in startup money; either buying out the lease or signing a new one, buying all the miscellaneous equipment and furnishings you'll need (in 17 years I have yet to see a place for sale that includes the pots/pans/plates/tables/chairs/etc), and enough cash to float at least two months' operations since a lot of purveyors want you to pay COD for a while before they give you an account. If you form an LLC you should be fine in terms of separating personal and business assets but your lawyer will be better for that.

And the work. I hope your family is also willing to be there as well because you will be easily spending literally over half your life (85-90 hours a week at least) there. You will likely never take a vacation, or have holidays or weekends off, or quite seriously have much time to do anything other than go home and sleep.

I could go on, but funnily enough I have to get to work. I will say this, in all honesty - "I'm a good cook and love it!" alone is kind of not the best reason to open a place...the cooking itself is maybe 10% of the job, as the other big post says, the business and non-cooking aspects of a restaurant are the towering challenges. I'm not saying you shouldn't do it, it sounds like a workable location and plan, but I would strongly suggest finding an experienced general manager, if for nothing more than consulting work.

[cilla4progress]

29. So helpful!

Could this scale down for a place with only, say, 8 tables, and breakfast / lunch business only?

[sir pball]

30. Oh yeah, the basic rules are the same from 25 seats to 500.

It's pretty much the same challenges and unknowns no matter what size you are - sure, at the very large scale you can run into logistics issues but the basic business remains the same regardless. I'll elaborate more later if you'd like, but I'm on a break at work right now so I have to keep it short..

[grasswire]

32. my family member who owned a coffee-house cafe worked like a dog

Many nights he slept in the place, on a couch. He took over this place; it was an established business and popular. But two people, a couple, had run it previously. He was only one. He baked at 4 a.m. Supervised 6 employees. Did the front and the back business. Became more and more anxious and exhausted. Two years later he had to walk away, losing his investment of sweat and money. When that downward spiral begins of being swallowed up by the work and the debt, things spin out of your control.

Watch Restaurant Impossible episodes.

[cilla4progress]

35. Definitely...

my fears.