Why restaurants fail…

Mic and Molley Heynekamp started Socorro Springs Restaurant & Brewery in 1999. After four and a half years of planning, they took their original $1,000,000 business plan down to $100,000. And they wound up starting with only $70,000. That’s right – they used 7% of what they orginally calculated they’d need to get started! Ten years later they opened Eddyline Restaurant & Brewery.

Both restaurants have been very successful, and clearly Mic and Molley learned a thing or two about how to stay lean, and what it takes to succeed. So it was interesting to here Mic’s thoughts on why so many restaurants fail…

Wil: “Why do you think restaurant failure rates are so high?”

Mic: “Molley and I talk about that all of the time. It’s a lack of perspective and a lack of experience.

A lot of people that are opening restaurants have this weird perspective that their friends will come in and out all of the time. For example, we had this happen to a friend of ours. She opened up a coffee shop, thinking her friends would come, but she didn’t put enough thought into how the business side was going to work. So six months later she closed her doors saying, “I’m not making any money.” I said, “Patty, I can tell from your pricing that you are not covering all of your bills and your cost of goods. You’re charging $1.50 for a scone. But once you go through all of the materials and the labor and the utilities, you’re cost on this scone is about $1.75. So you ought to be selling it for about $4 or $4.50 minimum if you are going to go anywhere with this.”

Also, Molley and I noticed that a lot of these people who own restaurants don’t eat out. We ask them where their favorite places are to go out and to have a beer, and they say, “We don’t like to go out.” So that’s the experience part. A lot of these people don’t have experience going out.

Molley and I love going out and eating and having drinks. You pick up on all of these little details. You realize that places that you don’t like miss the big picture. They have this idea in their head that they are just serving the food as a product, but what they are really serving is the whole atmosphere.

Tom Hennessy wrote an awesome article about a restaurant being like an oyster. An oyster sits at the bottom of the ocean, and the tide comes in and goes out, and brings some nutrients. If the water is just right – not too murky, not too clear, it’s got enough agitation. If everything is just right, it produces a pearl, and that’s just like a restaurant. From the time a customer sees your restaurant and pulls into your parking lot, it’s essentially that oyster. If everything goes right, at the end you will have created the pearl. You’ll have a happy customer.
It has to do with how clean the parking lot is. It has to do with how clean your front door is. It has to do with lighting. I’m sure you’ve gone into a restaurant when it’s dark outside, and you walk in and there’s a flash of light, and you are just blinded. Right then, your whole mood just changed. It just transformed.

Same thing if you are coming in and it’s right when the restaurant opened. Let’s say it’s 11:00 in the morning, and you walk in, and there’s no music, and you can hear the cook’s music, and you can hear the pots and pans, and you can hear the compressors in the refrigeration, and it’s like this weird library. When you go into a place like that, everybody will be whispering. You know, all you have to do is turn up the music enough to cover the noise you don’t want to hear, and it sets the tone. People get more upbeat. They start talking louder. Now of course when they start getting too loud you have to turn it down a bit.

You just have to pay attention to all of the details. You’ve got music. You’ve got light. You’ve got the general cleanliness. There’s so many little details that contribute to the big picture. But if you don’t have the big picture, you have nothing to go off of.

So with all of the restaurants that we’ve seen go out of business, we’ve seen those two things. One, the owners don’t go out. And two, they don’t have the bigger picture of what they are trying to accomplish.”

Mic and the other owners we interviewed in Restaurant Owners Uncorked (paperback -$14.99 or Kindle version -$9.99) were not shy with expressing their opinions on why restaurants fail, and on many other important topics. Grab a copy today with a click on Amazon – you’ll enjoy the interviews and maybe learn a thing or two.

Take care…