You are a great cook, and you know your way around a wine rack. All your friends tell you so, right? Your original recipes are to die for, so why shouldn’t you open your own eatery? How hard could it be? Well, consider that most restaurateurs have the life span of a moth.
“It’s a business, it’s all business, and you’ve got to be a good businessman,” said Dan Sbicca, proprietor of two successful restaurants Sbicca in Del Mar and Meritage in Encinitas. “This is as hard a business as there is.”
But four local restaurateurs , Sbicca and his wife, Susan, Karen Krasne of Extraordinary Desserts and Eric van den Haute of Sevilla, Inc. , are beating the odds.
“A good foundation is absolutely critical,” said Steve Zolezzi, the executive vice president of the Food and Beverage Association of San Diego, a 725-member local trade organization of restaurateurs. “A business plan is absolutely critical, financing is absolutely critical. You have to have all those things going for you before you start looking for a location. If you have those points, you can take a location that has been marginal and turn it into something that can be profitable and exciting to the public.
“You know what they said in that baseball movie? If you build it, they will come?” he continued. “There have been a number of cases when absolutely that was the case, but it takes a great foundation. You have to be grounded in basic business principles. You have to be people-oriented and command a staff and put together management that will execute your vision. Look around , the Cohns (who run a group of San Diego restaurants), George (Katakalidis) at Daphne’s , they fit every one of those components. They weren’t absolutely polished when they began, but they quickly brought those factors into focus. That’s how they became successful. Our industry is all about the little things. You have to pay attention to the minutiae.”
Van den Haute agrees.
“Business guidelines have to be followed,” he said. “Wanting to do what pleases the owners simply doesn’t work. You have to satisfy the guests all the time.”
And that requires a balancing act of keeping the flavor that first attracted the crowd, while staying fresh and in sync with, in his case, Latin cultural trends, he said.
While industry pundits estimate that anywhere from 90 percent to 95 percent of restaurants either shut down, change their concept or sell out within the first five years, said Zolezzi, “I don’t think it’s that high. A more accurate number would be between 60 and 70 percent in the first five years.”
Sbicca continues to marvel at all of the minefields he has to maneuver around on a daily basis.
“You buy raw product, you sell and collect all in one day, you have to be on top of things or you can get ripped off,” he said. “Theft, spoilage, cash flow I have vendors where I get 30 invoices a month, daily deliveries. Labor will kill you, and this is so labor intensive. Labor runs about 25 percent of the operation.”
Other headaches, he said, are “government interference, a lot of costs you can’t control.”
“You can be the best restaurateur in the world, but these are outside influences that could come in and ruin your day,” Dan Sbicca said.
The biggest factor in a restaurant going under, he said, is undercapitalization.
“You’ve got to have staying power and cash to pay the bills,” he said, and that can’t wait until you are flooded with long lines of customers.
Sbicca figures that it takes two or three years to feel secure.
“We’re coming up on three years,” he said of the Meritage, “but you still have to worry about day-to-day events.”
Sbicca also has learned a lot about real estate.
“Another reason a lot of restaurants go out of business is they lease space hoping to do business that covers the lease, instead of renting at a reasonable rate that allows a restaurant to grow,” he said. “That will kill you. I’d rather have no space, than space where you stay awake at night wondering how you are going to pay the rent.”
Krasne says you have to love what you do.
“This is a really hard business for anyone not willing to put in 200 percent, with the level of intensity it takes, working seven days a week, completely hands-on,” she said. “Everybody thinks it’s so glamorous, but it is so not true. There is nothing glamorous about what I do. But I really, really love what I do. I’ve never had an issue with work ethics and working hard.”