Here's What It's Like to Own a Restaurant

We bought a failing pizzeria in March 2014 with zero prior restaurant experience – just in time for the so-called "busy season."

The thing is, we didn’t really get to experience that rush. At the start, we were just trying to make the rent payments for what was deemed an "okay location."

Our backgrounds are in engineering, not food, so it’s pretty crazy how we ended up with (now) two pizzerias. Our goal was to be in business for ourselves, and we also wanted to get out of dusty central New Mexico. To do it, we moved our entire family to a town near San Antonio, where we had no connections and no fallback plan.

Four and a half years later, here we are. Having survived that initial startup period and now happily at what's known as the "median restaurant life" of 4.5 years, according to a research paper on restaurant survival rates by Philip Stark.

That “do or die” mentality is key for a business of any kind to survive. That’s because when it gets tough (and believe me, it will), you have to face the reality that your restaurant will close if you can't figure something out. Sure enough, by keeping in this frame of mind, you may very well find a way out and keep charging ahead.

Below, we'll share some of the myths, facts, pros, and cons of owning a restaurant today.

The Myths and Facts of Owning a Restaurant

Myth #1: 80% (or 90%) of Restaurants Fail in the First Year

Believe it or not, it’s a lot fewer than this. Actually, approximately only 30% fail within the first year.

But keep in mind – the word "fail" is rather vague.

A restaurant may not fail, but it may not be profitable either. It’s critical to know your numbers as a restaurant owner. Being aware of terms like “break-even point” and what kind of start-up costs you are facing could mean the difference between life and death for your business. That's why it’s essential that you calculate some of these numbers before you open your restaurant.

Here's how to get your figures under control from the start: 

• Fixed Costs: Understand what your fixed costs, such as rent and insurance, will be. You will then have a general idea of how much your bills will amount to.

• Variable Costs: Next, calculate your substantial variable costs. These include food costs and labor costs for a typical restaurant business.

• Do the math for labor: Work out how many team members you will need all day, on slow nights, and on busy nights. Set out how much you will pay them per hour. Also, will you work in the restaurant? If so, work out what your hourly rate will be.

These are the simple math equations that we must do before opening a restaurant. There’s no way around it if you want to succeed. One of the reasons many restaurants "fail" or aren't profitable is that they haven't done the math.

If you're collecting $50,000 per year in profits and working 70 hours a week – seven days a week – then maybe it’s better to get a job than have no life being your own boss.

Do the math and work out the costs to avoid falling at the first hurdle.

Myth #2: Great Family Recipes Make a Great Restaurant

There was a great cookie business that started up near us. The owner had delicious cookies, and we were able to sell some of her cookies at our restaurant.

She rented a little location and even offered free cookie deliveries. The issue is that she didn’t create a business – she just took her hobby out of her home. 

She thought just because customers loved her family recipes, she would be successful.

She had to close the doors within three months.

Moral of the story: If you're in the kitchen too much, you're neglecting the key aspect of your business. The fact is, you will never have a profitable restaurant without a great team and service standards supporting your efforts. A food business can’t survive on delicious cookies alone. 

Getting a great team together isn’t as easy as you’d think. Expect the process of hiring, training, documenting, and retaining the team to take up most of your time. We're talking 30+ hours per week if you have a large team, from my experience. It’s a worthy investment when you think of the benefits of having a solid team backing your business up.

As of January 2024, the average annual staff turnover rate in the restaurant industry is close to 80%. So, it’s easy to see why restaurants name staffing as their biggest challenge to success. With this in mind, the more proactive an approach and realistic your expectations are when opening a restaurant, the better.

Myth #3: If You’ve Worked in One, You Know What it Takes to Own a Restaurant

Just because you've worked as a server or a head chef for many years does not mean you know how to be a successful restaurant owner.

A restaurant business consists of way more than just food and service skills. It needs you to step up and become, or get help from:

• Legal Expert: Ensuring your restaurant abides by food safety standards is insured up to the eyeballs.

• Financial Advisor: Like it or not, you have to make friends with numbers or find someone who lives and breathes financial planning.

• Payroll Specialist: How are you going to manage staff salaries? You will need to get to grips with payroll management systems.

• HR Manager: Taking control of the hiring process and onboarding of staff. Identifying areas where training is needed and providing opportunities for staff to grow.

• Marketing Whizz: Letting your target market know where you are and what you do by using effective marketing techniques. 

• Team Leader: Inspiring and getting the most out of your employees. Also, unifying them as a team, so that everyone works together to make your restaurant a success.

• Maintenance Person: Making sure faulty equipment is replaced, arranging electricians and plumbers to fix broken down electrics and appliances. In general, ensuring that the restaurant space is clean and clear of hazards.

• Tech Support: Addressing any problems with POS, kitchen display systems, and any other IT issues.

All these areas require different sets of skills, and in order to be successful, you either need to master them all or pay someone who can offer their expertise and help you with them.

Remember, if these aspects of your restaurant are neglected, then chances are you'll fail at some point, or simply continue to be stuck in operations and have no creative or financial freedom.

Your goal should be to own a successful restaurant that doesn't own you.

My husband and I each continue to work on the non-food-related skills I mentioned above daily. If you're thinking of running a restaurant and have years of experience working at one, I suggest you start acquiring some of the essential skills for business owners listed above. This way, you will set yourself up for success in your own restaurant.

Myth #4: There's Always Someone to Blame

The fact is that, as the restaurant owner, there’s no one else to complain to. The buck stops with you.

When you're an independent restaurant owner, there are no HQ higher-ups to call for help. As an independent owner, you have a much higher risk of failure, according to Entrepreneur.com, but you also reap much higher rewards.

In short, you're the one who needs to fix your restaurant's problems.

Let's revisit the importance of solid teamwork. The team owns the wins, but ultimately, you shoulder the embarrassments, the losses, the poor reviews, the bad hires, and the equipment damage due to staff negligence. This is the cost of being in business.

The truth is, if you keep at it, continue to master the skills we listed above, invest in your team, create training and operational systems, and develop marketing strategies day in and day out. Then, in just a couple of years, you can start to reap what you've sown.

So, be patient, but stay at it.

The Cons of Owning a Restaurant

Con #1: Competition

As of 2023, there are 749,000 restaurants in the U.S.

That’s a lot of competition. However, your competitors aren’t just physical restaurant locations.

Walmart, Target, Whole Foods, meal kit delivery services, and Amazon are all competing for space and your target market’s disposable income.

Think about it – we sell pizza, but Walmart and HEB (in Texas) are selling a similar-sized pizza for less (with cheaper ingredients) right by the checkout line. How much business have we lost to convenience when we are competing against supermarket giants?

As for direct competition, right here in Texas, there are more than 53,000 restaurants.

That means business is good, but competition is high. If you’ve heard about the Blue Ocean Strategy, you’ll know that the restaurant industry really isn’t an untapped marketplace. Anything but!

It’s more of a blood-red ocean with some real whales trying to make a splash (looking at you, Amazon…). So, all the while you're trying to survive, you also need to work on providing a more tempting offering than the competition to attract customers.

Con #2: Long Hours

One well-known con of owning a restaurant is the long hours.

Chances are, you’ve heard all about the long hours involved when going into the restaurant business. However, do you know how it will feel?

When we're excited and geared up to realize the dream of owning a restaurant, we tell ourselves and our family, “Oh, we’ll handle it; it’ll be fun.”

The truth is that we really don’t know what we are getting into until we are in that situation. So, you don’t actually know what it'll be like to own a restaurant until it’s your name on the lease. Your family has no idea how their life will change. Physically, your body hasn’t experienced working 60+ hours a week yet.

So, simply go into it with an open mind. For sure, it'll be tough but will be worthwhile once you get to the other side.

Con #3: The Family Commitment

When we bought our restaurant, our son Mark was seven months old. We worked 100-hour weeks for a year and a half. Fortunately, my parents lived with us and worked at the restaurant so the children were with a family member at all times.

Most of that stressful time is a blur to us. We don’t have that many photos and videos of him from that time, and that’s sad.

But after two years of blood, sweat, and tears, we were able to double our restaurant sales and become profitable. We were able to create many training videos and systems to manage the restaurant remotely.

Now, we're able to spend so much quality time with our kids and involve them in the different aspects of the restaurant business.

So, we may have lost that time with our kids in the first two years, but that’s what it took to build the freedom that we have with them now. Also, it’s great to have these stories to tell, so that our kids can learn about the role of hard work in making a dream come alive.

The moral of the story: hard work combined with a smart approach pays off.

The Pros of Owning a Restaurant

Pro #1: Buying a Restaurant Can Be Affordable

Restaurants are a wonderful entry-level gateway to the business world. The cost to open a restaurant will vary depending on gross sales and other factors, and can sometimes run into a seven-figure range.

In some cases, owning a restaurant can even be much cheaper than purchasing a home or getting a college degree. Restaurant ownership can also serve as an investment in your future.

Check out the website BizBuySell.com, where they list restaurants and brick-and-mortar businesses for sale by state. You can find the contact information of the broker there and view the profit and loss statements. Then go visit the restaurant with the broker, to meet the owners and ask questions to determine if it’s a good investment or not worth your time.

Pro #2: It Gives You Ownership Over Your Life

A restaurant can be that business that exists for one and one reason only: to be a vehicle to help you achieve your life goals.

Our restaurant has allowed us the freedom and ability to travel, and that's one of the best pros we've found. We have the freedom to be in charge of our schedule, spend a lot of time with family, visit other restaurants, and much more. Just this summer, we were able to spend time at the beautiful beach in Destin, Florida, with our family.

It may take some time, but it's very possible.

Pro #3: If You Do it Right, It's a Blast

At the end of the day, we love being restaurant owners because it’s fun.

We've been able to have a great impact in our community, connect with, and meet people we never thought possible.

Owning a restaurant is an experience that is rewarding beyond words.

What to Consider When Going into the Restaurant Business

Now that your eyes have been opened to the myths, cons, and pros of opening a new restaurant business, you may feel ready to take those important first steps. Take these points into account when starting out.

Choose a Location

You may have a solid business plan nicely put together, a name settled on, and have applied for business loans. What next? If you haven’t got your heart set on a place already, the location is an important consideration.

Your business plan should lay out the size of the business you are looking to start and therefore inform your location choices. Calculate the number of tables you can fit into the space, how many covers you can carry out, and what this means for your financial projections.

However, you should also take into account if your restaurant will be visible to the passing public and easy to get to. Think about whether your target market lives close by and if there are any competitors around.

Licenses and Permits in Place

You have your restaurant concept finalized, but before you can legally operate, you need to pass inspections and acquire all the necessary licenses and permits. What you need to have, in terms of paperwork, varies from state to state. If you are unsure of what it takes to set up a restaurant business in your city, contact your local government. Hopefully, they will advise you on which business license you need and further steps to take.

Getting licenses and permits can take a while, so be wary to factor this into your timeline. There’s nothing worse than if you are still waiting anxiously for the all-clear, as opening day looms ever closer. Do yourself a favor - leave enough time.

Marketing Your Business Effectively

Now that you have your restaurant's location sorted and are legally able to set up shop, you have to get your name out there. It’s no good going to all the effort of setting up your restaurant business, all for a disappointing opening day. Footfall through the door is what you want.

A solid digital presence lets your customers know that you are ready for them to try your delicious menu offerings. A user-friendly website featuring all the important information: opening hours, contact details for making reservations, and your current menu, should be first on your to-do list. 

Once a fully functional website is up and going, don’t stop there. Now you can begin to connect to new customers through the power of social media and collect their details for email marketing campaigns. We all love to scroll through Instagram and drool over delicious dishes, so use this to your advantage and showcase your wares.

Use Tech to Make Your Job a Lot Easier

When you think of remote jobs, the restaurant sector definitely doesn’t spring to mind. However, you can use technology to manage much of your restaurant's operations remotely.

In order to do this, it’s critical to have a reliable POS system in place. This makes it easy for you to monitor key restaurant variables in real-time from your phone: sales data, labor costs, order history, customer data, inventory, etc.

For example, if an unhappy customer leaves us a private message on Facebook regarding their order, I can look up their order history in our POS system, give them a refund, and text them the receipt from a payment app on my phone in a matter of minutes.

On top of the POS system, we use simple solutions like Google Drive to document our materials and meeting notes, Google Calendar to organize our company events with staff, and scheduling software to save us thousands of dollars (especially when it integrates with your POS system).

Finally, we use the logbook feature of our scheduling software religiously. Everything gets documented daily by multiple managers throughout the day. My husband and I read the logbook daily and are able to know what’s going on in our restaurant, without needing to be there all the time.

What We Learned from Owning a Restaurant

Owning a restaurant will be one of the toughest things you’ll ever do. It will press you and take you to your limit. In the beginning, money will be tight, you will work long hours, and you will probably not be profitable.

Staff turnover hurts, and customers are not understanding or gracious at times. You already know this is a tough industry.

But keep at it. Sharpen your non-food skills, invest in your team daily, and use restaurant management software to support your efforts. If you’re a bit hesitant about using tech, test drive a platform to find the right system to benefit your business. It is, after all, a learning curve.

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