February 7, 2017

Bar Starting for Dummies: The Research Begins (#5)

As I mentioned, having never started a bar before, I needed help.  So I sent out the bat signal and asked close friends and family if they knew anyone who could get me started.  Ummm, turns out everyone knows someone in this business! Over the last 30 days, I have met with bar owners, general managers, investors, operators, insurance guys, contractors, engineers, millworkers, POS system vendors, city licensing people, bouncers, bartenders, accountants, real estate brokers and attorneys (I only list attorneys last because, well, they're attorneys).

I'll touch on some of the more interesting meetings in future blogs, but here's a taste of some of the key takeaways from my initial discussions with owner/operators:

General Manager, An Upscale Restaurant, Boston: My first foray into understanding the space started with a meeting at a Starbucks. I learned that... well, I learned that I am NOT going to open an upscale restaurant any time soon. Man, does that sound hard! However, highlights were:
  • Drinks and food do not get served or poured without a ticket.  Be a stickler.
  • Kitchen layout is key to efficiency and lower costs.
  • The Boston Alcoholic Beverage Licensing Board is in room 809 of City Hall!
  • Theft exists, sure.  But it really can be mitigated through vigilance.  
Owner/Manager, Gastropub Restaurant, Suburbia: Talk about a deluge of information! Huge gratitude to this owner, who continues to help me as my journey proceeds! Names and introductions for realtors, licensing attorneys and insurance brokers.  Suggestions for POS, scheduling systems, reservation systems, recruiting, payroll systems and music licensing.  Lists of the best bars to visit in Cambridge, Boston and Somerville.  Extended rant on the challenges of finding good workers (combined with a touch of "all employees suck!").  And high level metrics on cost of food and cost of alcohol.

Part Owner, Trendy Restaurant, Suburbia: My conversations here steered more towards ownership and partners.  Taking on partners is tough.  Sometime, it doesn't turn out as you might have expected (to which I may have coughed, "Sometimes?")

Owner, Family Restaurant, Suburbia: "It's all about the numbers" was the refrain I took away from this business-oriented owner.  Food/liquor and labor costs (the Prime Cost) should be less than 60% (of revenue).  Rent: 6-8%. Total occupancy: 10-11%.  Net profit... well 6-9% is the national restaurant average.  But bars should do better.  Shoot for 15-20%.  Nobody does 20% consistently.  These numbers have been reiterated to me - with slight variation - by a number of folks.  That's good. I like numbers.  I'm shooting for 20%.

Oh, and another nugget from this guy... www.restaurantowner.com is worth its weight in gold (The snide me thought: it's a website - it doesn't weigh anything! But I bit my tongue.)

Founder/Owner/Operator, Bar, Boston:  "After 3 years, I'm tired... and I kinda hate people."  Well, this had a slightly different tone.  But the gracious owner was very open with his experience and financials of building the entire bar out (including kitchen) from scratch ($1.3 million for 4,300 sf), as well as sharing some fun tales of cutting off patrons, a law suit and cleaning-up puke in the bathroom.

Doorman, Bar, Cambridge:  "Pay your people well.  Create an atmosphere of mutual respect.  You will be rewarded with long tenures and great workers."  I like this philosophy. I intend to embrace this.

I have met and spoken with a number of additional folks.  Everyone has their story... and their opinions. And we all know what those are like (yes, A-holes... everyone has one - if it's not yours, they stink).  But all information is useful information. I learned that for one place, turning off the TVs actually increased their sales.  I learned salary ranges of managers and general managers ($50k to $70k and higher).  I learned that a Boston liquor license is valued in the $400k+ range and a Cambridge one in the $200k+ range. GULP!  I learned that fewer bars are "free pouring" these days, instead going with the more precise jigger pour (might be a function of hipster bars).

All in all, this preliminary research has given me a shot of confidence that I can actually pull this thing off!  Which is a good thing, seeing as the name of the place seems to be materializing!  Thanks for voting everyone!  Next up... I need a menu...


(And Go PATS!)

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