INGREDIENTS FOR SUCCESS
Our new series explores hurdles restaurateurs face. This week, we look at the initial concept, the fine-tuning and one restaurant that took a different route
Opening a restaurant in Toronto isn’t for the faint of heart. A new series breaks down what it takes,
For many first-time restaurateurs, it all begins with an idea: a quiet 30-seat bistro in a residential neighbourhood, a lively snack bar inspired by the street food eaten on a backpacking trip or an ode to Grandma’s cooking.
But having a good idea or cooking skills are just a small part of surviving and thriving in an industry notorious for long hours, low pay and a high failure rate.
And without previous experience or contacts in the industry, figuring out start-up costs, locations and viable concepts that hit current dining trends can prove challenging.
In our new monthly series, How to Open a Restaurant in Toronto, we’ll look at the hurdles — some obvious, some not — wannabe restaurateurs face. This first instalment looks at coming up with an initial concept, the people that can help fine-tune the idea and one restaurant that took a different route.
“A lot of us in the hospitality industry are people-oriented, so we try to be welcoming and accommodating to customers,” says Jason Ching, co-owner of Omai Restaurant in Baldwin Village. “But building a restaurant is the complete opposite of that. You have to be a hard-ass when negotiating a lease and really stick to a budget. A lot of people are really good chefs or people with great customer service, but working with contractors and building a restaurant are totally different animals.”
Contacting a restaurant consulting firm that will walk newbie restaurant owners through the process — from fine-tuning aconcept to finding contractors and maintaining the restaurant after the grand opening — can be a wise first step.
Doug Radkey, founder and partner at the Key Restaurant Group, a restaurant consulting firm, says that when he’s speaking at a business seminar he’ll tell a room of100 attendees that maybe one of them will end up with a successful restaurant. “The other 99 will usually realize it’s not for them or that they don’t have the means to raise the money,” he says.
Radkey’s firm has helped more than 100 startups with business plans and has overseen the opening of more than 30 restaurant concepts across Canada and the U.S. since its inception in 2009. Examples include Full Beard Brewing Co. in Timmins, Table Seven Bistro in Woodbridge and Fat Lamb Kouzina in downtown Toronto.
A restaurant consulting firm provides services that include putting together a business plan, finding a location, securing permits and contractors, designing a menu and the look of the space, marketing and staffing. It’s not always first timers who seek Radkey’s help; he gets inquiries from professional cooks who want to open their own place but don’t know how the front of house operates, as well as recent immigrants who want to continue the food business they started overseas.
Before the lease is signed or a menu drafted, Radkey does an assessment with a potential client to find out how much they know about what they’re getting into. He’ll ask if the owner is going to be the chef working in the kitchen every day or if they’ll take on a managerial role; where the recipes are coming from; why they want to open a restaurant, why they think so many restaurants close after 18 months, their definitions of success and failure, and what they think life will be like during the opening process.
“We just want to make sure they’re ready for the journey that will disrupt their life for the next months and years,” he says, adding that he also asks would-be owners if they have a young family to look after. “That’s a red flag,” he says. “You have to understand you won’t be home when you need to be. You’ll have self-doubt and sev- en-day-a-week trials, so you have to have that mental and emotional support system.”
And if he hasn’t scared off potential restaurateurs, the next step is a feasibility assessment. This looks at the viability of the proposed restaurant using existing consumer data from previous projects, market research, food trend reports and neighbourhood studies.
The cost of the assessment starts around $4,000 and takes two to four weeks to complete. It is divided into categories based on market (the restaurant’s target audience, where they live and how much they spend on eating out), location (nearby competition, how far people are willing to travel to eat there), food and beverage logistics (will your farm-to-table restaurant have enough local suppliers to meet demand even during a food recall?), capacity (if the size of the restaurant fits in the potential neighbourhood or budget), business (how much customers are charged, if they think it’s good value, if the menu aligns with industry trends be it what’s on the menu or the style of service being offered). All these factors are distilled into a single score out of 100. Anything under 80 means the concept isn’t feasible, or needs reworking.
“We put together a financial breakdown of the costs and how much time it would take. That’s usually what scares people away,” Radkey says. “At this point 25 per cent of people walk away.”
“You need to come to the table with at least $100,000 of your own money, and if that’s all you can do then it’ll probably be an 800 or 1,000 square-foot place that was previously a restaurant and just needs rebranding. It’s not a bad thing to start small, especially if you’re not experienced,” he adds. “You want to reduce your risks as much as possible for you and your family.”
David Hopkins, president of the restaurant consulting firm Fifteen Group, which counts Smoke’s Poutinerie franchise as one of its success stories, says, “The first thing is to have a proper business plan. A lot of people jump that step and find a real estate agent.” Hopkins emphasizes the importance of nailing down as many details of a restaurant as possible to keep track of factors such as expenditures, potential locations and to prevent the restaurant from straying too far from the original vision.
Smoke’s founder Ryan Smolkin approached the Fifteen Group with the concept of opening a spot serving his favourite Québécois dish. He had experience in branding and marketing, but needed help on the food aspect. The restaurant group helped Smolkin learn how to work with suppliers, run a kitchen, develop a menu and with the help of the firm’s consulting chef, come up with the original gravy recipe for the poutine. Smoke’s started out as a single takeout spot in the Entertainment District in 2008 and now has more than 80 locations in Canada and the U.S.
Hopkins says the firm receives between 10 and 20 inquiries each month, but only about a quarter of them sign on after the initial meeting to develop a business plan after realizing how much it’ll cost. From there, an average of two or three restaurants will make it to the opening phase as it’s not uncommon for potential owners to drop out of the project before opening. Hopkins says an owner could run out of patience because it’s taking too long to find a space (his firm had a client that finally signed on to a location after a three-year search), the return on investment isn’t what they hoped for, a partner could drop out of the project causing a shortfall in funding, or the stress of the planning process made the owner decide that it’s not worth the headache. Jason Ching and Edward Bang, owners of Omai, a cosy Japanese restaurant serving small plates and temaki, Japanese hand rolls, opted not to go with a restaurant consulting firm. Ching previously worked at his family’s pho restaurant in North York while Bang had a takeout sushi place in Vancouver. The two met through friends and ran a monthly supper club in Toronto that they promoted on Instagram before they decided to make the leap to a bricks and mortar location. The supper club acted as a focus group, says Ching, as they experimented with different menu concepts such as Korean-French fusion and Canadiana, and tested out price points, going from charging $40 initially to $100 over the course of six months to see how much diners were willing to pay.
While the two weren’t wellconnected in Toronto’s restaurant industry, they felt they had enough experience working in food to draft a business plan on their own rather than seeking help from a firm. The two raised $250,000 between them by selling their previous restaurants and set a budget of $5,000 in monthly rent.
After a year and a half looking, they settled on the location of a former restaurant on Baldwin St. Ching and Bang budgeted their personal expenses when the restaurant was being renovated, knowing they would have no income during that time. They also didn’t pay themselves during the restaurant’s first month of operation.
The partners paid $30,000 to take over the lease on the space, a quieter dining destination compared to the nearby Chinatown. The monthly rent matched their budget and the space had an existing kitchen. While Baldwin Village didn’t match the culinary buzz of Ossington Ave. or Parkdale, Ching and Bang figured that it was a short walk away from major intersections such as Queen St. W. and Spadina Ave., as well as popular landmarks including the Art Gallery of Ontario and the Ontario College of Art and Design University. There were also hospital and government workers in the area.
The space is small, accommodating about 20 diners at a time. Inspired by the small izakayas that Ching and Bang saw in their trips to Japan and New York, the two decided on a small, sharing plate menu where food would be prepared in front of the diners sitting at the bar. It created an intimate experience for guests, as well as maximized the space, by bringing some of the food preparation into the dining room.
“It’s like going to a friend’s apartment and watching them make food,” Ching says. “We thought it would be a casual, unpretentious way to eat sushi.”
Construction took six months, much longer than the six weeks their contractor originally estimated, meaning additional rent payments had to be made and the two had an extra four months of no income. Ching says the designer and contractor they initially hired were caught up with other clients’ projects, causing delays. After three months, they fired their contractor because the work was being done too slowly and had to hire another contractor to finish the job. The walls, floors and ceilings were stripped and rebuilt to create a sleek and moody dining space. Omai opened in fall 2017 to positive reviews, making the long list for enRoute magazine’s annual best new restaurants list and getting featured on CBC Radio. Still, almost two years in and Ching and Bang say there are ongoing challenges of being in Baldwin Village, namely that they didn’t think thoroughly about the neighbourhood’s demographics from the get-go.
The nearby hospital workers and government employees aren’t the kind of people who would typically stick around after hours for drinks and dinner, compared to people who work in the Financial District, says Ching. “We thought the area was central, but we realized you should be thinking of what’s within a five-minute walk of the restaurant rather than 15, especially during the winter.”
The two made tweaks to the menu and space. They replaced the row of bar seats running along a counter along one wall of the restaurant for small tables of two, making it more appropriate for dates. Bang simplified the plating on some of his dishes. Rice bowls priced between $12 to $15 topped with marinated steak, sashimi or fried chicken were introduced to appeal to budget-minded diners during lunch and dinner service.
“We didn’t completely change the concept,” Bang says. “It’s about understanding the people who live in the area and finding that intersection between what they want and what you want to do. We’re still figuring things out.”
So far, it seems to be working. On a recent Wednesday evening ahead of a freezing rain warning, the restaurant was packed, some tables opting for rice bowls, while others ordered plates and hand rolls a la carte and knocked back sake and Asahi beer. The restaurant is profitable and the two are on track to meet their two-year deadline to recoup their initial investment. Still, Ching says there’s no surefire way to keep a restaurant afloat or predict when it’s going to be a busy night. The only thing that’s certain is that bills always have to be paid. “My mom’s friend told me that running a restaurant is like turning on a tap, but instead of water, it’s money.”
“The first thing is to have a proper business plan.” DAVID HOPKINS RESTAURANT CONSULTANT