Home Fairfield How can restaurant startups avoid a recipe for business disaster?

How can restaurant startups avoid a recipe for business disaster?

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In March 2016, Miro Kitchen, an Asian-fusion eatery in Fairfield’s busy Black Rock Turnpike business district, opened for business and was quickly praised in media reviews as one of the county’s most innovative restaurants. The New York Times complimented the establishment for boasting “a menu that is exuberantly creative and regularly has diners waiting an hour for a table.” The Hartford Courant noted the restaurant’s extensive competition when it stated that Miro Kitchen was “the best thing to happen to food on Black Rock Turnpike in Fairfield in forever.”

Even the notoriously unpredictable online reviewers were enchanted, honoring Miro Kitchen with a four-star average (out of five stars) on TripAdvisor plus 4.1-star and 4.4-star averages on Yelp and Google Reviews, respectively. But the positive reviews and hour-long lines were not enough. On March 13, Miro Kitchen abruptly shut its doors after a year in business. No explanation was given about the unexpected development, except for a sign on the door and a social media posting from the restaurant’s owners, both of which declared that “due to some recent changes, Miro Kitchen has had to close.”

“Opening and operating a successful restaurant is always a challenging task,” said Sarah Maloney, executive director of the Connecticut Restaurant Association. However, Maloney added the Miro Kitchen shutdown was an exception to ongoing trends. “We are finding that there is an increase in restaurants opening and/or expanding in specific areas in Connecticut, including Fairfield County.”

Mahoney added that there are 7,877 eating and drinking locations now operating in Connecticut, which are forecast to generate $7.5 billion in sales this year. Within this sector are 154,100 restaurant and food service jobs, which equals 9 percent of employment in the state — and that figure is projected to grow by 7.1 percent in the next 10 years, producing 11,000 additional jobs.

Chris Danas, whose Milford-based Top Line Restaurant Clients LLC advises start-up and long-running eateries in Fairfield County, was neither surprised nor resigned to the closing of Miro Kitchen. “Places come and go every day,” he said. “I don’t think it is a bad climate. I think it is a good climate, depending on what your brand is.”

But Danas acknowledged that Connecticut’s taxes and liabilities do not necessarily encourage aspiring restaurateurs. “Connecticut itself is a test,” he lamented. “It is expensive for a lot of people. It takes some stamina to do it here.”

Food trade entrepreneurs also face a traditionally harsh startup realm. Bill Guilfoyle, associate professor at The Culinary Institute of America in Hyde Park, New York, noted that 20 percent of new restaurants shut down in their first year, while 60 percent expire after three years and 80 percent are closed after five years. Still, he observed, this is not unique to the hospitality industry, adding, “A lot of people think that’s only for restaurants, but it is true for all small businesses.”

CHALLENGES AND STRATEGIES

In some ways, the owners of new restaurants are often their own worst enemies. Guilfoyle noted that many of the establishments that flounder and fail shortly after opening are killed by a lack of sufficient capital. “They forecast $1 million in their first year, but they have only $50,000 instead of $300,000 or $400,000 in the bank,” he said.

Mark Moeller, founder and president of the Shelton-based consultancy The Recipe of Success, agreed with Guilfoyle and added that financial irresponsibility among would-be restaurateurs has scared off many potential investors. “They think that they can keep spending and get money,” he observed. “A lot of investors are tired of small restaurants that spend, spend, spend and do not have any skin in the game.”

Moeller also faulted the newcomers to this profession for doing a dismal job in promotion. “There is a misconception: if I build it, they will come,” he said. “Restaurants are notorious for not doing well with marketing. They are operators, and they need to have the right person for that type of marketing — someone who has worked with restaurants. This type of marketing is a completely different animal than marketing a retail or office space.”

And speaking of marketing, independent restaurants are in competition with national and regional restaurant chains with considerable advertising and promotional budgets. Jim Lopolito, a hospitality industry consultant based in Monroe, N.Y., pointed out that the chains have an even greater advantage over independent restaurants: their ability to slice and dice customer and employee data to determine what strategies work best in their markets. Lopolito noted that independent eateries are less focused on number crunching.

“Small shops do not look at data,” he said. “They look at what their gut tells them. But that can be very problematic. I’ve walked into a lot of businesses where they have no idea what they’re doing on a daily basis. Without data, you really have to look at how each person on the team is selling. If you don’t know, it could be the end of the business.”

But Scott Lawton, president and co-founder of the Bartaco chain of restaurants which operates in seven states, including locations in Port Chester, N.Y., and Stamford, West Hartford and Westport, noted that there is one area in which independent restaurants have an advantage over the chains. “Independent restaurants have sort of a mom-and-pop mentality — they take care of the customers,” he said. “The owners are around the business all of the time and pay attention to all the time. The chains do not have that level of care to each of their customers.”

There is also the question of where the restaurant is based. For Lawton, the old real estate mantra of “location, location, location” is affirmed if new restaurants are poorly situated. “You are always running a great risk if you are not in a primary location,” he said.

Yet consultant Danas disagreed. “It depends on concept,” he explained. “I have a client in Norwalk — East Avenue Pizza — that has no parking, but it has been in business for 20 years. If they have something people like, people will come for it.”

Perhaps a possible strategy for avoiding restaurant start-up errors is to do a test-run in a non-brick-and-mortar setting. One of Fairfield County’s newest restaurants will be Aunt Viv’s Homestyle Cooking, which is set to open later this spring at 1055 Huntington Turnpike in Bridgeport. Owner Sarah Bridges began her business in 2012 as a catering service with the goal of opening a restaurant for her Southern-style fare. However, she first opted to test the concept via a food truck, which she acquired and put into service last year.

“It was less expensive,” Bridges said. “And it made sense because we wanted to make certain that we could sustain the quality of the business before transferring it over to a restaurant.”

Bridges scouted out locations in Milford and West Haven before settling on Bridgeport. “We want to see Bridgeport succeed,” she said. “There are a lot of great things about the city, and we want to be part of the greatness of the city.”

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