Starting a vegetarian restaurant—food for thought

HAVE YOU EVER WONDERED WHAT IT TAKES to start a vegetarian restaurant? Before serving the first meal, savvy entrepreneurs must cook up a plan to increase the likelihood of sweet Success.

Chicago Diner, Angelica Kitchen in New York, Millennium in San Francisco, and similar restaurants are renowned not only for offering vegetarians an enjoyable dining experience but also for attracting non-vegetarian audiences to sample delicious green cuisine. Despite these high profile successes, however, restaurants are a risky business. Doug Fisher, author of Successful Restaurant Strategies from Start-up to Franchising, told the Toronto Star that 80 percent fail in the first three years. The wrong concept, poor location, management miscues, employee theft, insufficient financing, and bad luck are just a few of the factors that can end the dream and leave the owner to meet unpaid obligations.

Prospective entrepreneurs, therefore, need to consider fit, finances, and feasibility before proceeding.

Fit--Chef or Chief?

Many people are drawn to the restaurant business because they are good cooks. Owners, however, wear a lot of hats other than chef's toque. They not only oversee the operational aspects of providing food to large numbers of people but also undertake activities necessary for any business.

Partners Mickey Hornick and Jo Kaucher brought an excellent mix of skills when launching the popular all-vegetarian Chicago Diner in 1983. Kaucher had previously managed and taught bread lessons at Chicago's original natural food restaurant and bakery, The Bread Shop. Hornick had a background in management, finance, and sales.

Although all of these talents were valuable, Hornick cited "hard work" and "fortitude" as most important to Chicago Diner's success. He and Kaucher worked 100 hours per week for many years; even today it can be difficult to put in less than 60. Leslie McEachern, owner of Angelica Kitchen, also recalls years of 90- to 100-hour weeks. "You're down on your hands and knees under the refrigerator wondering what that new noise is coming out of the machine ... It is not glamorous."

McEachern perseveres because she enjoys putting into action the beliefs she holds dear--caring deeply for "things close to the earth" and supporting the self-employed, small farmer. She is proud to work with producers she calls "artisans" to bring customers the best tofu, tempeh, sea vegetables, and more. McEachern believes that it is important to educate the public by example. "You have to be careful about how much you push an issue," she cautions. "You're in the hospitality business."

To see what's really involved in the hospitality business, potential owners should get experience. Any job, including waitperson or dishwasher, can provide valuable information on the rewards and the stresses of food service. Talking to as many people as possible about what they've learned as restaurant owners will also provide insight on the opportunities and drawbacks.

Finances--Measuring Carefully

When you compare the price of dining out to eating at home, you may think that owning a restaurant is highly lucrative. However, the National Restaurant Association shows that for every dollar in sales for the average restaurant, only 5 to 6 percent--five or six cents of profit--remains before paying corporate income taxes.

In addition to these slim ongoing profit margins, restaurant owners face substantial upfront demands on cash, including facilities, renovation, equipment, furnishings, initial inventory, insurance, legal support, and more. Therefore, one of the biggest pitfalls in starting a restaurant is estimating and obtaining the required financing. In a Restaurants USA article, Fred Schneeweiss, president of Restaurant Management Consultants, noted, "The biggest mistake I see people make is that they underestimate their working capital [funding needs] ... they might think that they need $25,000 in equipment, and it turns out that they need $50,000 or $75,000."

According to DaW Davidson, another vegetarian restaurant veteran, "A regional chain would very roughly require $1 million minimum to sustain a few stores for a couple of years assuming they are each at least breaking even within a year." Sources of financing can include commercial bank loans, SBA loans, investors, financing from someone, a restaurant seller, partnerships, personal finances, and venture capital. However, Davidson notes, "This economy is a bad time to raise money unless you have a 'name' and successful track record in the area in which you're trying to raise money."

Paul Travis launched the first SUNSPOT QuickGreen Cuisine in the Seattle area in 1994 in a converted Kentucky Fried Chicken site. To offset the higher costs of organic ingredients and labor-intensive products, he established a centralized kitchen facility to serve multiple units. Travis attracted both board and staff members with considerable restaurant experience. Thousands of customers enjoyed meals at the three SUNSPOT QuickGreen Cuisine units that Travis ultimately opened.