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Finding success in the risky business of running a restaurant

Jose Escobar is hoping he
Jose Escobar is hoping he's found the recipe for success with his Mexican restaurant on 6th Street in New Westminster. Three previous restaurants in the same location all closed.
— image credit: MARIO BARTEL/NEWSLEADER

Every morning at 7:30, Miro Fabian arrives in the kitchen of his Danube European restaurant in Burnaby Heights.

Hour after hour, he slices, dices, sautés and simmers as he makes hearty central European dishes like Hungarian Goulash, Hortobagy Pork Tenderloin, and Transylvanian Wooden Plate.

It’s what he knows. It’s what he does best.

It’s also a struggle to keep going.

“It’s always difficult because you have to be in the restaurant 24 hours a day,” says Fabian. “When you’re not in there you’re thinking about it. Sometimes I’m so tired but I can’t stop it, I have to pay the rent, I have to pay the people.”

He’d love to raise his prices to pay for produce, staff and rent, but he hasn’t done so in the 12 years he’s been in the business. He’s too afraid to.

“The problem is always the money, people don’t have the money,” says Fabian, who with his wife started with The Budapest on Main Street, which they closed after he was incapacitated with severe arthritis for 18 months before they opened the Danube in April 2009. “This is the worst thing for us, lots of people staying at home. I can’t change the prices because people will go away from the restaurant because of the price.”

An interesting business

Everyone, it seems, is fascinated by the restaurant industry. Everyone needs to eat, and everyone loves to judge what they’ve eaten. So there’s no shortage of people who believe they can create a culinary nirvana.

Yet they do so at their own peril.

Often a restaurant is opening its doors while another is closing across the street. And often it hadn’t been open long, either.

“There’s about a 60 to 70 per cent failure rate within the first two years,” says Ian Tostenson, CEO and president of the B.C. Restaurant and Foodservices Association. “The restaurant business is a complicated business. There are many manufacturing facilities (restaurants), so not only are you manufacturing on demand when somebody wants it, but you’ve got to manufacture it in a quick way.”

There’s no school for restaurant owners, but many people believe they can run one. Many think it would be fun.

Yet Tostenson says few bother to seek advice from his group before beginning their journey.

“A lot of people feel the restaurant business is easy. They’ve got a recipe, get a lease and open and they’ve got a job for life,” says Tostenson.

However, he points out there’s more to it than cooking delicious dishes. Restaurant owners have to know how to hire. They must familiarize themselves with reams of human resources regulations. Naturally, there are also health and building code regulations to worry about, to say nothing of leasing issues.

“People see it not for what it is and are generally underfinanced and overtaxed from a time point of view. There’s just too many demands on the new owners,” says Tostenson. “Banks don’t lend restaurants money very easily.”

Most rookie restaurateurs, he says, end up borrowing from friends and family or dipping into their savings, which tend to evaporate in no time at all.

“Time is of real essence to get a business up and running quickly,” says Tostenson.

Compounding those concerns is the current economy.

Ever since 2008 consumers have become picky when spending their money. The HST and tougher drinking and driving regulations have deterred them too. One couple Tostenson knows has owned a restaurant for 15 years, normally having three or four staff. Now it’s just the two of them.

“If they go away they have to close their business. For the small independent guys it’s really tough. Not to say it hasn’t been for the bigger guys, but they have enough resources to weather the storm. What’s going to make them a success is restaurants delivering really good quality, exceptional value, great service, that are really pulling out all the stops to attract a customer base. Those are the ones who will survive.”

Authentic Mexican

Although he’d worked in a restaurant before, up until last year Jose Escobar had earned his living as a painter and roofer. But his family owns restaurants in the United States so he wanted to try it here. Last May, he opened Taqueria Playa Tropical and is serving what he calls real Mexican fare on Sixth Street in New Westminster. It’s a spot where many restaurants have come and gone.

“I just wanted to try here,” says Escobar. “Everything is a risk, but if you never try you never know. Right now I’m paying the bills. People like the food, they’re always happy, but we need more customers.”

The upbeat Escobar says he’ll give it about 18 months, and if it’s still slow then maybe he’ll change things such as instituting a bigger menu. “I like it the way it is because when you have a big menu you have a lot of headaches.”

If Escobar had come to The Danube’s Miro Fabian before opening his restaurant, Fabian says that, despite the challenges and stresses involved, he wouldn’t have tried to talk him out of it. Especially if they have the passion for it.

“It’s everybody’s decision,” says Fabian. “If somebody wants to do a restaurant, I tell them go ahead.”

•••••

RECIPE FOR RESTAURANT SUCCESS?

Location, location, location is often key to success in the restaurant business, but so is research for first-time restaurateurs, says Douglas College hospitality management instructor Anton Kosztyo.

“No. 1, you have to know your target market. You have to know who you built it for, then how to target that market, how to build a menu, to build a restaurant to appeal to that market. You can’t appeal to everybody. You can be a steak house, you can be a family restaurant, you can be a sports bar, but you can’t be them all.”

He suggests:

• studying who lives and works in the area. What food do they like, when do they eat?

• check out the competition. Have they cornered the market or is there an opportunity to gain a foothold because they’ve slipped up?

• familiarize yourself with every step in the process before deciding to open, including lining up who will do the cooking and the serving because if business is slow good staff will move on.

• make sure food and service is consistently high quality

• keep up with food trends, like organic and local food.

• once open, keep expectations low. Restaurant owners who break even in their first three years are really doing well, and those that get a two per cent return are doing exceptionally well.

“There are all sorts of variables,” Kosztyo says. “Be extremely cautious. You must have a reason, and you must believe in yourself.”

 

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