Good Time to Open a Restaurant? Maybe, but the Basics Haven’t Changed!
A couple of friends and acquaintances aren’t going to be happy about this post. After a few cocktails, they explained their new concept they planned to open. The location is on a popular beach in south Florida. They are taking over a closed waterfront seafood restaurant that has a large footprint with about 250 seats. The facility is above average with plenty of parking.
The new restaurant this group is opening will be “unique” to the beach scene – a French restaurant with a lounge area on the waterfront featuring a tiki bar. The demographic considerations include a high percentage of tourist trade that is extremely cyclical. Local customers are residents that would consider this restaurant a dinner destination. The price points for the new restaurant would be higher with the elegant French menu planned.
Their reasoning for developing the restaurant is landlord’s willingness to re-open this facility with a reasonable lease and a favorable time for construction as contractors continue to look for work. The group sees these as opportunities they can’t duplicate as the economy improves.
After listening for the better part of an hour to these enthusiastic partners, they asked me for my opinion about their chances of success. First, I don’t like surprises and being lured into the conversation was unexpected. Second, I don’t like discussing serious business over a couple of beers that tend to exaggerate everyone’s emotions and shade the logical side of the mind. Third, it’s tough to be put on the spot without exact data at my finger tips.
Guys – here is your answer;
Your idea has some major flaws that need to be included in your planning. They are in addition to the difficulty of surviving the restaurant business in a normal economy – let alone a recession and changing consumer habits.
The major problems are:
- Location. The facility is large and will have a high fixed cost basis. Waterfront locations require extra maintenance, high per square foot cost and security issues.
- Location. Your biggest customer base are tourists. They come for casual fun in the sun. Few look for fancy French dining. Think about your own vacations. Do you look for fine dining when relaxing on a beach? If you do make a visit to a fine dining establishment, do you eat there several times? You are correct, there are no other French restaurants on the beach – there may be good reasons.
- Location. Locals (which are comparatively few in your immediate vicinity) may support your restaurant, but rich French cooking won’t be something they will eat two or three times a week. Remember Outback closed their beach location a couple of years ago which was predicted.
- Location. Mixing a Tiki Bar with French fine dining may seem like some “fusion” to you, but I can’t imagine tank top clad beach goers being comfortable with the smartly dressed evening diners and vice versa.
- Location. Your menu and customer service standards may be exceptional, but will local residents fight the seasonal choked traffic to get to your restaurant? I doubt it.
- Location. This restaurant facility has had multiple tenants in the last fifteen years. Most have been small seafood regional chains. None have made it even though they had menus and prices that were successful in other locations.
In my opinion, the only way your new restaurant can make it will be an extended, costly and continuing marketing plan that will need to be one of the most creative and aggressive of any restaurant in the area. Cash flow will be negative for months (other than season). Your pockets need to be deep and full.
I applaud this group’s entrepreneurial spirit, planning and the sense to reach out for outside opinions. However, the basics haven’t changed in this recession. You can dress a pig in colorful clothes, expensive make-up and a lot of perfume, but it’s still a pig.
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