How to take the risk out of restaurants

We have tons of great content from the interviews we did in Gilbert, AZ. (Here’s a post about the trip along with some pics). One of the most interesting topics Joe Johnston talked about was minimizing the risk involved with opening restaurants by planning extremely well. Joe and his partners plan as much or more than anybody else I’ve come across, and here’s what he had to say on the topic…

“From my point of view, planning is what separates the men from the boys. A lot of people would like to have a restaurant but they don’t take the time to plan it out well, and that becomes evident in the final product. So for me personally, I break it up into two creations.

The first creating is the creation in the mind. Doodles. Back of napkins. Color swatches. Photographs that you’ve cut out of newspapers or magazines… All those sorts of things collected together into this image of what you want to create. The amount of time you put into that first creation in the mind and on paper is directly proportional to the second creation, when you actually do the bricks and mortar, you buy the uniforms, you create the menu and cook the food.

None of those will be any better than the first creation, so if you kind of just did short shrift of deciding even something like, let’s say, an onion ring. If you decide, ‘We’re gonna serve onion rings,’ but you don’t decide up front that they’re going to be hand breaded, and you like the panko style, and you won’t to have local herbs in them. If you don’t decide that early on, you’re just going to end up with bagged, frozen onion rings because that’s the easy choice in the end.

Also, I am a low risk individual. So for me the planning process is as much about me getting my concern about risk down as it is about creating the final thing. If I can’t determine in the planning phase that this is a low risk venture – because we’ve determined the location, we’ve thought through the economics of it (‘How many people would have to come through the door? How many people already drive by on the street? What are the demographics of our area?’) – for me personally, I have to convince myself that it’s a low-risk venture. Because, hey, it’s our own personal money, and our own time and effort that’s gonna be wasted if we enter into a high-risk project that only has a 20 or 30% chance of success.

So that planning phase is critical, even if it means that we have to say, ‘You know what, we shouldn’t do this, because this is too risky. Or this doesn’t meet the demographics of our location.’ That planning phase is very, very important then, to say ‘Yay’ or ‘Nay’, and also to adjust the risk level mentally.”

Joe went on to talk about what he believes is a myth that 50% or so of restaurants close in the first year. He thinks a very high percentage of properly planned restaurants succeed, while “Probably 80% of poorly planned restaurants don’t make it two years.”

Given that he and his partners run three long standing, extremely successful single-location restaurants, Joe’s advice is worth some thought.

Can’t wait to finish the videos we made from his interviews…


If you like this post, you might enjoy our book, which is a collection of interviews we did with 20 successful restaurant owners (including Joe) as well as the Restaurant Owners Uncorked video series, which contains short videos of restaurant owners sharing advice and wisdom.