# Have you ever started a business in the restaurant industry What was your experience?



## Young&Ambitious (Aug 11, 2010)

Hubby and I are thinking of opening a coffee shop and I was curious if there were any other CMFers who opened up a restaurant, cafe etc who would share their experience. I would love to hear about how the reality differed from the dream, what the outcome was, and any general advice you have gained from the experience.


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## Rusty O'Toole (Feb 1, 2012)

I ran a pizzeria for a year. The money was pretty good, $600 - $750 a day in 1980 but it happened to be in a seasonal area, dead in the winter. I suppose the first question you have to ask is, where are the customers? Who are you going to sell to? This brings up the question of location. If you have a coffee shop you need to ask where it will be and can you compete with Starbucks and Tim Hortons? This should not be hard, given the high prices of one and the low quality of the other.

Now let me make a suggestion. Here is a restaurant business that I have seen succeed more than once but never seen talked about. A restaurant in the main business district of a town or city, selling breakfast and lunch to the workers in the stores and office buildings. Usually open from 7am to 5pm or so. Take out and sit down service.

Breakfast sandwiches, eggs and bacon, ham or sausage, hot cereal, coffee, tea, pastries.

Lunch special soup (choice of 2 kinds each day) with toast or garlic bread. Or a salad plate. Keep the choices simple and easy to prepare quickly. All soup home made, everything made fresh. You can make a large pot of excellent soup for a very low cost.

Give the people a quick lunch that is made fresh and high quality. Also coffee, soft drinks, iced tea etc 

Call it "Mom's Home Cooking". If anyone asks where Mom is, say she's home, cooking ha ha.

Seriously this is a business not very difficult or expensive to start that can make a good living. You need the right location with plenty of people around working in stores and offices. They will be your regulars, but you will get plenty of shoppers dropping in too.


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## Eclectic12 (Oct 20, 2010)

My mom asked the next door neighbour why he went into construction when his parents had owned several restaurants and he was such a good cook (which he loved doing), his answer was he had seen the feast/famine his parents went through. He preferred the more stable construction pay cheque.

OTOH, I had a co-worker who wanted to create closer to home employment for his wife (a waitress) as the kids were small. He was cursing that where he'd planned on three years of tax write offs for his higher salary from the video rental store, it was turning a profit after a year and half. He had done his research to know that the big players wouldn't bother for such a small community.

Here's a Montreal story of "Mom's home cooking" that is now a chain.
http://www.chezcora.com/en/about-cora


At the end of the, if you can combine traffic, value and keep the costs reasonable while providing good service ... lots of people will return.


Cheers


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## mark0f0 (Oct 1, 2016)

A friend started a restaurant in Lloydminster. His biggest problem, by far, wasn't getting customers, it was actually finding/keeping staff at reasonable wages. Its a real eye-opener, especially if you've previously worked at a steady job or are a professional, just how minimum wage employment works of younger women (and men I suppose too). They show up stoned. They show up hung over. Sometimes they don't even show up at all. There's a fine line between what can be tolerated (because its a decent amount of work finding replacements), and what can't. There's a real art of ruling with an iron fist, yet not driving staff to want to kill you.

Dealing with labour is why extended families and ethnic groups who run restaurants tend to 'clean up' financially compared to those who are just hiring random labour off the streets. Loyalty. Commitment to their 'brand'. Family shaming if they majorly mess up. You're not gonna find this with the teenie-boppers you hire for $10/hour, many/most of whom, at that age, suffered an abrupt change of lifestyle as they left home, didn't go to college, etc.


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## Eclectic12 (Oct 20, 2010)

mark0f0 said:


> A friend started a restaurant in Lloydminster. His biggest problem, by far, wasn't getting customers, it was actually finding/keeping staff at reasonable wages.
> 
> Its a real eye-opener, especially if you've previously worked at a steady job or are a professional, just how minimum wage employment works of younger women (and men I suppose too) ...


While I can agree it's difficult, I guess I had enough minimum wage jobs to notice this sort of behaviour. I can recall the gas bar cashier thinking it was totally unfair to be fired for deciding to ride along with her trucker boyfriend for about a week without letting the manager know she wouldn't be showing up for any shifts for several days.


Cheers


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## Rusty O'Toole (Feb 1, 2012)

Good point, labor is always a big hassle.Now that I think of it the places I mentioned were run by middle aged women and they all seemed to stay forever.


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## Mukhang pera (Feb 26, 2016)

Rusty O'Toole said:


> I ran a pizzeria for a year. The money was pretty good, $600 - $750 a day in 1980 but it happened to be in a seasonal area, dead in the winter. I suppose the first question you have to ask is, where are the customers? Who are you going to sell to? This brings up the question of location. If you have a coffee shop you need to ask where it will be and can you compete with Starbucks and Tim Hortons? This should not be hard, given the high prices of one and the low quality of the other.
> 
> Now let me make a suggestion. Here is a restaurant business that I have seen succeed more than once but never seen talked about. A restaurant in the main business district of a town or city, selling breakfast and lunch to the workers in the stores and office buildings. Usually open from 7am to 5pm or so. Take out and sit down service.
> 
> ...


I would say that in 1980 dollars $600 - $750 a day was more than just "pretty good". And I take it you are talking of net profit, before tax. If gross sales, it would not be so scintillating.

The downtown business district daytime restaurant Rusty suggests can, I think, do well. Certainly if you get the right combination of location, menu, etc. and if you are not beset by some of the labour difficulties mentioned by mark0f0. I worked for many years in downtown Vancouver and patronized one or two of those places - places that operated for years, so I assume they must have made decent money. However, I would expect lease costs there to be quite steep these days, not to mention costs of leasehold improvements unless you take over an existing operation. So startup costs might be a bit daunting. I also recall a few more simple "coffee shop" type of operations that were also around for quite awhile (as well as some that did not last, for whatever reason). Those places would usually be closed by 3 or 4 p.m., after the local 9 to 5 crowd had taken their last coffee break for the day. Some of those had no serving staff. Customers would proceed along a counter, draw their own coffee from an urn, pay a cashier at the end of the counter. 

Y&A, you appear to be in Vancouver. Where would be be thinking of starting up?


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## Rusty O'Toole (Feb 1, 2012)

Mukhang that is what I had in mind. A simple low cost menu so local workers could get a healthy lunch or breakfast every day. Those would be your steady customers but you would also get some shoppers etc. Feature a home made soup special every day with a few other menu items that are simple and inexpensive like a salad plate, sandwiches, cakes and pastries. In fact very much like what Tim Hortons offers but better quality and not on the main hiway.

The ones I am familiar with, are in small towns where the rent is not so high. They were open from 7 to 4 or 5 and were staffed by 3 or 4 women. Being in the downtown area they do not have to worry about competition from Tim Hortons who stay by the main highway and must have a drive thru.

The pizzeria was a small town operation. Rent was low and I had no employees. The figure mentioned was gross sales but expenses were low and profits were good. The problem was everything was dead in the winter. The second summer I banked the money and shut the place down after Labor Day.

Such a seasonal operation can be ok if you have something else to do in the winter. Or be like a friend of mine, he sold ice cream cones out of a shack by the beach all summer and took the winter off. You wouldn't believe how much you can make selling ice cream and pop on the beach on a hot day. Unfortunately his hot temper ruined him.


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## Rusty O'Toole (Feb 1, 2012)

Another good business is a sub sandwich shop. I like it because you don't need deep fryers which double your insurance, and are messy and dangerous. You can do subs with minimal equipment. Another place that does a good business with minimal investment is the Pita Pit. Similar to the sandwich shops but with stuffed pitas.


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## Mukhang pera (Feb 26, 2016)

Rusty O'Toole said:


> The pizzeria was a small town operation. Rent was low and I had no employees. The figure mentioned was gross sales but expenses were low and profits were good. The problem was everything was dead in the winter. The second summer I banked the money and shut the place down after Labor Day.
> 
> Such a seasonal operation can be ok if you have something else to do in the winter. Or be like a friend of mine, he sold ice cream cones out of a shack by the beach all summer and took the winter off. You wouldn't believe how much you can make selling ice cream and pop on the beach on a hot day. Unfortunately his hot temper ruined him.


Yes, in a small town, low rent, no payroll, gross sales for pizza of $600+ would probably net out quite well.

Like your friend with the ice cream, I had a friend who sold hot dogs and soft drinks from a cart at English Bay in Vancouver, near the entrance to Stanley Park. He made a bundle during the summer months and spent winters in Costa Rica. When the U.S. dollar was worth about CAD1.50, he would sell $4 hotdogs to American tourists all day, effectively getting $6 for each one. He said on his small numbers, almost no one ever asked for more for U.S. funds and, if they did, he simply told them that he was not in the business of tracking exchange rates and making those kinds of calculations. 

Another seasonal business I recall doing quite well in my youth was Weber Burgers on Hwy. 11 near Orillia, Ontario. Selling burgers to the cottage crowd. They had to build a walkway over the highway to accommodate those stopping on the other side to pick one up. I think they expanded to other locations at one point, without a lot of success, but the original plan remained a good one.


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## Young&Ambitious (Aug 11, 2010)

Mukhang pera said:


> Y&A, you appear to be in Vancouver. Where would be be thinking of starting up?


A Vancouver suburb near to where I live with a good density of population and low competition.


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## indexxx (Oct 31, 2011)

mark0f0 said:


> A friend started a restaurant in Lloydminster. His biggest problem, by far, wasn't getting customers, it was actually finding/keeping staff at reasonable wages. Its a real eye-opener, especially if you've previously worked at a steady job or are a professional, just how minimum wage employment works of younger women (and men I suppose too). They show up stoned. They show up hung over. Sometimes they don't even show up at all. There's a fine line between what can be tolerated (because its a decent amount of work finding replacements), and what can't. There's a real art of ruling with an iron fist, yet not driving staff to want to kill you.
> 
> Dealing with labour is why extended families and ethnic groups who run restaurants tend to 'clean up' financially compared to those who are just hiring random labour off the streets. Loyalty. Commitment to their 'brand'. Family shaming if they majorly mess up. You're not gonna find this with the teenie-boppers you hire for $10/hour, many/most of whom, at that age, suffered an abrupt change of lifestyle as they left home, didn't go to college, etc.


I've been in the industry for over 30 years and yes, staff is the biggest headache by FAR. Coffee shops can do OK, however I would ask yourself where the small independents are that have lasted more than a couple of years. When I look around Vancouver, I see a constant turnover of startup shops, then the mid chains like Blenz and Waves, and then the Starbucks and Tim's. The small startups go out of business all the time because the chains kill them off. The exception I see is around Commercial Drive where the guys have been around for 30 years, or places like Calhoun's or The Grind or Breka that cater to late-night/24 hour customers- a problem in itself with all the drunks, homeless, and junkies that will flood your space. If you find a spot near a post-secondary school it can be a goldmine. 

If you've never worked in a bar or restaurant and are going in 'blind' this industry will eat you alive- there are so many details. However, I am not trying to be discouraging, just pointing out some of the downfalls. Personally, I would probably open an ice-cream place; great margins, the equipment is less expensive (cappuccino machines and assorted equipment are an arm and a leg), less training involved for staff, you don't need 500 cups, plates, spoons, condiment holders, and a huge dishwasher or a food prep area and equipment (I assume you'd be selling food in your coffee shop). But then I don't enjoy dealing with coffee as it's messy, slow to produce, and people are very picky about it- don't discount the customer attitude factor that can leave you hating your time behind the counter as you struggle to accommodate all the special requests and bitchy people for 10 hours a day. Ice cream is simple. And everyone loves it.


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## sags (May 15, 2010)

A local auction house has continual listings of restaurant equipment and furnishings for auction.

Around here, small businesses can only compete on one thing.........quality. 

If they try to compete on price they will be working for nothing. The chains buy in bulk and are ruthless cost cutters.

Small business can't compete with $5 subs at Subway and free coffee fill ups at McDonalds.

In the morning McDonalds is full of seniors chatting, reading the paper, watching the tv and drinking free coffee.

I would bet the majority of profits come from the drive through windows.

Here is your food........goodbye.


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## canew90 (Jul 13, 2016)

Was in the restaurant business for about 12 years. Initially working then we owned our own restaurant for 5 years. 

Pros:
- Self employed, your won boss
- enjoyed the business and even the staff
- took a few years to begin to make money, but did well in the end
- one learns a lot about themselves and business

Cons:
- long hours
- much harder work any as an employee
- constantly watching $$ and theft (even the best of employees steal)
- must learn to be knowledgeable about all aspects of the business


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## OhGreatGuru (May 24, 2009)

Look around you at the typical turnover rate of restaurants/cafes in this industry. There's not much long-term security. And when the economy is down the restaurant industry is one of the first to suffer because dining out is a discretionary expense for most people, and the easiest to cut back on.


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## twa2w (Mar 5, 2016)

sags said:


> A local auction house has continual listings of restaurant equipment and furnishings for auction.
> 
> Around here, small businesses can only compete on one thing.........quality.
> 
> ...


Agree with you on the drive through profits but they make money on in store coffee refills too.
Cost of coffee is about 5-10 cents per cup depending on cup size. Plus cost of cup plus labor plus utilities. People who refill typically only do 1 refill. A rare few do 2.
Mcyucks has pretty good data on number of refills etc. They are still making some money. Plus these people make the restaurant seem busier which does attract business.


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## Rusty O'Toole (Feb 1, 2012)

It doesn't cost anything to have people sitting around. The only time it might cost you money, is if the place is so crowded new customers can't sit down. In the morning McDonald's is mostly take out, a few people sit down to eat but if they have a job to go to, they don't linger. One or two tables of seniors don't hurt anything. The senior get there early and are gone long before the lunch time rush. And, they come in every day without fail. The steady business has to be worth something.

Some places have a 20 minute limit sign but they don't enforce it unless they are real busy or to oust some questionable character. Tim Hortons used to have such signs but I think they got rid of them.

If you enjoy having people around and look forward to going to work in the morning a restaurant might be for you. I know they have a high failure rate but it is also a business that attracts people who don't know what they are doing and do not know how to run a business or make money. A little business savvy goes a long way.


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## Rusty O'Toole (Feb 1, 2012)

Eclectic12 if you have a choice between restaurant operator or heavy equipment operator take the bulldozer. A friend of mine is a heavy equipment operator (union) and he showed me a pay check last summer, $15000 for 2 weeks work.


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## Eclectic12 (Oct 20, 2010)

^^^^

Mom didn't ask if he was union or not.

Regardless - the point of relaying the story to the OP is that even if one has inside info on how to run a restaurant as well as enjoy cooking, it can still be a struggle. 


I have never wanted to be a restaurant operator so it is moot to me.


Cheers


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## sags (May 15, 2010)

My son is trying the sole proprietor route with flooring installation and fence installation if he has time.

He has a business number and a HST number and he has been working his butt off.

I can tell already that he will be earning less than minimum wage. The gross income looks decent......but.........

CPP, WSIB, HST, commercial truck insurance, gas, bookkeeper and accountant fees, and income tax will glean off most of the money. 

I tell him to forget it and get a factory job. He is just going to end up wrecking his truck and owing a lot of money to the CRA.

But........he has to learn everything the hard way.


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## lonewolf :) (Sep 13, 2016)

For any business I think max of 2% should be put on table. Don't have to put a lot of money down to start a business 

I started a business of glaring cars/boats not a lot of money needed. glare polish turns to glass when comes in contact with paint forming covalent bond. heat resistant 650f to -250f.


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## darylshriver (Oct 19, 2016)

indexxx said:


> I've been in the industry for over 30 years and yes, staff is the biggest headache by FAR. Coffee shops can do OK, however I would ask yourself where the small independents are that have lasted more than a couple of years. When I look around Vancouver, I see a constant turnover of startup shops, then the mid chains like Blenz and Waves, and then the Starbucks and Tim's. The small startups go out of business all the time because the chains kill them off. The exception I see is around Commercial Drive where the guys have been around for 30 years, or places like Calhoun's or The Grind or Breka that cater to late-night/24 hour customers- a problem in itself with all the drunks, homeless, and junkies that will flood your space. If you find a spot near a post-secondary school it can be a goldmine.
> 
> If you've never worked in a bar or restaurant and are going in 'blind' this industry will eat you alive- there are so many details. However, I am not trying to be discouraging, just pointing out some of the downfalls. Personally, I would probably open an ice-cream place; great margins, the equipment is less expensive (cappuccino machines and assorted equipment are an arm and a leg), less training involved for staff, you don't need 500 cups, plates, spoons, condiment holders, and a huge dishwasher or a food prep area and equipment (I assume you'd be selling food in your coffee shop). But then I don't enjoy dealing with coffee as it's messy, slow to produce, and people are very picky about it- don't discount the customer attitude factor that can leave you hating your time behind the counter as you struggle to accommodate all the special requests and bitchy people for 10 hours a day. Ice cream is simple. And everyone loves it.


I love this - working in Toronto I've seen so many Ma and Pop type shops pop up and then disintegrate into the commercial abyss. What seems to be saving some of them is alcohol - some shops I've seen start serving tall cans, bar snacks etc. turn the lights down, and converting it into a low-key "hipster" bar at night.


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## Lost in Space 2 (Jun 28, 2016)

Right now small business shows are really hot. While it’s “TV” they do give you a good insight into issues small business face. Reading the comments here one thing they don’t seem to talk about is staffing, other than how much everyone hates the boss, but it’s TV.

Shows I like. 

*The Profit:* my favourite show - Marcus Lemionis invests in struggling business
*Bloomberg The Mentor:* a successful entrepreneur mentors a struggling business
*Bar Rescue*: format gets a bit old after a few seasons but I mean it always the same
*Gordon Ramsey shows*: he’s got a bunch where he goes in and restructures a failing hotel/restartant. This is the most TVish of them all. Lots of yelling and swearing obvious stuff like keeping a clean kitchen and serving good food. 
*Shark Tank Beyond the Tank*


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## Rusty O'Toole (Feb 1, 2012)

Indexxx I believe you about the ice cream business. A friend of mine opened a little stand by the beach, a shack about 10' X20' that sold ice cream cones. On weekends it was mobbed. The first weekend he had to get rush orders of extra ice cream twice, sold about 4X as much as he figured on. I thought it was a great business, low overhead large profits and stack enough money in the summer to take the winter off.


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## sags (May 15, 2010)

I talked to a business specialist at RBC last week.

She said she gets calls every day from small businesses in financial trouble.

The biggest problem is people can do the work but lack the business skills. 

Many are in trouble with the CRA for arrears in income taxes, HST, or CPP payments.

The CRA freezes their bank account and nothing can go in or out. It is a big headache to get the account reopened.

I talked to our insurance broker about commercial insurance and it is the same story. 

People don't get commercial insurance when they should, get involved in an accident and the claim is denied.

My agent told me the police are calling the broker frequently to check for valid insurance these days.

To set up and operate a business properly and legally requires a considerable amount of money.


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## Eclectic12 (Oct 20, 2010)

Rusty O'Toole said:


> Indexxx I believe you about the ice cream business ...


After watching students in Calgary head off on a regular basis to buy ice cream when it was -30, I have no doubt that ice cream can do well.


Cheers


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## CPA Candidate (Dec 15, 2013)

Tough, low margin business that has to cope with changing tastes and swings in the economy. Restaurants come and go in Winnipeg like the days of the week. Unless you have something really special and unique, most fail.


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## dougbos (Jun 4, 2012)

Mukhang pera said:


> Yes, in a small town, low rent, no payroll, gross sales for pizza of $600+ would probably net out quite well.
> 
> Like your friend with the ice cream, I had a friend who sold hot dogs and soft drinks from a cart at English Bay in Vancouver, near the entrance to Stanley Park. He made a bundle during the summer months and spent winters in Costa Rica. When the U.S. dollar was worth about CAD1.50, he would sell $4 hotdogs to American tourists all day, effectively getting $6 for each one. He said on his small numbers, almost no one ever asked for more for U.S. funds and, if they did, he simply told them that he was not in the business of tracking exchange rates and making those kinds of calculations.
> 
> Another seasonal business I recall doing quite well in my youth was Weber Burgers on Hwy. 11 near Orillia, Ontario. Selling burgers to the cottage crowd. They had to build a walkway over the highway to accommodate those stopping on the other side to pick one up. I think they expanded to other locations at one point, without a lot of success, but the original plan remained a good one.


Webers is still there and probably more busy today than it was in your youth.


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