My new business partner and I are moving our lives out of New York. Census data say the fastest growing counties are near Jacksonsville Florida, Atlanta, and Dallas/Austin. A bit of background, for context: our first step was to take over and run a vacant “Ice Cream & Grill” up in Nowhere, Pennsylvania this past summer - to make sure we could successfully make the transition from practicing law to becoming restaurateurs. For a while (about 10 weeks) we sold very good food in a clean establishment, and we grew to a total payroll of 26 different people (we didn't have much turnover, but the kids went back to school, etc.). In the Quest for the right place to which we should relocate, Lesson 1 was quite simply demonstrated in Lake Wallenpaupack, PA. It cost us each a pile in losses which reinforced the lesson, since there was no volume of traffic to be had no matter how good or cheap the food where our landlord built his restaurant (he was an idiot to buy it, the builder was an idiot to build it). We already knew this, our motivation was not to make money but an education in diner 101. We just got back from a week in Atlanta, our first scouting trip. We ended up checking out around 30 restaurants - 15 of them were for sale, and for these we spent an hour or 2 with each guy who was selling his store (we’re still deciding what concept we’re going to pick, and whether or not to go with franchise, so we also went to a lot of competitive stores that weren't for sale). Forsyth County is what attracted there, we stayed in Norcross and spent 6 full days driving around central Atlanta and NE of that (about a 40 mile radius from Norcross, and up to lake Lanier). The reason for the post - share your ideas on where we should go, and why. Low taxes is one big factor. Moving to Atlanta means the state confiscates 6% of income as tax, Florida and Texas don’t. No brainer, stay outta Georgia. All have sales taxes not much better than NY. Just FYI, seven states have no income taxes - Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. New Hampshire and Tennessee collect income taxes on dividends and interest only. Castle doctrine in Taxes is reputed to permit you to shoot someone squatting on your land who refuses to leave. Texas legislature meets only 6 months out of 24, which means it's hard to fuck things up like they do in NY and Cali where lawmakers work "full time". Both of those seem like great reasons in support of TX. We’d both ultimately rather get into some kind of light manufacturing than exploit America’s expanding waistline. But Obama has cratered economic development, and our industrial policy was for shit even before this fuckup took over. And we both recognize that among our key demographic markets is the welfare fatties. My questions- what brings money into these places? What makes more sense? What am I missing? Where would you go? Economic policy is important too - good policies, and where are they being practiced? Please keep this RR, since I don’t intend for this to develop as some kind of blog (personal though the subject matter may be) and don’t mind insults if the lefties on this board start spouting their nonsense and pissing in the pool. All good fun, eh?
What town is 14th Doctor in? If you want to do a pedophile themed restaurant have you considered Canada?
Sounds to me like you need to pick some pontential places and do some serious research. Your posts reads like a lawyer. Unfortunately too many lawyers are shite businessmen because that don't have that business brain. A successful business is not just about taxes and local laws. You need to work out who your market is, whether or not the locals in a particular location are going to be good enough interest in the product or service you are providing, what the population size is, the value of prices you can charge in a particular region, whether or not thet region will affect operating costs and whther or not that region is significantly affected by the economic climate. Supply and demand my friend.
Honestly, you should be weary of such a radical change of careers unless you two have extensive experience running a restaurant as it involves a whole lot of things most people don't think about (or even know about). I'd suggest working a couple of months in a restaurant as close to the type you want to run, in the city you want to locate it in, before plunking down your cash just so you can really learn the ins and outs of the trade and work at every aspect of the business before you open your place so that way you're not learning on your own dime. Also making quality food in commercial quantities on a tight schedule (the customers want it now and most won't wait or even care that you have 15 different things going on and one of the cooks didn't show up for work that day) and an even tighter budget. Also you seem to be letting yourself get side tracked on by virtual nonissues, letting the presence of an income tax determine your location, when in reality you should be rigidly defining the theme and what style restaurant you want then figuring out which cities it would work well in and which would actually support that type of restaurant. You should be religiously researching the competition, where are they located, what is their menu, what are their prices, what does their food taste like and how will you have a comparative advantage? Can you really cook a better burger and EXACTLY how much will it cost in ingredients? Does that include a profit margin to pay for rent, and staff, and utilities, and your living expenses, etc? You'd be amazed how many restaurants fail because some guy thinks he's a good cook at home but doesn't have any experience and thinks "how hard could it be"? Seriously, figure out what type of restaurant you want, decide it's theme, figure out a coherent decor, spend weeks or months refining the menu for taste, easy of preparation, and cost effectiveness compared to what everyone else nearby is selling those items for. There are tons of great restaurants that go under because of a bad location and even more bad restaurants that survive because of a good location. Personally, if I was trying to start a restaurant, which I would never due since I'm a geologist with only limited restaurant experience way back in college, I think I'd try to ride the fresh & local theme for all it is worth so at least I'd have a comparative advantage over the big chains. People are willing to pay $12-$15 for a 100% local hamburger when they'd bitch about a chain serving a similar hamburger for $6 but you really have to play up the quality and localness of it all and you ABSOLUTELY need to be located in a town where people give a fuck about those things. It won't fly in some shit stain town full of rednecks but it would be packed in a more cosmopolitan place so location is everything. Refine that damn menu a hundred times, find the local suppliers who can consistently give you what you need at a decent price, do everything in house possible as people notice if you use Sysco crap, write down what your theme is and use it to guide your decision making, once you decide what you will have on your menu make several physical menu designs as that is what every customer will see and read so it has to be perfect, and make hundreds of different mixed drinks so that you get just the right combo of mixes on the menu (and, yes, you want a liquor license because that can add up to 50% to your bottom line; some states/cities are stingy with those so that should be WAY more important to you then a 6% income tax which you probably won't even make enough to have to pay for several years). Maybe you just didn't put it in your post and you've secretly been thinking about these things but sincerely your whine about an income tax, which you probably will not make enough to pay any way, makes me believe you're not concentrating on the things you should be if you want to run a successful restaurant.
http://www.thelinkery.com/ If I was opening a restaurant, The Linkery is the type of restaurant I'd want to run even though it is more difficult to run then just another burger joint. At the end of the day they're selling better quality versions of the mass market foods we all know and love but they're also making everything from the mayo to the meat from 100% locally grown and sourced stuff. Naturally, you can't do that in every town because most places don't have the local farmers growing everything you need any more or because the towns people don't care if they eat McD's every day compared to very high quality local and organic sources but some town you can do this and that's where I'd want to be. The profit margin is much higher in these kinds of restaurants so it makes business sense but also it gives you an instant comparative advantage over the chain restaurants so you have a unique sales proposition. There are problems, you have to adjust your menu to what is seasonal and what you can source locally but that is both a plus and a minus depending on where you are and what grows there. Many customers actually like the variety in menu offerings. Seriously, read The Linkery's owner's blog so you can see how he his marketing his stuff, see what's on his menu, look at the pictures to see his decor, read his drinks menu, and most of all understand his theme then think if you can do something similar in a town which is sophisticated enough to support such a high quality establishment.
I'm breaking my own rule about not posting three times in a row in a thread but this topic has me fired up. If you want to be in the restaurant business then don't settle for just another X style restaurant; be something special. That doesn't mean you need years of culinary training (though that no doubt helps) but it does mean you need to bench mark the best restaurants serving the style of food you want so that you can one up them. Figure out what type of food you want to serve, the vibe you want customers to get, the ethics/philosophy you want to espouse, etc... Then figure out which towns will support that sort of restaurant; compare population income (by bracket), levels of education, family size, etc for the town. Then find out the best examples of that style in the country, travel to the top 10 or 15, take lots of pictures & write down everything you can in a notebook (what did the burger taste like, how did they talk about it on the menu, what was the sauce like, can you figure out what the ingredients were, how is the seating & table, what was the decor top to bottom, how was the staff & service, who are the customers, how much is each table spending [are they buying steaks with expensive drinks or just a quick snack], etc...? This bench marking will first of all be fun to do since it involves traveling and eating but it will also give you ideas for your own place (as long as you take complete notes & photos so you can remember everything good, bad, or other wise) plus it will open your eyes to aspects of the business you might not have considered before. Heck, keep a blog and tell the owners you're a blogger who wants to write an article on their restaurant and I'll bet you half of them will give you the grand tour behind the scenes which is bound to help you when you open your place.
Good point there. My town has basically the same two restaurants -- a generic Mexican restaurant and a generic greasy-spoon diner -- repeated over and over and over.
This is a no-brainer. Open an Icecream and Grill in Texas. It's hot as hell there and you can make a killing!
I know farmers that sell their grassfed hamburger meat for upwards of $5/lb. Aenea sells her grassfed eggs for $4/dozen.
No way in )(*&* would I open a restaurant in the Dallas area. Plano, TX - just outside of Dallas - has more restaurants per capita than any other place in the US. I was blown away when visiting the area in April with how many restaraunts there were there, commented to the owner of a restaraunt, and he shared the tidbit with me. I investigated it at the time, and believe it to be true.
Sound advice. I skipped our backgrounds as irrelevant to the thread, since we are now most interest in where and what, but well past the whether we should. And to avoid the most common pitfall (since most restaurant failures derive from a lack of capital to sustain the store), we also have millions between us as capital. Still, since you asked, before I went to law school I worked 10 years in diners (I'm greek, it's in my blood), in just about every position position short of owner/hostess. My partner managed such operations as McD's and Roy Rogers etc. in his prior life, before he ended up becoming valedictorian of his law school class (he ended up graduating a year before me because I took an extra year to do my MBA). Oh, and he's a super genius that would make Wile E Coyote blush. Even before our experiment this past summer in Wayne PA (you may have missed that we already performed the 3-month test exactly of the kind of advice you gave) we were well aware that depth of staff and redundancy of positions are required to meet unpredictable demands (i.e. we hired 26 staff headcount for a 1-cook, 2-ice cream girl, 1-waitress operation, hours 11 to 9 pm; in contrast, the guy who ran it in 2006, the last year it was open, had his wife, two daughters, and one local kid as depth). We also know that US young are basically useless as employess, and they prefer texting and websurfing to work because they are entitled to a good living without any work. That means we must hire as many legal mexicans as we can hire, wherever we end up, because they have the right work ethic. Min wage late teens and twenty-somethings are the worst generation yet to be bred as employees in America.
My experience with hiring 20 somethings as sales people bears this out as well. :| It really is quite sad.
After getting the MBA in 1989, I've spent 2 decades close to businesses of a variety of types and scale. And I disagree, matters like local income tax and sales tax policy are most certainly *not* a non-issue, and the amount of regulation most certain does matter. Compare entrepreneurship rates in the US with the sclerosis in (highly-regulated) Germany for a taste of what I'm talking about. The US states are micro examples, but the same economic truths hold absolute. As a general rule, regulation and taxes are bad, m'kay? Example - if you want to run a few machines (pinball, video game, wack-a-mole) in a small alcove in your store in Atlanta you will be disappointed - Atlanta GA, residents pay 3 different kinds of fees/taxes that make a simple kind of investment unprofitable/complicated. It's another negative of Georgia that it is so mature in its development and quantity of regulations- and these burdensome and costly regulations are most often accompanied by high taxes (government keeping itself busy in the service of government, not commerce).
I consider that your are overlooking certain things in your initial view. Anyhow, since I am not American I can hardly advise you about which is the best location other than to give you core pointers on what it takes to make a business successful.
One thing you should consider is hiring chesty girls in tight t-shirts and hot pants on rollerskates to serve the food. And getting a liquor license. Because if you can get drunk guys in a place that has hot, skimpily dressed girls rollerskating around... CHA-CHING!
Well for food type, you could start with a less risk "stick to what you know" approach and open a Greek resturant near a Greek community. Once that's found a footing then you could maybe branch out into something different. I think in this climate you need to take the quickest route to initial, and potential long term, economic stability before starting the dream project.
Understood, but given the context of my initial post, and the scope and magnitude of the ambitions in the project, and that although my partner and I may be idiots, we're obviously not mindless idiots (having succeeded as lawyers for 2 decades and all), you should also have considered that there must be more information about us underlying our plans that didn't (and wouldn't, and couldn't) come out in a relatively brief first post at WF. I.e. our initial view is much much broader than my first post could reasonably describe without me writing a tome including two mini histories. A few replies since then have elicited more info. that responds to some of your points.
Yeah, that's what we concluded. E.g. (example only, again, there is much much more to our calculations) Phase 3 will likely be a single store, that we take time to perfect and then replicate. If it's a slice pizza theme (margins around 25% of gross, but smaller top line sales) we'll have to build to 7-9 stores for the critical mass to which we aspire - if it's a 'diner' (margins around 15%, but much larger gross, on average) 3 stores should do the trick. We'll likely start by buying a 'turnkey' not building out our own from scratch (much more expensive, risky, and with several complications unique to build outs). Meanwhile, at the outer edges of whatever Growthicopia we select, we may deploy a small amount of combined capital (say 15-20%) for land depending on economic climate, zoning and demographic trends, etc. for the final stores planned (e.g. for pizza stores 7, 8 and 9 or for diner no. 3). OTOH, franchises would tie our hands considerably, particularly with respect to expansion, although they offer many "pros," in return for the constraints.
Pizza is by no means certain. But it stands out as the idea to beat for a few reasons- much higher than typical margins; you can train mexicans to do it adequately to well; there is a reason that NY-style slice pizza can be found everywhere if you travel within a mile in the NY area, it's good, fast, cheap, etc. There is not even close to the same kind of penetration of slice pizza in e.g. the Atlanta area, nor many other markets in the Growthicopia parts of the USA. The fat, old and dying areas of the US, Slothicopia USA, have plenty of slice pizza, but not the parts of the country that are an attractive location to which to relocate (incidentally, where home residences are avg $125,000 compared to $280,000, among other benefits).
When considering where to start up, don't necessarily look at the trendy places that have already established food culture. Lesser metro areas like Oklahoma City, Tulsa, (my local examples) or any mid major urban area might have less of an entry cost. Plus if you're doing something unique, it will be easier to make a splash in a less saturated, chain heavy market. An example, a couple of local chefs started up a taco shop in a dilapidated part of town, operating out of an old drive thru diner and a food truck. If they had jumped into Austin's established food truck scene, they would've been just another squirrel trying to find a hip food nut. As it is, Big Truck Tacos is now the most popular restaurant in Oklahoma City, winning praise, acclaim, and a spot on a Food Network program next year. They're very good, but nothing that you haven't been able to get in alot of other cities for years. What made them uber successful is that they hit this market at just the right time. Within a year they've gone from start up to buying half a city block to contain their restaurant, catering business, and retail clothing store. And being two butch lesbians shows that you don't have to fit in to any certain demographic to be successful. Lines are the norm. A place like OKC may not be on your radar, but it's the home of the natural gas industry, which makes it one of the few economic bright spots nation wide. Real estate is relatively cheap, and consumers with cash are looking for anything that isn't an ordinary chain. My advice would be to find yourself a smaller pond if you want to be a big fish.
Changing demographics in any given area I'm sure have come across the table and should not be taken lightly imho. Effluient areas have gone south due to the influx of poorer individuals and areas once taken over by the downtrodden are being reclaimed by developers. Some areas never come out of what I refer to as ghetto state but as times, industries, and demand dictate areas usually see some form of reclaimation. These areas of reclaimation, like for instance downtown here have done fairly well but are limited due to parking restraints and such. Lofts have become a haven for builders around here who've taken otherwise blighted areas of semi abandonded industrial sections and made the conversion happen. It would be helpful to know someone involved in such large scale projects. The ballpark downtown here was part of such a project. Midtown is going through a similar renovation as land became semi cheap and was bought up. The changes have brought property values up considerably. Of course zoning changes were neededin some of these areas though zoning is pretty laxed here. I wouldn't say these examples are exemplairy but there have been some decent startups that have done well. From my perspective and what has been discussed, if you know Greek then unless you are just tired of that particular area of expertice then I would look for an area not particularly Greek, with plenty of better scale apartments and businesses around and then just make an outstanding product the people actually want. It's not an easy task you two are undertaking but you seem to have your ducks in a row.
Yes, that occurs in places like NYC, Chicago, or coastal California. The key is marketing and educating the customer so that they know why it costs so much and how it is different. A burger costing that much will be 100% grass fed beef (not grain fed), hormone free, and from a local rancher. The flour used to make the bun, veggies, and the condiments would be both locally grown and organic plus made fresh in house by staff paid a living wage. It's a feel good meal which a great many people are willing to pay extra for because not only is the food really good, super fresh, and of much higher quality then the industrial stuff but you're also helping local farmers and paying staff decent wages. Is this approach for every customer? Nope, some people don't care about that stuff or can't afford anything but McDs but in the right town (and location is far, far more important then if the state has a 6% income tax on people making over $100,000 or not) you can do extremely well with this approach. The locavores love it, anyone into sustainability loves it, most people like supporting quality local businesses which buy local, and the health conscious & the foodies will pay top dollar if you give them exactly what they want. It's good business as well as good ethics but you have to be located in a place whereenough people care about those issues and not some little one horse town.
I forgot about food trucks. That's a huge growth area which is catching on like wild fire across the country with even top chefs opting to go the food truck route because it requires less start up capital (probably not Tuttle main concern) but also allows them to serve quality food at a lower price point. Unfortunately, many cities (most?) still have absurd regulations on food trucks to try to prevent them from out competing the traditional property tax paying restaurants but across the country those rules are being loosened as a new generation of high end food trucks takes to the road. Another thing I'd think about looking into would be a gastropub as that segment seems to be taking off and is easier then a locavore type establishment and, besides, huge numbers of folks like quality exotic beers and mixed drinks with fancy versions of familiar foods.
