When should restaurants upgrade?
The life cycle of a restaurant is tough. The data is that 90% of restaurants fail in their first year. 5 years is the average life span.
We have been invested in restaurants so I understand the numbers. But hospitality is more than numbers. It is also about creating a vibe, serving up good food and trying to make ends meet. It is hard work and the financial upside can be great but generally just good. It is an easy industry to burn out in because the hours are nuts.
There are many restaurants that I really enjoyed for a year or two but then the food begins to not taste as good and the menu seems staid. Is it because everything has aligned and no reason to shake it up? Maybe just add some specials?
It is pure curiosity on my end. Being a restauranteur is really tough hard work. I’d love to talk to some to see the thought process behind the decisions made when it comes to having a gut decision and/or about when is the time to shake things up or not.
Comments (Archived):
I think part of this is similar to any business and what I have personally experienced.It goes like this:You start and have all these grand dreamsYou may or may not achieve those dreams.At a point time later (and this assumes you are actually surviving) you realize that you have either set the world on fire (or you haven’t).Then there is certainty. You know your fate. Your place in the business world. If you started something and hoped to go from there you then might realize that it’s not going to happen. (At the start you think anything is possible, right?).What happens then? It gets boring. Honestly it’s not exciting anymore because the thrill of the ride up and the pain and pleasure of that doesn’t exist. And knowing what you know you have figured out your place in the world.One other important thing. The reason you might not ‘shake it up’ if you are bored is because at that point you actually have something to loose. And you might have a family and have obligations and so on. So risk is really not on the table. At least not in the way it was when you started (and had nothing so you had nothing to lose).Think about your own experience with angel investing. You did it for a long time and with many companies. Then both the market changed (as you have detailed) but more importantly you know with some certainty what is possible. You know that (from experience) ‘the sky might not be the limit’.So what do you do (what you did). You move to something else. Where the thrill of ‘anything is possible’ exists.Works even on a much larger scale. Look at what both Bloomberg (and Trump for that matter) did and consider why they did it.
I am not a foodie but knowing how tough this business is, I am super impressed by those that take the risk and even more impressed by those that survive.I know this guy (friend within my NYC friends) opened up Contra in NYC and I am so impressed by how well it’s done. I think they change up the menu lots and are very creative with their offerings.Another two friends (a couple) opened up a coffee shop Bird & Branch, a coffee shop near theater district, and that’s done quite well too. They opened it with the hopes to provide job training to people that have a hard time finding job placements, it gives them a start. They have a fairly creative coffee menu. If you ever nearby, definitely check out 😉
Restaurants and perfect competition.
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