This article was originally published in September 2021. we're reposting it now, as it was one of our most popular articles of the year.
People like to quote the old adage that 90% bars and restaurants fail in the first year of existence. But what they fail to acknowledge in that statistic is that ours is an industry filled with people who dream big. And, more often than not, those people come from industries outside the food and beverage world. I meet people all the time who ask me “I want to open a bar/restaurant, any advice?”
I used to joke that they should take half the money they were going to use to open their concept, put it in a trash can and set it on fire. (Okay, maybe half-joke.) It was just so hard to convey all the pitfalls of our industry in casual conversation. But truthfully, we need more big dreamers, we need new voices and we need people to succeed in this industry and create stable, independent bars and restaurants to support our communities.
So, instead of burning your money, figuratively or literally, let's explore the five mistakes that new owners make.
Poor Market Research
Market research is way more than just knowing your local competition and product. People fail in their market research because they get overly excited and move too quickly, before understanding the demographics and economics of a potential location. Do you know the median income of the area you are developing in? Do you know the foot traffic per day? How does traffic differentiate from day to night? Explore the area you’re interested in extensively at different times of the day, over the course of several weeks. Go into other local businesses and ask yourself: what types of audience are they drawing? When are their peak periods? When are they closed, and when are their slow periods? What products do they offer and how do they compare to yours? Most importantly, introduce yourself to the staff and ownership of the businesses around you and get to know them. They will be your best allies for word-of-mouth marketing, and potential resources for business advice.
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Not Understanding Your Brand
There are countless books, podcasts, and TED talks about establishing brands. With good reason. Building a solid brand is the most important thing you can do when establishing a new concept. Creating a brand is sometimes confused with creating logos, websites and other marketing materials. But in its true essence, your hospitality brand should serve as your guiding principle for making decisions. At Gorilla Cinema Presents we like to think of our individual concepts as people, and then we create a brand personality around that concept. If the concept was an actual person, what type of music would that person listen to? What sorts of things are they interested in? What would they eat? What would they drink? How would they talk? The more of a personality you can build, the easier it will be to answer fundamental questions about your concept. This will come in handy before you open, and as you decide what types of events to host, images to post, and products to sell.
Too Much Space
As an industry, we have a bad habit of viewing more space as an asset. We like to think in infinites. We tend to believe that the more space we have, the more guests we can accommodate, and the more money we will make. The reality of the situation is more nuanced, particularly for first time owners. Can you find the staff for a 4,000-foot space with 150 seats? More importantly, can you fill those seats and afford that staff over the long term? Hopefully you have done your market research at this point and know the local foot traffic numbers. This will help you set realistic sales expectations, especially after the honeymoon rush of being the ‘new thing in town’ has faded. Make sure you are staffed enough to provide great service in the beginning, while also being able to maintain that consistent staff year over year. And truly, this is one of the hardest things you will do as a new owner.
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Not Knowing Where to Compromise
A new owner will always go over budget. Don’t stress, most projects go over budget. Where new owners get into trouble is reaching the finish with no, or limited, capital left over. So be smart, and don’t spend all your cash reserves before you open. You will need them to cover you over slow times, and through unexpected costs. This is not to say you should open with a product you are not proud of. But rather, spend wisely. As you are building out, prioritize your spending on two types of things: those that enhance the guest experience, or those that will benefit your staff. Spend your budget on things that your customers will directly interact with, touch, see, or that makes the experience more enjoyable for them. The same thing goes with your staff. Put yourself in their shoes and create workspaces that work for them and make their jobs easier. Remember, no matter how well you plan, you will have to compromise at some point in this process. Put things into three categories prior to build out: Need, Want, and Wishlist. Start with your ‘Need’ list, and you can keep adding after your doors are open and revenue is coming in.
Not Planning for the Long Term: Systems and Training
The doors are open, and you have had your first successful service. Now what? Now is the time to document your processes! If you haven’t done so before opening, build a comprehensive training program, recipe book and brand guide. These don’t need to be hundreds of pages, but simple documents your staff can refer to, to better understand their jobs and train new team members. This will allow your guest experience to remain consistent year after year. Empower your staff to be a part of this building process. Listen to them about the challenges of their jobs, of what works, and what doesn’t. And finally, have a plan to provide them with further education so that you can continuously improve the experience for your guests.
Jacob Trevino is the Owner and CEO of Gorilla Cinema Presents, his concepts The Overlook Lodge, Tiki Tiki Bang Bang, The Lonely Pine Steakhouse, La Ofrenda and Tokyo Kitty have been featured by Conde Nast, Playboy Magazine, USA Today and The New York Times. When not operating food and beverage concepts or consulting for iconic brands he can be found at your local Emo Night spinning records under the moniker DJ DAD. Trevino has been a featured speaker at Bar & Restaurant Expo (formerly Nightclub & Bar Show).
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