How Not to Run a Start-Up Restaurant

Writing this post for those who’ve asked for advice on starting a juice bar.

Recently received an e-mail from someone opening a raw food/juice bar in a small Montana town.  She asked six juice bars from around the country to each provide her a couple of drink recipes.  Excerpt of her e-mail:

“A few years ago I attended Allisa Cohen’s raw food teacher training program, and last summer, I spent a month studying at the Matthew Kenney raw food academy in Oklahoma. In spite of my familiarity with raw food, I am heightenedly nervous about providing juices and smoothies that my Montana customers will like.”
She lacks confidence in her cooking skills. She lacks confidence because, in spite of her (likely useless, counterproductive) raw food education, she doesn’t know how to cook.  She can probably follow recipes, but she can’t cook, at least not for a restaurant. First paragraph of my response:

“But you live in a different region.  You’re dealing with different set of suppliers, prices, ingredients, palates, etc.  Unless cost is irrelevant (people are willing to pay anything for your products), or you have a sophisticated supply chain and food preservation system (like what Subway, Evolution Fresh, Jamba Juice have), you can’t be using recipes from different parts of the country.  Food business doesn’t work like that (unless you have sophisticated supply chain…).  I saw a juice bar fall apart immediately because owner thought she could use her favorite home recipes at work.  So she ended up with one drink made with red grapes, another with green grapes…too complicated and fussy.  Doing it this way, she had to price each drink differently and made produce shopping and employee training a nightmare.”

In other words, I told her that she doesn’t have the right attitude and mindset to run a start-up restaurant that’s trying to introduce a new concept to community.  Nor is she focusing on the important issues. Anyone who thinks running a successful restaurant is primarily about having the “right” recipes and friendly service should not open an unbranded restaurant — they’ll likely be crushed within a month.  These are the people who think that grandma’s meatloaf recipe, if just given a chance, will make a million bucks and make grandma famous (I’ve been offered several recipes that will supposedly make me “a million bucks”).  These people think running a restaurant is like hosting a 12 person dinner party, that the only difference is scale.

So what does it take to run a start up restaurant that’s introducing a new concept, new brand?  I’m still not sure but here are a few guidelines I’ve learned to follow.

Product is secondary, sometimes irrelevant.
Ever wonder how restaurants survive, even thrive, despite shitty food?  For instance, I’ve wondered about 13 Coins, Jade Garden, Buca Di Beppo and many others.  Or why restaurants that serve extraordinary food don’t survive?  The reason why we’re surrounded mostly by bad to mediocre food is because the quality of the product is secondary, and sometimes it’s irrelevant.

So how do restaurants get people to pay for, over and over again, shitty food sometimes paired with ridiculous decor and irresponsible service?  In some cases, they get away with it because that’s what their core customers are accustomed to and ultimately, taste is subjective.  People are creatures of habit, and if microwaved pizza is what they’ve eaten everyday for past 20 years, that’s what they’ll probably do for the rest of their lives, even if they hate it and acknowledge there’s much better pizza available.  Other restaurants, like Hooters and Buca Di Beppo, distract customers away from the food with kitsch.  A lot of Chinese restaurants lure customers with mounds of comfort food at low prices.  13 Coins thrives by attracting those who are either too tired or drunk to give a shit (open 24 hours!), or are easily impressed with exorbitant prices and faux upscale decor in diner setting.

People make choices about food based on interplay emotions, perceptions and rationalizations.  There’s peer pressure, there’s yearning for childhood memories, there are negotiations of social identity, there’s the comfort of habit.  There’s fear of the unknown, of pain, of failure.  There’s confusion about which “expert” is right, which is wrong.  There may be subconscious desire for self-destruction, a slow, hedonistic death.  Most decisions aren’t made based on objective standard and quality of food (taste is subjective, but quality is not).

The point is, it’s not the product that sells, it’s the hopes, aspirations, values, and lifestyle the product represents that people are purchasing.  That’s why it’s far more productive to focus on controlling customer expectations, building and managing supply chain and workflow processes, training employees, and refining business vision and culture than to worry about recipes and products.  If one really wants high quality products, focus on defining standards and culture and training employees.

Control customer expectations.
I once watched a restaurant describe itself, when it opened, in glowing terms, comparing itself to famous fine dining restaurants around the world.  Customers, expecting fine dining experience on par with Per Se and French Laundry, were disappointed.  Restaurant failed, not because of crappy food — food was mostly solid to excellent.  It failed because of inability to meet expectations (experience was more like French Laundry meets Cheesecake Factory).  There’s a reason why it’s considered crass to brag about oneself — it typically gets one in trouble (few can pull of an Ali).

We have extremely high expectations for ourselves but we don’t go around telling everyone that we’re the bomb, or that we’re something we’re not. It’s the customer’s job to grade us, to tell us what they think of us.

Control customer perception
Often, there’s mismatch between what your business is (or is trying to be) and how customers perceive it.  Some people judge a book by its cover or think they already know, without asking questions or conducting research or controlling for bias, what other people are about, their motivations and aspirations.  These are the same people who will think they know what a restaurant is about without bothering to study its menu.  Or they’ll make assumptions about operating hours without fact checking it online or in person.  They think they already know what’s on the menu, how everything is prepared, and why owner opened the business.  That’s the way the world works, you have to assume that people don’t think you’re special enough for them to devote time to get to know you.  No use in complaining about it (sign of self-absorption), just work on making yourself important to others by being responsible for them.

It takes much effort to change how people think about you and your business.  But it can be done as long as you’re persistent and don’t mind being repetitive.  Small and large established businesses have to deal with wrong perceptions.  For instance, UPS has been working on correcting perception that they only deliver packages, even though that’s a small part of their product and service offerings.

At Alive Juice Bar, employees control new customer perception the moment he walks into the door.  Every second counts, as new customers can form opinion about business in less than 3 seconds.  It is very difficult to change one’s opinion, so we get their attention immediately in order to control how he perceives the business.

Build products around existing utilities infrastructure
If you don’t have enough funds to build your ideal store, let the utilities infrastructure and refrigeration units determine products and recipes.  You need to make sure that you have the bins and storage space for ingredients used to build products.  (Another reason why you can’t just borrow random recipes, you’re not operating in a contextless environment).

Customers have offered me their recipes.  A few are simple and make sense, and we’ve incorporated them into our menu.  Most are fussy, complicated, and I have to ask them where I’m supposed to store the additional 8 ingredients that go into making their ideal drink.

Hedge

Food business is about calculating and controlling risk.  Many can develop their own recipes.  Few can write a menu that reduces risk.  For instance, it’s unwise to have one menu item with ingredients that aren’t found in any other item.  What if this item doesn’t sell?  Too risky.  Another example is how we use yams.  We get a good price on them because we purchase them in bulk.  To ensure that they don’t rot, we have to use them quickly.  So we offer baked yams.  Baked yams that don’t sell within a day and refrigerated and used in protein shakes (Power Meal).  Yam is also used to make yam chips.  We do something similar with kale.  Fresh batch we use for salads and smoothies.  Older batch is used for kale chips.  We give ourselves the option to use collard greens in green smoothies just in case price of kale quadruples (it happens).  Making a menu isn’t like making a music mix of one’s favorite songs.  It’s figuring out ways to minimize risk and waste. It comes down to math.

Don’t hire anyone
I learned this one the hard way.  If you’ve never worked in food industry and don’t have network from which you can hire good employees, work the job on your own.  It’ll help you build mental toughness and patience and get you accustomed to working long hours.  You’ll be surprised how productive you can be if you work on your mental muscles.  Hire only after you’ve developed workflow processes you’re satisfied with and are consistently profitable.  Don’t hire so you can be lazy.  Hire only so you can expand hours and/or devote energy to other aspects of business.

Be cautious when hiring.  As Anthony Bourdain has declared over and over again, food industry isn’t for most.  Inevitably, you’re going to lose a lot of money hiring employees who produce negative value (produce value less than what they’re paid).  You’ll likely have to train someone to gradually become the sort of employee you’re seeking.

Don’t be afraid to piss off customers
If you’re not pissing people off, then there’s something wrong with you and your business.  If you’re not pissing people off, then you’re probably scared and lack passion. Don’t give customers a reason to look down at you, be dignified. And you shouldn’t be in this business if your goal is to be popular.  Be in it because your convictions are deep and you believe it’s your higher calling to improve the world, to change the way people eat and think about food.

Burn your business textbooks
Some of the ideas in business textbooks are asinine.  Like focus groups and marketing research.  As Steve Jobs put it, “how are people supposed to know whether they like something if they’ve never seen anything like it?”  Other ideas only work with large companies.  Start-ups require recklessness, instinct, adaptability, tenacity, and flexibility, not book learning.

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There’s more, like defining business culture and vision, developing human resources, etc.   The point is, don’t start a restaurant just because you think you have great recipes.  There’s a lot to think about, which is what makes getting into food business so much fun.

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