Owning my own restaurant has been a lifelong dream for me, one that has eluded me for a variety of reasons over the years. I've spent countless years poring over ideas, recipes, themes, designs, ideas, menus, you name it. For years I walked through the skywalk system in downtown Des Moines, past a little cove in one of the buildings, every day thinking to myself that would be the perfect spot for a tiny little bistro. Something small, and elegant, with a menu that changes daily, depending on what's available. Seasonal, local foods, beautifully prepared and served, with a lovely selection of wine. Something that reminds people of a romantic spot in France.
My very good friend Jessica and I share this dream. She and I found ourselves discussing the possibilities many many times. Would we do catering? Wines and cocktails? Should we go simpler, like a diner or coffee house, or maybe a tea room? So many plans, so many dreams, we even bought a small supply of antique dishware to use in our future tea room, and some kitchen equipment. Sadly, the dream had to be put on the back burner as real life issues were pressing, kids, bills, making ends meet, and we abandoned our immediate plans.
Every once in a while I try to get out and explore the world of food outside of the kitchen. I might sign up for a cooking class, or I might visit a specialty store and browse the unique options, and come up with some decent photos and a fun story. The other day I was flipping through some local stories, new restaurants and the farmers market and so on, looking for inspiration, when I came across something that piqued my interest right away- the Iowa Restaurant Association was holding a free informational seminar- Restaurant 101, geared at people who were considering opening a restaurant. I knew right away I'd want to go check it out, even if I'm not actively looking to start a business.
The seminar was hosted by Stacey Kleusner. We learned about who the Iowa Restaurant Association is and what they do: they are a member based non-profit trade association. The Association protects, promotes, educates and acts as an advocate for Iowa's restaurant and hospitality industry. They represent the legislative interests of the restaurant and hospitality industry both here in Iowa and in Washington D.C., and they are an affiliate of the National Restaurant Association.
So what is the restaurant industry? Easy- any meal that is prepared away from home, whether it's sit down service or takeout. The industry is made of a mosaic of individual businesses that include clubs, full service and quick service restaurants, cafeterias and buffets, and more. The failure rate of today's new restaurants was a sobering statistic- one out of every four new restaurants will fail within the first year of business, and that increases to three out of five in the first three years. I can say without a doubt that here in Des Moines the competition is fierce. We live in an up and coming culinary hot spot and the new places opening each year prove it. Iowa, as of 2016, has more than 6,000 restaurants. That is just a crazy number to imagine in our state.
So HOW does a new restaurant achieve success in this day and age? Firstly, don't open a restaurant unless you have worked in a restaurant, and preferably, several. You must be a business person first. Just being a great cook doesn't mean you will run a great restaurant. Make sure you understand what customers like, not what YOU like, and then figure out how much they are willing to pay for it. Work your way up, maybe starting with catering, a food truck, or other SMALL venture before you commit to a big restaurant. If you are the owner of the business, you have to be prepared to do what owners do, and it's not always fun.
Think you're ready to take those first steps towards opening a restaurant of your own? You have got a lot to do, my friends, starting with research. You want to study restaurant and food trends in your area over a period of time. Do you know that in 1955 about 25% of the average food dollar went to the restaurant industry but today that has jumped up to about 47%. Americans value their restaurants! Do your market research- for example, in Iowa in 2016 over $4 BILLION was spent on food and beverage purchases, in fact, on a typical day in Iowa the food and beverage industry estimates sales of about $11.7 million. Million!! While that number seems staggering, it isn't all peaches and cream. Assuming a 5% profit margin, that number of sales, after considering all expenses of operating, allows less than $100 profit as an average.
Start up costs are an obstacle for many. The average cost to open a small restaurant is around $275,000. If you plan on purchasing a building, that start up cost goes up significantly. To help with costs, many people look to investors or loans to help finance their dream. This requires a business plan. Creating a business plan is crucial. What are the elements of a good business plan? The concept, the team, the market, the strategy, the location, the financials and the offering.
Your concept should contain an overview of your proposed business. What is your unique selling point? What will your guests' experience be? How about menus and signature items, things that set your restaurant apart from the others. You want to talk about your team, with brief biographies of each person. What is their background and experience? What will their role be? You want to focus on your market- who your target clientele will be. What's your marketing strategy? How will you purchase supplies and equipment? Your location will be an important part of your business plan. No one likes to discuss the financials but they are extremely important. where is the money coming from, and how is it being dispersed? What is your anticipated budget? There are lots of resources out there for new business owners to turn to for help. Local economic development agencies can help, the U.S. Small Business Association is another great resource.
Now that you've some information about getting started, what are some of the licensing and legal requirements you might face? It starts with building permits, whether you're building or remodeling. Alcohol and food licenses are required, your business license, sign and fire permits, state and federal tax permits, food safety certification- lots of hoops to jumps through. There are insurance liabilities to research as well. Hiring a good business attorney would definitely be a first step in the process.
Now The Chef and I have tossed around the possibility of opening our own restaurant many times. Will it come to be? Maybe, maybe not, but in the mean time, we will continue to enjoy learning, researching, networking and exploring the many restaurants that are already in business and have made someone's dream come true.