Business Plan

I am going thru the same process and have found a lot of helpful info on www.Restaurantowners.com. If you join there is a ton if great info. Good Luck.

I appreciate pointing to other forums, but it would be better to discuss here if there is relevant information to BBQ owners. We get questions a lot, but not enough answers (because they're going to other forums?)

Russ

I agree, Russ.

D, I appreciate the link, but you may have it wrong, that link redirects to a restaurants for sale page (remove the S). However, I AM famliar with the restaurant owner website, and you're right, it is very helpful. My question was more specific to BBQers, since there are numerous aspects to our service that are unique.

About business plans in general, and specific to my request, it is probably the most important overlooked item in starting any business, especialy a restaurant, and I don't want to overlook it. In fact, I want to go in a strong and as informed as possible. We've all heard the statement that 9 of 10 restaurants fail in the first year. Well, that's a myth. The reality isn't much better though. 1/3 fail in a year, with half of what's left failing by year 3 (meaning 2/3 of startups). Luckily if you survive year 3 only 1 in 12 fail by year 5, and if you survive year five you are pretty much set unless something dramatic happens to hurt you.

Of those who fail, more than 3/4 of them have no business plan, none at all, and of those who do, it is usually either weak or not adhered to (a plan isn't just for starups, its for following, maintaining and growing your biz). Of those who survive, however, it's reversed, 3/4 of them have a business plan and follow it. It's those kinds of odds that I'm looking at to improve the liklihood of success.

Second on the list was the operations manual. Yes, an SOP for you military vets. Basically, an instruction manual for every little thing you do, from prep to recipes to inventory management to cleanup, huring, firing, everything. The big franchise chains have them, and in fact is one of the things you are paying franchise fees for. The stats here are even more amazing, with an 80% failure rate for those organizations who have none, and an 80% success rate for those with. Amazing.

I'm not making these things up either. I got my data, indirectly, from NRA, Restauranteur Mag, and yes, RestaurantOwner.com (not ...ownerS.com).

So if you have a catering venture or restaurant, and have written and are using either or both a business plan and operations manual, I would love to pick your brain and learn from your experience/mistakes. And I'm certain that there are dozens of others who can benefit as well.

Thanks all,

Carl

Hi Carl,
I'm a chef, catering company owner, and restaurant consultant. You've got the right idea about an SOP, and your numbers are correct too, but I've got to tell you that this is the most HORRIBLE time in my life to consider opening a restaurant. Established chains have all but halted their new openings due to the recession. Unless you are absolutely sure that your situation is different, I'd strongly reconsider the timing.

Now with that said, if you have the resources available to weather the remaining economic bleak period, setting up now and getting your ship in order and name established before the turnaround(hopeful) is a great idea. But of the 100 or so restaurants that I have intimate knowledge of, none have had good years the last 2-3 years, and have seen their overall business decline and margins drop too. There are no exceptions in this group, spread out between Florida and New Your. The market will come back, but you might want to time your entrance carefully.

In the meantime, I know where you can pick up an 80 unit family steak and seafood chain cheap if you're interested.

Wow, Todd, you're the kind of folk I really want to speak with. You have excellent points, which I have considered, and continue to.

What I found most interesting are a few people, people who I consider "on the edge of crazy but also incredibly successful," tell me that now is the best time to start something, any business, restaurant or otherwise. The reasons are simple. Costs are at an all time low, real estate and staffing both, and governmental assistance is the most lenient as well. The vacuum of service and product left behind by those who failed provide an opportunity to succeed. Risk/reward and all that.

Another strong point was the idea that of buy low/sell high. We are at a low, probably at or near the very lowest, so now or soon is when to start, so that once things start to really pick up, if you are already lean and strong (which one MUST be to make it until then) you'll be in the thick. It's going to grow slowly once it really starts, and some say it already has, barely. So although the past few years have been brutal, I feel fairly confident, based on the evidence we have, that the future hold promise.

Anyway, Chef Todd, I'm all ears to anything and everything you have to share.

I'm not opposed to picking up an 80 unit steakhouse, and in fact there's an 84 unit bistro locally they only want $47k for, but not knowing their FFE I'm not sure even that is worthwhile. Their location seems to be the clear reason why they went under, so I certainly wouldn't want that.

And I have some financial projections that look promising, so I feel confident that this is very possible.

Seabass...

April 30th will mark my 2 year anniversary of doing the "crazy and insane" thing of having a business own me. Yes, I said that right, my business owns me. Perhaps even crazier, I wouldn't trade it for anytning (except a permenant house in the Bahammas) in the world.

Seriously though, making the decision to go onto business, especially the restaurant business, should be taken with all steps considered. By the sounds of it, you have looked to have done an ample amount of research and are asking all the right questions before making that final decision.

My number one recomendation to you is that you NEVER sacrifice quality over quantity. As all of us have dealt with, bad BBQ has as much as a reputation as good BBQ. You put out bad food people will let friends know about it. Perhaps more so than if they had a good meal. Always have YOUR mark on each plate that is served.

Second piece of info...projections for a new business are completly that...projections. Always be ready for the "sucker" punch. If you plan on $100,000 as a start-up cost, be smart and add 10%-15% to that cost. Construction and equipment cost can add up fast with "extras" that you may not have thought about when you put your original plan together.

One thing I did was created a cost sheet that included all start-ups (ie. construction, equipment, taxes, fees, labor, food , etc.) that i would have to contend with before opening the doors to cash flow that would start covering operating cost. Every few days I would go over the cost sheet and update to match new numbers and new cost that may have come up. This keeps you from being blind-sided and keeps you on top of where your money is going.

Also, offer your contractor an incentive to finishing the project early or on-time. I set an aggresive time frame for construction being done so that I could get my doors open. I offered 10% bonus for being done 10 days before our agreed date of construction was done. 5% for the day we wanted. They ended up being done 2 days after the agreed date. My win becuase I didn't pay out but they worked for it. I have heard horrer stories of construstion running months over due. That's possibly $75,000 in loss revenue because your contractor didn't work outside the "lines." The extra cost could be of great value in the long run.

As for what Todd said about the time to open. He's right. But you are as well. On the finanial side of things, loans and such, the time is right to borrow. However, your customers are the ones you need to think about. Are they willing to open their wallets to you? A good way to get the answer to this question is contact your local chamber of commerce for demographics in your area. What kind of money are people making in your selling area? Go around and collect menus from area restaurants and do cost analysis. Can your menu be affordable compared to the competition?

Hope this helps...have anything else feel free to ask...

Sean
www.kisersbbqshack.com

Sean,

Thank you for your exceptional post and comments. I've added them to my notes of important things to keep top of mind as I wade into these deep and fast-moving waters. Sincerely, thank you.

The CoC has a program called SCORE, where retired business professionals counsel and advise young entepreneurs on the art and science of starting and running a business. I've had one initial counseling session with them. As my financial numbers get tighter, and my business plan more filled in, I will schedule my second session with them to get an eyes-on evaluation of my documents and intentions. My last session was with two long-time veterans of the restaurant industry, and they pointed me in the right direction so far, as well as leveled me some grim reality advice on the dangers and struggles of starting a restaurant even in good times, never mind these challenging ones.

My next appointment will also be to gather the kind of demographics and market direction that I need to fill in the remainder of my financials. Hopefully in early January I can be ready to schedule my SCORE session with a retired loan officer, who can shred my numbers and my plan and assist me in putting it together in such a way that makes a lender or investor drool, or at least get hungry.

As for a lot of surprises, yeah, I've heard, from my SCORE counselors and others. Anthony Bourdain's Kitchen Confidential reiterates that over and over. Other books too. If anyone questions whether I'll be informed and prepared, all I can say is I'm doing my best, and I still expect to miss something. So yeah, surprises...

Construction is via my brother-in-law, an experience and quite capable GC. I don't know if that's a good thing or a bad thing, using family, especially in-laws, but he needs the work and it's good work he does, so I feel comfortable with that. Architecture is via an aquaintence/new friend. Similarly I don't know if that's a good idea or not, but I feel comfortable with him, and so far at least he's been very open to my desires and wishes, providing a vast amount of knowledge that I needed to get even this far.

The building is city owned, the first floor strip mall area of a downtown parking garage, and it's been vacant for over a year, so hopefully it will be in everyone's best interest to expedite this process. THe biggest problems are: 1. No back or side door, because the parking garage ramp is back there, and 2. it wasn't a restaurant before, so a change in use permit will be required.

Thanks again to all.

Seabass,

My brother and I opened two BBQ joints in the last 4 years. Great partnership – he is a great chef and operator; I do the build-out and books. The first was 350 SF takeout and the second is 4000 SF with 140 seats. The larger space started as a concrete slab, electrical panel and a couple of water lines. Start of construction to opening day was only 11 weeks.

Sean is on the money when it comes to construction. The only thing I would add is remember it’s your money and you are the ultimate GC. Build a detailed project plan with milestones, review it with the contractor and make sure you stick to it. I was in the building every day. I only paid on milestones with a 10% holdback until 2 weeks after we opened. Delayed opening can cost 10’s of 1000s of dollars.

Another area of focus were the town planners, fire marshal and health department and other organizations responsible for inspecting and approving licenses to allow us to open. We met with each organization while we architecting the restaurant to ensure we were following all of the codes and met all of the requirements. Changes during planning cost pennies compared to the cost of changes required after construction is complete. We continued to follow up weekly with each group. Everyone we worked with appreciated our efforts and put in extra time throughout the project to help us be successful.

You didn’t mention if you had cooked professionally or managed the front or back of the house. If you haven’t run the back of the house then find a partner of someone you can trust. We had written processes for almost everything but we would have lost our (pork) butts if my brother didn’t have his hand on the rudder at all times. More than once something went wrong and Chester pulled it all back together.

What about equipment? I found a used restaurant equipment dealer, brought him lunch and picked his brain for a couple of hours. Restaurant equipment is virtually indestructible and we are self-funded so we bought everything used. I even purchased 160 seats of wooden booths and tables on eBay for pennies on the dollar.

We installed a state of the art POS system, capture all of our food, paper and labor costs and do a monthly review to ensure we know what is working and what isn’t. Remember that SOMETHING is going to go wrong and the sooner you find out you can fix it.

We use Paychex for payroll and have a local bookkeeper to make sure our taxes are straight. Both investments are worth it to us so we can focus our energies on things we are actually good at – like maintaining quality and building the clientele. We also added a group health plan this year to help with employee retention – always a challenge in restaurants.

Last, or maybe first, try to make sure the location will support the BBQ and price range that you are targeting. Location is critical. A red flag for me was when you mentioned the space had been vacant for a year. What was the last business and why did the last business fail? Don’t start with one strike against you.

Hopefully this stream of consciousness helps.

Best of luck.

Skip
www.chestersbbq.com

Skip,

Thanks for your post. It was very encouraging that everything you mentioned is already in my top-of-mind notes; not that I'm that smart, but my architect/friend has 10+ years experience building restaurants in town and has held my hand through the early planning stage, really filling me in on things like those you mentioned, fire marshal, building department, health department, city counsel.

Used equipment, except for the new POS, is something I was going back and forth on. I am strongly considering leasing some big kitchen items (range, low-boys and walk-ins), but buying used furniture and smaller items. The idea is to keep the initial investment dollars as low as possible, and leasing will do that. Leasing also allows new equipment and pre-paid service/repair. But I don't get depreciation either, and continuing costs are higher (excluding maintenance and repair), so there's the trade-off.

I buried myself in the details of POS for 2 weeks in November and decided that a brand new POS fully featured and integrated wasworth the money, for improved efficiency and integrated management. I am leaning heavily, almost exclusively, toward NetPOS with a WhenToManage back office setup. Cost and functionality push me this way. Constant updates, online scheduling, anywhere managing/analysis, even online ordering for customer convenience.

My location is downtown on "restaurant row," where the "high-rise offices" are (funny, 20 stories is about the tallest building in town). It should support the number of covers per day I need to be viable.

The location was NOT a restaurant before. It was a 6000+ sqft bridal shop on the first floor strip mall in a city-owned parking garage, of which I only want 2000 (it has already been subdivided). There are no restaurants in my part of the strip, but across the street is a bar-and-grill and there are 4-5 restaurants in view from there. The physical therapist next door said the sidewalk is jam-packed during the lunch rush.

I have "professional cooking experience," in McD's, Domino's and Little Ceasers. Not exactly the most useful, but better than nothing. My strengths are processes, efficiency analysis, workflow and training. I have written technically professionally, operations plans and manuals for software companies, production facilities and even the DOD. I follow instructions closely and write instructions where there are none. I then nit-pick and refine them until time, volume, quality and consistency of production meet requirements. In short, I'm a process and efficiency analyst with technical writing experience. Or at least, I was.

I'll have to rely on a good manager, but I have 3 friends-of-friends who are trained chefs to rely on for recipes that I don't have, and teaching me tecniques I need (I've already touched base with them on the subject). One of them might even become my manager, so best of both worlds.

Thanks again to all. Keep it coming guys.