Showing posts with label ThinkLocalFirst. Show all posts
Showing posts with label ThinkLocalFirst. Show all posts

Wednesday, April 11, 2012

Think Local First DC seminar on Ingredients for Success - Opening a Restaurant in DC Part III


Part III of Ingredients for Success - Opening a Restaurant in DC
Branding, Greening, Hiring/Retaining, Doing Business Locally
Click the links for Part I and Part II
Branding - How important is it?
Joe Englert said there are three things you need to spend money on:
  1. Good shoes
  2. A good bed
  3. Branding
Look to youth when deciding what outlets to spend your money on.  A lengthy part of the conversation focused on using interns for various duties, but particularly social media. They are in-the-know about what's being used before older folks catch on.  Keep your eye on them though, as sometimes you'll get a wild one in the group.  You don't want them damaging your reputation.

Marry your brand to a good organization that has lots of followers/members.  DC is full of them.  Find a group you can identify with hold on to them.  Make them part of your family.

Think about what you want to do and stick with it.  It's important to stay relevant, but don't spread yourself too thin chasing the next big thing either.  Your core, once established, will let you know how they want to maintain their connections to you.

When doing anything promotions-wise make sure your staff is engaged and on-board.  Customers can smell exasperation emanating from staff.

Logo and web presence - Make sure it is representative of your brand and the business and what customers can expect when they walk in.

Integration is important - you have to be sure that your brand is pervasive and consistent.  All output should have the same look/feel.  Be sure to copyright your branding.

Engage your neighborhood.  Find an employee who's also and artist and can do some great things with sidewalk chalk.  Get your neighbors talking (in a good way).  Give them a reason to stop in.  Don't underestimate the authenticity of small moments.

Find your brand ambassadors and engage them.  These are the people who like you, and like what you do, and are willing to tell people about it.  They will bring their friends in, and encourage those friends to bring theirs.  Treat them well and make them feel like part of the team.

Greening: Be a steward for your community.

There are many ways you can help the Triple Bottom Line (TBL) when you're opening and running your restaurant. 

Try to buy from local farmers as much as possible.  It will support your local economy.  You'll need to be creative, and your menu will have to be seasonal.  Obviously you can't buy EVERYTHING locally, but make the effort where it's possible. 

Use LED lighting.  It's more expensive up-front, but it will save you in energy usage and bulb-replacement costs/effort.

Think about composting.  www.fatwormcompost.com can set you up.  It takes a little more effort on the part of the servers and kitchen folks, but it reduces your garbage pickup dollars and output.  They take it away and do the work for you at a flat rate based on the number of bins and number of collections. They wipe out the bins for you as well so there's no mess.

Make your green initiatives part of your story as well.  People will feel better about being part of something that has more environmental responsibility.  List what you do to be good to the environment on your website or in the restaurant, or both.  Be transparent and tell the story.

Hiring and Retaining Staff:  How to find and keep good people.

Washington DC has some great resources to help you staff your restaurant.  There are numerous programs through One City One Hire and ROC-DC that provide assistance in training employees, sourcing them, and helping you make the most of the resources available at no cost to you.
Not mentioned in this seminar was another great placement program available through DC Central Kitchen. They train people to work in kitchens through an extensive program and it's a great way to get people back to work who need jobs.

Outside of the programs mentioned above, the more hospitality focused resources for finding employees are Craigs List, The City Paper, The Chef Link, and local food blogs.

Many restaurant owners will poach good people from surrounding businesses.  People come and people go from restaurant to restaurant, but always keep in mind how you'd feel if someone did it to you.  Just a thought.

Retaining staff is another issue entirely. Andy Shallal had a lot to say on the subject and I was impressed with his dedication to keeping employees engaged and motivated.  For starters Andy provides his full-time employees with paid health insurance.  His labor costs are higher than your average restaurant, but he feels that the investment is worth it when it comes to reduced turnover and training.  His training pay is $10.25 an hour for FOH, $11.25 for BOH and he provides paid sick leave as well as vacation.
He has regular meetings with staff to keep everyone in the loop and engaged and provides ongoing training.  The training encompasses not only hospitality skills, but life skills that apply outside the restaurant.  If you want to keep your folks happy, make them feel appreciated.  Value their opinions, educate them, and empower them.

Closing points were sometimes funny, often poignant, and a few were contradictory.  This just goes to show that there isn't one specific formula that will work for everyone.  Find your groove and make it yours.  Here is what the experts had to close with:

Trust your instincts and don't be outsmarted by experts.  Listen to what they have to say but don't be swayed easily.

Purchase the real estate, then open the restaurant; if not, make sure you understand the lease.

Understand the work-life balance and leave time for your family.

Bring your family into the business because it's all-consuming.

Savor and understand your failures.

Figure out your weaknesses, and hire someone who does those things well.

I would like to end by saying thank you to Think Local First DC for providing the opportunity to attend this seminar and to the participants and presenters.  This was a great event and I look forward to attending more.

If you have any questions please feel free to comment or send me an email @ dsmelson@gmail.com





Monday, April 9, 2012

Think Local First DC seminar on Ingredients for Success - Opening a Restaurant in DC Part II

Part II of Ingredients for Success - Opening a Restaurant in DC
Where to open your restaurant and tips on getting it financed.
Click here for Part I








There was some great info put forth by the panelists regarding how to decide WHERE to put your resaturant.  Some of it is below.

Don’t choose a location based on the proximity to your house.

You can choose to work with a broker. They have done a lot of the homework below already and are experienced, but you have to keep in mind that they make money regardless of the type of deal they’ve worked out for you.

Choosing a location in an up and coming neighborhood may be a bargain as far as rent is concerned, but if you do the math and consider foot-traffic and being busy during the week vs. only being full on Friday and Saturday nights you may find it to your advantage to choose a location in a higher rent area. Look at your business plan and your estimated sales per seat. Can you make it work if you’re less than full all the time?

Base it on the following criteria:

• Population – office and daytime as well as night time. Spend an evening hanging out by the front door. Does it have the feel your target audience will feel comfortable with?

• How many households are with ½ a mile?

• What is the disposable income for those households?

• What are the food expenditures for those households?

• What is the Metro pedestrian count?

• What is the vehicular traffic count?

• What is the average age?

• Are there nightlife/activity generators in the area? Entertainment, theaters, universities, hospitals, other restaurants, what is the retail density? Is it a tourist area?

• The Washington DC Economic Partnership provides free resources to help you with your choices here: http://www.wdcep.com/tools-research

• Some of the suggestions from the group included the Rhode Island Ave. N.E. development area, Lower Georgia Ave. N.W. corridor, Ward 5, and Anacostia.

Regarding site-specific criteria once you’ve chose a general area:

• What is the size?  Is it big enough to do what you want to do?  Does it have enough seats to make the numbers in your business plan work?  Does it have too many for your production capabilities/desires? Can you adjust your business plan to fit the space?  If not, find another space.

• What kind of exposure does it have? We’ve seen multi-million dollar flops because they were a block in the wrong direction or on the second floor of a building with no exposure.

• What is the frontage?

• What is the ceiling height?

• Is the HVAC suitable for a restaurant with a kitchen putting out lots of heat?

• Does it have the proper gas lines? 2.5” lines are required for a commercial kitchen.

• Is the electrical up to spec? It needs to be 225 amps of 120/208 volt, 3 phase-4 wire service.

• Does it have parking? If not, it had better be near a Metro stop or in a high pedestrian-volume area.

• Does it allow signage? Check with your landlord. Also see the note about historical districts in the first post in this series.

• Co-tenancy: give preference to super regional destination oriented venues; key national tenants; transportation complexes.

• Outside seating…we’ve got some nice weather here. It’s so DC!

• Is it highly visible from major access points?

Leasing/renting/buying

The majority of the people on the panel who voiced an opinion said it’s a good idea to buy the building rather than lease. It gives you some extra stability and proves to the banks that you’ve got skin in the game.

Consider the following regarding leasing:

• The typical commercial lease is what they call Triple Net. That means the tenant pays base rent and expenses including common area maintenance (CAM), taxes, and insurance.

• Space size – identify spaces that support what you want to do. Don’t lease excess space unless you know you’re going to need it in the short-term.

• Base Rent – Annual rental amount. Always check the rents in the area to make sure it’s in line with comparable properties around yours. Find out what they are BEFORE you start negotiations.

• T.I. Dollars – Tenant Improvement Dollars. Always negotiate to get the landlord to contribute to the cost of the build-out.

• Lease/Rent Commencement – Lease commencement will begin upon lease execution, but rent commencement should begin 4-6 months after lease execution. This gives you time for design, build-out, and permitting.

• Term – Length of the lease. Take into consideration the cost of the build-out and amortization period, along with the amount of time it takes to build up the business. Typical terms are between 5-10 years. Always attempt to negotiate option terms equivalent to the primary terms.

Other lease negotiation points:

• Try to get a cap on your CAM costs – helps to control expenses throughout the terms of the lease.

• Percentage rent – use as a negotiating point if you’re trying to get lower base rent or escalations.

• Assignment rights – In the event that you want to transfer the business to someone else because it fails, you want out, or you want to bring in a partner, this needs to be in the contract.

• Make sure there is no rent acceleration in the lease. This is the right of a landlord to accelerate the rent in the of default.

• Restriction of hours – be sure that the lease does not specify hours that you’re not willing to conform to. If you’re trying to open a nightclub and can’t serve past 11:00pm you’re in trouble. Always get the maximum number of hours of business you can specified on your lease as you may want to open early or close late for special events. Make sure you do the same on your business licenses.

• Signage – Be sure you are allowed to have signage that presents your business in the manner you choose.

• Use – Be sure that your use clause is flexible enough to be able to improvise your product mix or business plan as needs warrant.

• Termination rights – Make sure you can terminate without major penalties and without being liable for remaining rent in the event that the business fails.

Financing

There are multiple ways to finance a start-up. Some start with the 3F’s. Friends, Family and Fools. Once you’ve exhausted those, you have to go to a bank or run up your credit cards, or be independently wealthy. Usually the vanity restaurants opened by the latter fail as there isn’t the passion driving the business that scrappy independents have.

What do banks want to see?

• 3 years of financial statements and tax returns

• SBA504 financing requires 10% equity

• Credit-debt service 1.2X at a minimum

• Source of repayment – Will you have the cash flow?

• Collateral – what are you willing to put up? You may be able to amass collateral that isn’t worth anything to anyone else, but still has value as collateral.

• Guarantee – who is going to guarantee the loan? Try not to sign a personal guarantee. If you do and the business fails, you might lose a lot more than the business.

• You have to have cash in the deal to show commitment.

That’s it for location and leasing. In part III I’ll go over the build-out, marketing/branding, and more.

Stay tuned!  Part three is coming soon and will focus on

Wednesday, April 4, 2012

Think Local First DC seminar on Ingredients for Success - Opening a Restaurant in DC Part 1

Ever think about opening your own restaurant?  I have worked with many restaurants as they were trying to open but have never had the opportunity to see what it takes to get through the parts I wasn't involved in.  Think Local DC put together a seminar with a panel of local entrepreneurs to discuss their experiences and offer advice about how to make it happen from concept to opening your doors and beyond.  This post will be presented in several parts as there is a lot of information to impart.

Part one will focus on Nuts and Bolts of Getting Started
The list of participants for the entire seminar included the following folks:
  • Geoff Dawson of Bedrock Companies
  • Nizam Ali of Ben's Chili Bowl
  • McKee Floyd of Sweetgreen 
  • Joe Englert of H Street
  • Aman Ayoubi of Local 16
  • Chef Tate of Inspire BBQ
  • Andy Shallal of Busboys and Poets
The list of supporting actors is long, so I won't go into them until they come up in the information.  Not that they weren't all contributors, but there were a lot of them.
Think Local First is a group of like-minded business individuals who have a goal of educating consumers, businesses,and policymakers about the benefits of supporting DC's local independent businesses. 
 In addition to advocating public policies that support growth of DC's local businesses, they are a community that believes in being responsible for a triple bottom line, meaning they focus on more than bottom line profit to the owners. 
"The triple bottom line captures the essence of sustainability by measuring the impact of an organization's activities on the world ... including both its profitability and shareholder values and its social, human and environmental capital." 
Andrew Savitz, The Triple Bottom Line (San Francisco: Jossey-Bass, 2006).
On to the information......
The Nuts and Bolts of Getting Started:
How do you proceed with licensing?  Get the lease first, then apply for the business license as other licenses will be required before you can get your business license such as a zoning certificate.  There is a service available to help you navigate the bureaucracy of all the permitting/licensing/registration here: http://dcra.dc.gov/DC/DCRA/For+Business/SBRC  You can schedule a one-on-one with someone who can help. There is no charge for the service.  Seems like DC is trying to make improvements in what was formerly known as the Business Prevention Bureau.  Good to hear.

The steps for getting your restaurant licensed are as follows:
  1. You'll need your certificate of occupancy.  This ensures your compliance with zoning ordinances.
  2. Corporate registration.
  3. You'll need Form FR500 for tax registration.
  4. Clean Hands Certification
  5. Basic Business License Application
  6. Department of Health Inspection/Approval and Certified Food Service Operator licenses.
Before you sign a lease make sure to complete your due diligence regarding the following items:
  • Get to know the ANC (Advisory Neighborhood Commissions).  Meet them yourself. They would much rather meet you than your lawyer.  Make a good presentation to them.  Show them what you want to do and be truthful.  If you're not, they'll pick you apart and make your life hell. Make sure you concept is clear and your business plan is tight and right.
  • One of the great things about DC is the history of it all.  It's so DC!  That's fine until you move into a historic district and can't put up the sign or awning you want.  Check here for information on the many historic districts and how to work with the administrators of those: http://planning.dc.gov/DC/Planning/Historic+Preservation
  • Look at the business application record for businesses near where you're thinking of opening.  I heard they are public record, but I'm not sure exactly where you find them. Ask your rep at the small business resource center. Cheap homework to let you know if what you're going to try to do has been tried before and what the results were.  This will also give you the general temperature of the residents in the area.  You don't want to open where the residents are going to make it unfriendly.  You'll need the support of the community you open in.
  • Negotiate a release clause that allows you to back out of the lease if you can't get the permits and/or licenses you need.
  • Negotiate for "Heavy Up" MEP improvements if necessary.  Mechanical/electrical/plumbing takes time and is very expensive.  I've seen two restaurants that I worked with recently that had to re plumb their buildings, which entailed ripping up their floors down to the dirt and replacing the main piping to the street.  Expensive, but generally only necessary in places that weren't previously restaurants.
  • If you need these types of improvements allow approximately 4 months.  Pepco and WASA can be slow.
When you go back to show plans and get approval, you'll need 5 copies.  4 for DCRA and 1 for the Department of Health.
Allow for back and forth time with the Dept. of Health and DCRA if your plans aren't perfect, which they won't be.
As far as licensing, once you've got all your permits, Ms. Outlaw of the licensing division says walking in is the fastest way to get done what you need done.  Once again, the DCRA Small Business Resource Center will get you a list of everything that needs to happen and all the paperwork that needs to be completed and filed.  Don't sleep on this step.
Preliminary plan reviews are available as well according to Tay Garnett of DCRA's Permit Operations Division.  There is also an "Ambassador Program" to help steward you through the process from cradle to grave.  Take advantage of this free resource.  It can save you a lot of frustration.
Regarding using an expediter, there is not a need for one according to the consensus of the restaurant operators on the panel.  If you follow the steps, you'll do fine.
Special licensing is needed for outdoor seating.  If it's on the sidewalk or other public area it's known as a sidewalk cafe, but if it's in your courtyard or rooftop it's called a summer garden.  It will be in the lease if it's available to you.
Part II will focus on Finances, Leases and Build-Out.  Stay tuned!