Things You
Need to Know Before You Purchase a Restaurant, Bar
or Club Business
1.
You must understand the
financial aspects of the business. You must
be able to understand how to read and analyze
financial statements such as the monthly
profit and loss statement, daily sales
report and monthly bank
statement. It is also helpful to understand
how to read a balance sheet but this
is not as important as the other items mentioned
above. You must understand the proper target
expense percentages on the profit and loss
statement that are acceptable for all of the major
expense categories such as food cost, pouring cost,
labor cost, utility cost and occupancy cost, etc.
It is also helpful to understand the source
and use of funds statement which outlines
all the source of funds and uses of funds for your
business to help you have a better control of your
cash flow. Inventory control is a
very important aspect of running a business. You
always must keep the proper inventory on hand so you
don’t run out of product. If you’re out of a
product, unless it is a special of the day when
frequently only a designated amount of products are
prepared, it gives the customer the impression that
your business is not reliable and may influence the
customers decision to not return to your business
again.
2.
You must understand the operational aspects of the
business. To truly
understand all of the operational aspects of the
business it is helpful to have a working knowledge
of each job in the business. I was taught when I
was in the business that if necessary I could jump
in and fill any job that needed to be filled on a
temporary basis such as cooking, waiting on tables,
hosting guests, washing dishes, busing tables,
seating quests and making drinks at the bar.
Inevitably in running a service oriented business
some employees get sick at the last minute or for
various other reasons don’t show up for their shift
and it might be necessary for the owner to jump in
and fill their shift until he has time to find a
replacement employee. By having a working knowledge
of all of these positions you will be more
humanistic and empathetic in dealing with employee
problems and the challenges that arise in these
positions as you have experienced these situations
yourself from your past experience.
3.
You must understand the legal and accounting aspects
of the business.
It is important that you follow all of the legal
requirements of running a business such as making
sure everyone meets the immigration requirements for
being hired. Additionally you must have the proper
licenses in good standing such as business license,
health department license, alcohol beverage control
license and if applicable, fire inspection
approval. The various tax returns are required to
be filed such as payroll tax, county tax, state tax,
federal tax, etc. It is important that you deal
with accountants and attorneys that are experienced
in working with restaurant, bar or club businesses.
4.
You must understand the marketing aspects of the
business. Most small
businesses cannot afford any type of expensive
advertising such as television, radio, newspaper,
magazine and billboard advertising, etc. Most
marketing of a small business comes from word to
mouth communication from a prior customer. If a
customer has had a good experience he’ll undoubtedly
tell other people about his positive experience and
conversely if the customer has had a bad experience
he’ll spread the unpleasant news to others as well.
Needless to say it is important to provide every
customer with a good experience so he’ll become the
goodwill ambassador for your business which will
create a domino effect in reaching others who have
never experienced your business and motivate them to
come and try your business. Another important source
of marketing your business is being reviewed by a
local well known food critic. Many people are
influenced by well known food critics and a good
review could draw a lot of customers into your
business and conversely a bad review can negatively
impart a business to the extent of putting a
business out of business. I had a client that
operated a chain of well know up scaled restaurants
nationally and I placed them into a location in
Marin County. The first couple of years they did
well and then the operation started to slip in terms
of inferior management, food and service. At the
same time they received a terrible review from the
most well known food critic in the San Francisco
Chronicle and consequently I ended up selling the
business for them and they lost over a million
dollars on the transaction.
5.
You must understand how to effectively deal with
people.- You should be a
person that genuinely likes to be around people and
likes people. You are dealing extensively with
employees, customers, vendors and landlords. You
should be a good communicator and should treat
people honestly and fairly. It is very important to
be objective and not favor one person versus
another. You should be a role model as the employees
look to the owner as the one who sets the pace for
the business. As an owner you should always have a
smile on your face, put your best foot forward and
strive to maintain high standards in maintaining
consistently good service, good food and beverage
quality in a clean and safe environment.
Based on my experience as a former restaurant, bar
and club owner it is imperative that you are
proficient with all of the above items to enhance
your chances for success as a restaurant, bar or
club owner.
Bruce Osterlye
of Aram's Cafe
Bruce
opened Aram’s Café in Historic Downtown Petaluma in
January of 1989. The menu concept came from Bruce’s
Armenian background and the experience gained from
working in the hospitality field. Born in San
Francisco, Bruce began working as a delivery boy,
dishwasher and bus boy in Marin County restaurants
before graduating from the City College of San
Francisco Hotel and Restaurant program. Hands on
culinary experience followed while working in Bay
Area French and Italian restaurants, as a hotel sous
chef in Switzerland and a twelve year tenure at
Kenwood Winery where his responsibilities included
events catering and wine sales to restaurants.
Bruce has been working with Restaurant Realty as its
Listing Specialist since 2008.
Bruce believes his niche menu concept alone would
not allow the business to succeed without a
philosophy emphasizing customer service, a strong
sense of community, continuous attention to detail
and hands-on ownership to oversee the operation. In
addition, Bruce is animate that the success and
business side of a restaurant catering operation
must involve much more than just a trendy menu and
appealing décor. Controlling expenses, negotiating
favorable rent and lease terms and landlord
relations go hand in hand with success. We had the
opportunity of selling Bruce’s restaurant recently
and we wish him continued success in all of his
future endeavors.
