From Forbes: You Want To Open A Restaurant; But Do You Have The Stomach For It?

In 1989, a chic Basque-inspired eatery opened up in downtown Manhattan. With plush, azure-blue banquettes lining the walls, candle lit tables for two, and soft, seductive jazz, Alison on Dominick Street soon earned the moniker New York’s most romantic restaurant, and a highly coveted spot in Gourmet magazine’s Top Twenty Restaurants in New York feature. Success seemed in the bag for owner Alison Price Becker who opened the doors of her intimate 52-seat eatery before she’d even hit thirty.

Price Becker had equipped herself as best she could to ensure her $325,000 investment would take off without a hitch. A New York native, she put in the hours to learn the restaurant business inside out. First she answered phones for acclaimed restaurateur Jonathon Waxman(contestant in Top Chef Masters, Season 2, and owner of Barbuto in Manhattan’s West Village), then she charmed celebrities and obsessive foodies alike as the assistant manager at Gotham Bar and Grill before commanding the helm at Thomas Keller’s Rakel, as manager. “Starting at the bottom I learnt from the best. I did everything: inventory, event planning, I waited tables, I even worked in a kitchen,” says Price Becker. “I absorbed everything like a sponge. It was an excellent base for me.”

Clark Wolf, a notable restaurant consultant and thirty-year veteran of the food industry would agree. “Don’t think that just because you go out a lot you know how to run a restaurant,” says Wolf, “You don’t. You need to understand a little of every aspect of the business, especially since you’ll be surrounded by people who know much, much more than you do.”

Well armed as she was, however, Price Becker closed Alison on Dominck Street in 2002. The unthinkable had struck the city, and after 9/11 no amount of careful strategizing and scrupulous budgeting could keep the eatery operating. Tables simply wouldn’t fill up like they had before, and every next service was increasingly a struggle.

Therein lies the most important lesson of all to any aspiring restaurateur: success is never foolproof. But, you’ll have a much greater chance of making it if you have an intrinsic aversion to giving up, a propensity for hard labor, and youth on your side. “I had blinders on to failure and the freedom to work twenty-four hours a day,” say Price Becker.  “I was still so young then; I just picked myself up, dusted myself off and moved on.” Next on the cards was a move out to East Hampton, NY where Price Becker gained a sizable following through various permanent and pop-up restaurants and catering projects in the area. At the end of 2011, she returned to Manhattan’s Flatiron District with her latest eatery – this time titled, Alison Eighteen.

If you’re not willing to work yourself to the bone, running a restaurant is almost certainly not for you. “Sure, it can be fun and glamorous and it’s like having a party every night, but if there’s one thing that’s been drummed into my brain over the last twenty years it’s that this is as serious a business as there is,” warns Price Becker soberly. Being realistic about your intentions and capabilities is only half the battle.  The other half is knowing how to best manage your finances. According to Wolf, one of the biggest mistakes first time restaurateurs make is not having enough money amassed upfront or accessible when unexpected expenses inevitably accumulate. “It’s too late to start looking when you’re in a jam; have relatives prepared to open up their checkbooks, or a line of credit ready in advance,” he advises.

Still, even if your initial financing is air tight, don’t think your eatery will make you an overnight millionaire. When it comes to restaurant margins, there’s no escaping the fact that these are notoriously low. Sales are always lower than you think and expenses always higher. At Alison Eighteen, the cost of sales is kept at a maximum of 23%, and payroll straddles 25% to 28%. On average the restaurant runs at a 12% profit. “This is a penny business, and without watching those pennies you’re not going to get into the dollars, or the hundreds of dollars, or the thousands of dollars, or the hundreds of thousands of dollars,” says Price Becker.

You want to especially watch out for staffing expenses which can easily spiral out of control. If you wonder why you’re not making any profit on a restaurant that’s packed every night, it’s likely because you don’t have firm handle on how much your employees are costing you explains Gary Levy, Hospitality Industry Practice director for consultant firm J.H. Cohn. “Remember with all the rules regulating restaurant labor you have to take into account everything from overtime to reimbursing your staff for cleaning expenses for their uniforms.”

So you’ve got the money thing figured out (enough to get you up and running, at any rate) and your priorities straight. You’re willing to give up luxuries like sleep, regular meals and a social life for your new venture, but all this amounts to little unless you have a management team that’s similarly committed. “The greatest challenge of any new restaurant isn’t necessarily to get people to come through the door, it’s to get people to keep coming back through the door,” says Levy. That’s why is so vital to have a team that understands how to drive repeat business and to generate customer loyalty, not just to elicit initial interest in a new place, he explains. “Always remember, these are the people who are executing your dream.” It makes perfect sense then that Price Becker brought back not only the design team that created the original Alison eatery to deck out the interiors of her new Flat Iron eatery, but also Robert Gurvich, the chef that led the kitchen crew for the final four years of Alison on Dominick St and Price Becker’s various East Hampton culinary projects.

Price Becker may have returned to Manhattan, but it’s not the same place she left behind and she’s not just re-hashing her old ideas. And rightly so. “America’s dining scene is changing so rapidly because the demographics are changing so rapidly that you cannot be tied to a pre-determined concept,” explains Levy. “You have to do your homework and understand what your market will bear – even if this differs from your original plans.” Price Becker acknowledges that Manhattanites have changed since during her 10-year hiatus, and has tweaked her tried-and-tested formula to suit her new clientele. Alison Eighteen has a more casual, comfortable atmosphere than Alison on Dominick Street. The menu has a seasonal, local and simple feel and lacks some of the fussiness that characterized the Dominick Street outpost. Couples are still welcome, but so are colleagues getting a business lunch, girlfriends catching up over a quick mid-week dinner, families enjoying a relaxed weekend brunch, and diners grabbing supper for one at the bar. Still, there was one thing the Price Becker was determined to keep, her name above the door. “It makes it very personal, it’s like inviting people into my home – they know they can expect a certain level of care, hospitality and quality.” By all accounts Alison Eighteen is delivering on that promise.

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