Closing remarks: Why restaurants can be a recipe for failure.

EVEN THE BEST NEIGHBOURHOOD RESTAURANTS ARE HERE TODAY AND GONE TOMORROW, WRITES CLAUDIA McNEILLY

The restaurant industry is an impossible one. Between screaming head chefs, gruelling 12-hour shifts and an evening and weekend work schedule that means you’re busiest when the rest of the world is not, it takes a certain type of mentality to thrive in the professional kitchen — never mind wanting to open your own.

Anyone who has seen an episode of Restaurant Impossible on The Food Network knows that opening your own restaurant is difficult, yet hopeful new cafés, fast casual eateries, and sit down destinations continue to open day after day. “Chefs are so guilty of thinking we are the exception to the rule,” says David Santos, former chef and owner of the now closed Louro restaurant in New York City. “We always think our idea is the best, that it will be the one that sticks.”

Unfortunately, culinary school does not teach aspiring chefs and restaurateurs that running a modestly successful restaurant is often not enough to keep your business above water. Even if the restaurant has received good reviews; even if you have a steady stream of customers filtering in every night; even if, by all accounts, you’ve “made it,” staying afloat will remain a struggle for most.

According to a study by Ohio State University, 60 per cent of restaurants do not make it past the first year, and 80 per cent go under in five years. This happens because profit margins can often feel like they’re working against you. A 2010 Restaurant Industry Operations Report published by The National Restaurant Association and Deloitte & Touche LLP found that average pre-tax restaurant profit margins range from two to six per cent, leaving little room for financial missteps, unexpected costs or debt management.

“The cost of opening a restaurant puts you in a hole from (the beginning),” says Santos “That’s the thing that most people can’t get out of. If it costs you a $1 million to open something, which is not out of the ordinary — it’s going to take a lot of work to make that money back, and we’re not even talking about covering staff or food costs yet.”

Richard Mulley, owner of Rasher’s, a well-received and well-publicized bacon sandwich shop in Toronto with two locations, knows this well. “Our Ossington location still isn’t breaking even. I sometimes lay awake at night and say to my wife, ‘We have four and a half stars on Yelp, we get all this media exposure, when is it gonna happen?’”

Instead of raising prices and risk losing customers, Mulley manages costs by making sure the ingredients of each sandwich are measured out to the last gram. “We portion everything, from sauces to meat. I would rather have a high-quality product than switch to something cheaper, so we have to be really careful with how much we’re spending on ingredients.”

“There is only so much people are willing to pay for food,” echoes Felipe Faccioli, head chef and co-owner of the delicious and modestly popular South American Mata Petisco Bar in Toronto. “If we raise prices too high, no one’s gonna come. Sometimes when people complain about prices I want to shake them and say, ‘Do you know how much went into this dish? I put every penny I had into the food on your plate.’ Most customers don’t see that side of it. They don’t see that everyone in the kitchen has been working 70-hour weeks to make their dinner possible.”

Although chefs are often stretched financially, so too are most people. Who among us hasn’t snarled at a $28 chicken and roasted vegetable entree while thinking about how they could make something similar for a fraction of the price at home?

Faccioli notes business has been slow during the week that we speak. He wonders if things might be different if he could afford to invest more in publicity and marketing. “It’s not an excuse, but bigger restaurants have PR people emailing writers and bloggers to come give them publicity. We just have our food, and what we post ourselves on social media.”

This is true: food media is complicit in giving publicity to restaurants with particularly persistent promoters, or to places that have already been deemed “good” by other trusted media outlets, instead of trying more restaurants off the beaten path for ourselves. The result is that smaller establishments are often sacrificed in the wake of a constantly simmering stew of laziness, spiked with the sickly sweet spice of ignorance and deadlines. This doesn’t help smaller restaurants trying to get ahead.

Also frustrating is that restaurant owners have no say in many costs: pricey necessities like operating licences, insurance fees, accounting charges and unexpected repair expenses. These all represent expenditures that eat up large portions of a restaurant’s budget before it can even open its doors. And once it does, other expenditures beyond an owner’s control continue to pop up.

Such was the case for Santos, who enjoyed bona fide culinary success after opening the Portuguese-American restaurant Louro in Manhattan in 2012. New York Times restaurant critic Pete Wells applauded his delectably unpretentious fare: “At Louro, the chef doesn’t try to show off to his customers — he hosts a party for them.” New York Magazine gave the restaurant a whopping five stars. Yet Santos was forced to permanently close shop when a new landlord raised his rent from $18,000 to $30,000 a month.

Santos recalls, “It was a modest space: Louro was a 65-seat restaurant. You’re talking about trying to do $3-milliona-year just to make a profit. That’s not impossible in a 65-seat restaurant, but it would be pretty damn hard. Our best year we did $1.8 million, and we were busy. In those situations it can feel like everything in this industry is working against you.”

Whether it’s marketing, rent or simply getting people in the door despite having checked all the boxes for success, every restaurant faces challenges when it comes to turning a profit. In an age where everyone’s knee-jerk reaction is to criticize, it can be easy to forget that the special destinations where we celebrate our anniversaries, birthdays and accomplishments are often merely temporary flashes in a neighbourhood’s pan. While criticism can be important, the temporary nature of the industry also deserves gratitude. Restaurants continue to be some of the most universally recognized markers of time and place. For proof look no further than the frequency with which people remark how a place has changed when a once-familiar restaurant has closed down.

While there are recipes to guarantee a dish’s success, there’s no formula to prevent restaurant failure. “Sometimes you step in s---,” says Santos. “It doesn’t matter how great you are. No one is safe from that.”

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