Growthicopia USA

But this also means that there are bargains. We saw some steals - one of which sold while we were there (it was one of the few empty stores, an Irish Bar called Flannigans in Tucker County).

If the recession lingers we could be fucked (it could turn out that we bought in too soon), but in the grand scheme of things, as long as we have the capital to outlast the downturn, we should survive till success - assuming also that we don't overextend ourselves.

Mostly. But at heart we're both kind of fucked-up stoners. Fortunately we're also workaholics when needed for the right objective, and we won't pull the trigger until we've completed the due diligence needed to have a good chance that we have a good idea of what we're buying into.

Thanks a lot for the reply, bud. Your city is certainly one of the most extreme cases of ups and downs, and contrasts of styles of life in the country. Local knowledge and a feel for recent history will be key. So you're right about changing neighborhoods - we're both on the lookout for expected changes in either direction, better or worse. It's kind of why I'm here, Wordforge is just my latest source of information, albeit since we have a diverse group of Americans here it should provide a fair amt of value. E.g. I figured oldfella would've dropped in by now to tell me to stay out of Augusta GA.

I want to know what is growing, and why it's growing. And if it will be growing tomorrow, I want to know that. If Nat Gas means a sleepy region today will very shortly become a high-growth county, and it has decent volume to start with, I'll move past my expectation that it will be in Florida, Texas or Georgia. Why it's growing is a key question. What brings money in? Forsyth county has $11 billion in manufacturing, GA total was $157 billion in 2009. Forsyth is high on the list because it grew from 100k to 175k people (2000 to 2009), 6th fastest in the country.

So what the fuck is accounting for that growth in Atlanta? I don't mean all the nail polishers, everyone polishing each other's nails (gym, dry cleaner, car wash, beautician, etc.). My partner and I were both nail polishers (writer of bullet-proof junk bond prospectuses, hedge fund general counsel) in the NYC financial services sector. Without fin's services NY would be a small fraction of itself. Atlanta is corporate HQ, nice climate, and convenience that it's a hub of air-traffic. Anything else? What brings money in? What do they actually produce? Building stuff is more sustainable than polishing nails (sort of like what the economists call velocity, the same dollars changing hands, accountants, lawyers, services, salesmen, landscapers). What's being built?

My Greekness is diluted, I have a good accent but only around 20% fluency (from a peak of ~50%, through disuse). I was raised as Amer-Greek, not Greek-Greek like the ones I met in G.O. church when I was young. But I'm still all-Greek and willing to prostitute it for whatever value I can, and I've a good taste, and my mom's recipes. A lot of the diners have Greek menu (in NY, GA, and FLA, at least). Diners are 24/7. They serve alcohol. But cons: they have menus as long as a book. It's very challenging to train Mexicans (or even locals) to handle a diner's broad menu selection. But a diner (Greek or otherwise) is still a strong possibility, because the best ones can throw off $50,000 a week gross (compared to the best slice-pizza joints at maybe $20,000/wk), which is an awful lot of money, much of it paid in cash.

Yeah, but they can be very personality dependent. My partner and I are not burly ex-football players (I played college ball but I'm like 5'8" and don't lift any more). We saw a real nice Sports Bar, they've got the nights of trivia and 2-3 poker, and local team sponsorships, but it's the tight-tight shorts the hot little cuties were sporting that brings in the beer junkies.

This guy (the seller) was adept, but he is personally responsible to build his stable of bitches. He sees them in everyday life, if they meet his T&A scale (I'll vouch for his eye based on two I saw), and gives them a smile and a business card and tells them to drop by. Three months after we bought half the girls he hired would be gone. New ones would depend on us replicating his talents (not our skill set). Or we could hire a mgr who would then rob us blind.

I'll let ya guess where the other one is.

On another note the design for the new Federal Courthouse here in San Diego is rather nice. It was kind of expensive because they wanted a skywalk attaching it to the next door city jail (so inmates could be walked to and from court) but locals actually raised charity money over the last 30 years so that public art could be painted in the court rooms. Personally, I kind of think that's the way it should be done; the Feds pay for the building but the locals pay to decorate it. We badly needed a new building though because the old one was built in the early 1930's and was way to small for the number of cases.



Over all it still looks like a cheaply constructed government building but it has about four times the courts as the old building so it means cases will go much faster.

A little pressed for time but here's my take (and I'd recommend you take it with a grain of salt as I'm more adept at pressing out an extra 2% of efficiency out of mature companies in mature markets than setting up a new business in the restaurant industry):
I basically agree with Oerdin - figure out what it is what you want to do, then pick the market. What are you good at, what do you want to do, what do you believe in? Then take it from there.
No idea what a proper segmentation of the (U.S.) restaurant industry would look like but I'd argue there's at least four distinct categories: cheap fast food chains (McD, BK, ...), a little more upscale chains (Cheesecake Factory), local restaurants (one outlet - could be cheap or mid-range) and high-end restaurants (high prices for high quality).
One and two are basically off the table unless when you mentioned millions you were actually talking at least high double digits and you can find additionally partners bankrolling you (plus it's kinda boring). Personally I'd like 4 best (highest margins plus I like high-end, fancy stuff in general - less competition) - which would require you move into a fairly wealthy, cosmopolitan, up-and-coming region (e.g. evenflow's example might work) and that you'd actually have the cooking skills to pull it off. It'd also offer the most possibilities for extra revenue - add a lounge, hire a DJ and keep it going until 1 or 2 a.m. instead of 9 p.m. with a continued shift away from food as the night progresses.

If I'm reading you correctly, you're mostly interested in option 3 - which could work as well but wouldn't be something I could get personally excited about too much. Different requirements and probably a lot less tough than 4 (but also a lot less rewarding).

I could go further into why I prefer 4 over 3 but the general idea is, you need to figure out what it is you want to do before picking where to go - then use census data to pick the areas that are attractive based on your target customer base.

You're right that we lean toward a mid-market or family-style type. The reason is the simplicity. We are not interested in "buying a job", we don't want to be tied to the 5 stores (or whatever) we end up with, we want to be a strong presence (2 hrs each per day in every store on average, for each of us), but not required to be in-store for it to hum along on its own. We want to reduce as much as possible the stealing from us, and the waste. Both of those are a challenge if the Owner is not also the manager (or someone in owner's family). A good POS system and a good process can both mitigate theft, but the style you suggest would be (1) a build out which is always more challenging than a turnkey (taking over an existing success), and (2) a theme, decorators, head chef, etc. all of which would cost significantly more than a more generic style, and then all of which are more beholden to the head-chef to hold us hostage (we can't hire Mexicans to replace the Kitchen Manager).

It's not really a formula designed for high probability of success, but the higher-risk higher-reward formula, which neither me nor my partner favor. Done right it can certainly generate a super-successful return, but then as soon as we start becoming absentee (not completely, see above) the quality will drop like a stone or the head manager will steal from us or both. In every store, if we replicate the template. Also, neither of us have egos and gourmand tastes sufficient to carry out the high-end stylish restaurant (although, like you, I certainly like to patronize the high-end places and pop for the big fine wines from time to time).

In the 90s, fresh out of biz school, I would have given a similar analysis to yours and Oerdin's. I'd have made much of a full understanding of the competitive environment, etc. and you can recite it with a fresher memory than I.

And you are correct, when I said "millions" I should have added "just," as a qualifier, along with the word "liquid", with maybe a-half more each to follow in a year. Anyway, the problem with a McDs or BK isn't just the high amt of money needed, which is mitigated somewhat because banks will lend for that kind of franchise (although they will generally not without a franchise), the problem is that you are constrained in growth by the Franchise Lords, and the new stores that they will permit, or to buying existing stores. Either way, it's some serious tying of hands, in addition to the high cost you mentioned.

Our whole purpose is to buy where the place is already growing (and determine what will work there), not force our own preconceptions of what we'd like to sell into a market that might not have a taste for it.

We want to arbitrage the training and indoctrination we can instill in min. wage workers, and extract the maximum value we can arbitrage from that training. As el chup said, it may sound like it's a pair of lawyers talking, but if you look deeper you can see that our flexibility and agnosticism regarding what we want to cook and where we're prepared to cook it is a big strength of our plan.

Growthicopia, baby.

It ain't New York, and hasn't been for 5 decades.

I agree with you that you should avoid becoming a franchisee if at all possible. If you design a good themed restaurant with a good menu then the big money is turning it into a chain and selling franchise rights to others. Being a franchisee might help make the start up easier but it also precludes possible future profits from selling franchise rights to other locations.

North Dakota has a good economy now.

You should go where the consumer is for your product and/or service. Secondly, if you have no passion or flair for the restaurant business, don't bother.

The streets are littered with people who had dreams of owning a restaurant but lacked the skill set to see it through.

People love to eat out in Dallas and Austin. Dallas is insane when it comes to that. Austin is pretty ripe though. Give the Austinites something unique/quirky and they'll eat it right up. People there love to do "Austin" things. Make your restaurant one of those things, and you're good to go.

But few people and an economy based on two things. Not worth the effort IMO and certainly not prime real estate for a new restaurant chain. If Tuttle wants to go medium level but not high level with his restaurant (and he has too if he wants a chain) then he should seriously look at the gastropub movement as I think it would translate well even in medium sized cities in red states without being over the top specialized like a locavore place is likely to be.

Dang! I need to read this freaking thread. That said, I don't know if anyone else has said it, but it sounded like you'd already researched it a bit: I've heard the margins are really good on breakfast restaurants and...I forget. Mexican? Chinese?

Look at your cost of ingredients compared to what you can charge if you haven't already.

As for finding a silver lining, that was where I was when I was exploring the motorcycle company as well. One would argue that going into manufacturing durable goods in the beginning of 2009 would've been a terrible idea, but there were industrial lots going for a steal, you had lots of talent you could hire cheap, and motivated governments that would cut you tax breaks.

I was just too lazy/chicken to follow through.

You went to B-school so I know you know all this but once you figure out EXACTLY what you want to do you need to write a business plan detailing everything as realistically as possible. What will your sales volume be, what is the projected sales margin on items sold, how soon do you expect to become profitable, etc? Take your projections and double them on the down side (just in case) and with those revised numbers can you weather a worst case scenario? It will help you from having rosie glasses and it just might save you if things don't work as planned (and they never do). You're both a lawyer and a MBA so you have the top end know how (and I'm assuming your partner does too) but there is a ton of low end drudgery which must be considered and which you're probably going to have to do because it is your business and you're responsible. Also, I have several friends who have started their own businesses but who later found their partner wasn't as committed as they are or who were initially committed but who got worn down due to the month in, month out drudgery of it. Make sure that doesn't happen to you. Lastly, B-school things are all well and good (and can be very useful) but at the end of the day a restaurant lives or dies on it's food and it's service so you need to spend as much time as you need to make sure that's spot on. Make sure all the serving staff taste everything so they know what's on the menu (all the way down to the expensive wines or what not) and can make good recommendations to the customers. Lastly every day physically eat and taste each thing with the staff present as you can spot problems that way before it hits the customers and causes a problem that way you can correct it before a customer gets offended and writes a bad review online which could cost you sales.

I could write a long post telling you not to do it. About how most restaurants fail within a year, or how many people get involved with no idea how to successfully run one because they think it's easy or that their other life experiences somehow qualify them to do it.

But I suspect it'll fall on deaf ears.

-Have a clear idea of what you want your restaurant to be. Don't mish-mash ideas that have no business belonging together.

-Be realistic. Look around you and see what the competition is doing. See where people are eating, and see what they're eating. White tablecloth establishments in blue collar towns, or seafood restaurants in the desert are big no-nos.

-Hire a talented chef who shares your ideas. Give him freedom and responsibility. This can be hard, because most people have no idea what good food tastes like. They think they know, but they're so used to eating shit that they have no idea. Furthermore, many people like to micromanage a kitchen or worse, are completely hands off and let hacks ruin their business.

-Don't cut corners. Some people are pushed to cut corners to save money; things like microwaves create a viscous cycle.

-Don't go all out. You can find all of your ingredients at local markets; don't bother importing caviar or Maine lobsters unless you absolutely have to.

-People vote with their feet. See what people order, see how they leave. If you have a bad restaurant, no one will tell you. The red ink will tell you. If all your customers are taking food home, shrink your serving size.

-The best way to make an impression is to have a good meal. I can't stress this enough. A lot of people think that a gimmick or a bunch of signs on their building will put them on the map. A good restaurant advertises by word of mouth.

-Don't do this. I can't stress this enough. Stop and try something easier.

I know stepford wives who live here because it is here and not say Washington DC for their kids. They have 2 homes and possibly a 3rd now. One here, one in DC, and one in New Orleans.

Don't forget that we are also 3 hours from Big D. Flow's been told by some of the gas guys that their company told them they were going to "retire" in our neck of the woods because the deposit was so large, they would be here that long.

Thanks, A, for the supportive words.

Was busy with "day" job until now, am out of town for a couple of days, sorry I'm so late in checking in here.

My partner has a wife and 3 kids, that don't seem to appreciate the work that's involved in earning a dollar (daddy is billed out at $1000/hr at his law firm so maybe that means money grows on trees in the City) e.g. last week I hear they bought a fuckin' Jack-o-lantern carving kit. You read me right, a fuckin' Jack-o-lantern carving kit. AFAIK, a Jack-o-lantern carving kit used to consist of a knife and pumpkin, but nowadays it seems there's a lot more to it. Their property taxes are somewhere over $35k per year (it's just an ordinary house on an ordinary piece of land, it has some really nice furnishings, but it's in a "top" school district). My buddy's gone pretty crazy with the bleeding since it's his job to support his family, and he spent too little time indoctrinating them on the value of a dollar than he spent working.

In time, and with the right experiences, I have no doubt she would come to appreciate how far the dollar can stretch, and how fine the quality of life can be in the right environment with the right people, but many people end up with their head shoved up their asses, especially when the world hands them the golden ring, or it sells them a bill of goods with a invoice post-dated far into the future, and it can often be a difficult challenge to extract the head from the ass without a lot of kicking and screaming.

It'll take a fair bit of work from both me and my bud to make headway on the missuz, she's really a great gal at heart (except for the whole head-up-ass part) but some manipulation may turn out to be necessary.

So for e.g. we picked Atlanta as the first scouting territory because my partner figures his wife will find it necessary to veto our first choice, almost on principal. Apparently she's going to insist on making him pay for his gross transgression of making her move away from her happy little sheltered (and unsustainable) life, like it's his fault that he ended up getting fucked by his partners in the major NYC firm he's been with since '89 (he didn't do the "face time" thing, preferring instead the "kick-ass best-lawyer-on-the-fuckin-block" thing, so in effect it *was* his fault that he became the easiest target for discard when someone had to be shitcanned from the Capital Markets group).

Anyway, I will take your words to heart, and steer the car north when we get to Big D. Just my partner and I will be making the scouting trips, and ultimately, if we make our decision on the merits, we'll drag his family along kicking and screaming if we must.

Thanks a bunch, Chris, that's all swell.

But since as I said this is a thread about "where?" and maybe "what?" (and perhaps, for the curious, "why?"), your response will have to wait until the universe circles back around and the "whether" question becomes interesting again.


In fact, as I probably didn't stress enough before, we'd both be more interested to produce something you can hold in your hand - light manufacturing of some kind, somewhere that's growing, instead of contributing to America's expanding waistline (or exploiting the most basic vice of the dumbest, depending on your POV). But you probably know even more than I do about America's failed industry.

Agreed on just about all. We're actually both quite hard-core about whatever we may set out to do. We're both very different, and yet complement each other incredibly well (different talents).

This will start out with pure pragmatism (growth area, optimal biz selection), but the final choice will eventually have to meet the tests of the metrics. The qualitative stuff behind the decision will ultimately be the hardest to predict where it ends up (we want a minimum of bitching from his wife and kids, or at least an amount he's willing to accept - I don't really care as much, except as a sympathetic friend who'll have to listen to him bitch about them bitching).

But as I've said a couple of times, we're already both quite committed , the real question - and reason for the thread - is where we should end up going.

The stuff in my first post about being able to shoot squatters in Texas was mainly tongue-in-cheek, as you might guess. But the part about good policies leading to higher-growth is inescapable truth.


Flow made a great point about new buildings as a worthwhile metric - it's more subtle than simple growth rates- so I checked, e.g. 2009 data, and it shows Atlanta only has 129 new building permits/people/square mile compared to Oklahoma at 175 (NY has just 46). Texas has a whopping 1056, but it also has miles and miles of desert, which makes for an artificially low persons/sq mile number.

Anyway, thanks for the post.

I do.

Make a luxury item.

So maybe your partner should suck it up and keep doing what he's doing rather then trade it in for a job where you will likely make $10 per hour.

Maybe one will turn into the other? When Hector Boiardi opened his first restaurant in Cleveland, it was to bring the taste of Italian food to a people who'd probably never tried it. When his customers started asking him how to cook certain things, a light bulb went off in his head.

There are a ton of restaurants which offer spin off products like BBQ joints which sell BBQ sauce or what not. The problem is virtually all of them don't make much money. That market is much more competitive now then when Chef Boyardee got started.

Just booked air/hotel/car for my visit to Dallas (six days) and Austin Texas (three days). Leaving this Saturday, and back in NY the Monday of Thanksgiving week.

I'd really like to find some time to shoot the 3 hrs + up to Tulsa and OK City an area that's been growing and has other positive attractions.

My partner and I will spend the nine days visiting as many businesses for sale as we can without stressing (3-4 a day on average, based on the week in Atlanta).

We both remain pretty agnostic about what we'll end up with (whether franchise or not, what kind of food, and what segment of the market-cheap to expensive).

If the numbers work I could see us being impulsive and taking the jump at what seems a steal - but that's unlikely since we both recognize that we're not seasoned enough to accurately spot a "steal." Plus my buddy has a fair amount of baggage that will provide the biggest challenge in our selection (see above about his wife and three kids) particularly regarding the location of the anchor city (Dallas, Jacksonville, Atlanta, or some dark horse that also has great metrics).

Yes, I've been told that fuckin these days you gotta add the word "business" in front of the word "partner" or you might be misunderstood.

To fix that, in day to day conversation when I use the word, I always add "not that I take it or give it up the ass, you understand."

I can be a bit anachronistic.

Although one should always be careful about that. While you may think you're in it together, you can find out your business partner is fucking you up the ass all the same.

That's a damn good idea.

A critical part of your research needs to be Gordon Ramsey's shows on restaurant turnarounds.

Lake Lanier NE of Atlanta is nice - quite a few rich "living on the lake McMansions" type. But DO NOT open a Mexican restaurant there!
It's flooded with real Mexicans (and subsequent good Mex food) because of all the chicken-processing plants in that part of Georgia.

Thank you!

One of the hardest things to determine is accurate info on what brings money into the counties we're looking at, and to figure out what is being built or grown locally - so when we see GA had manufacturing output of $67 billion or that TX had $330 billion (both 2002), it's not always apparent which industry the money is coming from.

We drove around Lake Lanier area, particularly along the eastern and southern sides of the lake, parts seemed a bit rundown for what was otherwise prime lakeside property. We saw some land posted to be rezoned, it had some old structures not far from the train tracks, and we couldn't be sure what they grew (or more likely, what they used to grow) around there.

Good to know about the chicken farming. We love the part about many nearby Mexicans because they'll make great hires if we end up in the restaurant or another low-skilled industry. As you suggest, we have no plans to open our own new store of any kind, for the first store we'll only buy an existing business - but there are lots of Mexican and Tex-Mex stores all over the place in both GA and TX so I could see us buying/opening a handful of taco shops, if the locations work and if it seems to generate the kind of cash flow from investment that we're exploring.

We are definitely staying away from any business that puts too much bargaining power in the hands of someone other than us (e.g. no prima donna head chefs). Fast casual to family style is about as high-end as we want to go, although we're now (since TX) checking out businesses other than restaurants.


Texas was fuckin awesome, both Dallas and Austin. But it's far away from the tentacles I'll leave behind in NY (relative to Atlanta or Jacksonville FLA areas).

Georgia has an income tax, and while FLA and TX don't, it's more likely that FLA will add a tax than TX (shit, in TX their legislators can only pass new laws 6 months every 2 year cycle, so they barely have time to add new regulations let alone taxes- then they gotta go home to a real job, live with the laws they passed and the people affected by them). GA seems pretty well along the path of regulation (not at NY or Cal, but in that spirit) with tons more to follow - but we could be wrong, it just seemed that way (we spent a fair amt of time in Gwinnett).