The Coming Restaurant Apocalypse That Isn’t**
**Provided the industry works together to embrace change
“A restaurant apocalypse is nigh,” suggested Daniel Duane in this NYTimes article entitled Dinner, Disrupted.
“David Chang explains the coming restaurant apocalypse,” in the recent GQ lament that he personally wrote. “Razor-thin does not even begin to describe just how slender the margins are in the restaurant business, and that’s if you’re one of the fortunate few that don’t go under in the first year. If you’re lucky, small single digits. Like, the smallest single digits. It’s legitimately one of the dumbest businesses you could possibly get into.” This from one of the industry’s most beloved and successful chefs.
Restaurant Apocalypse. I must be in the wrong industry. It gets worse.
I read a while back about the closing of a chef-driven, much beloved restaurant — an all too common occurrence these days. In this case it was Thirty Acres in Jersey City. It seems all my social-media friends in the restaurant industry re-posted chef-owner Kevin Pemoulie’s lament that “I don’t want to do this shit anymore.” The typical response from chefs on Facebook: “I’m *so* about this!” with a link to chef Pemoulie’s comments on Grubstreet. His interview touched a nerve with nearly every ambitious chef I know.
At nearly the same moment, on the opposite coast, a similar story played out. The LA Times wrote a piece titled, “Why we love Alma, maybe even a little too much,” to announce that it too was closing. Amid financial squabbling, a lawsuit, and efforts to survive, something finally drove Ari Taymor to close up shop and, one hopes, eventually start again.
Want to get really depressed if you are either a passionate diner or, far worse, a restaurant owner? Here’s a sampling of a little collection of articles I’ve been building that I call, “Holy shit the restaurant industry is doomed.” It reminds me to stay paranoid. Please don’t read them all.
What is going on?
These articles all claim that the restaurant industry is littered with failure, so much so that it is a terrible business with low margins, high pressures, and little reward beyond the intangible but great-to-write-about chefs’ passion for cooking and hospitality. In the end, though, chef-owners can’t pay their teams, their rents, or afford their own family lives with passion alone. As chef Taymor himself posted on Instagram, “We’ve learned a lot of lessons about operating a business, about having goals that are meaningful and goals that are not meaningful.”
I sadly never had the chance to eat at Thirty Acres or Alma or AQ or many of the other restaurants mentioned in those articles — I wish I had. As a diner, there is nothing more exciting than a small, intimate, chef-driven restaurant where chefs push their culinary visions in spaces that are the culmination of years of dreams, planning, and sweat. Those restaurants become the cornerstones of their neighborhood, their community, and the restaurant industry itself. A few years later those are the places that the corporate restaurant groups will copy and plunder for ideas and staff, building knock-offs with four times as many seats, an added bar, and a burger on the menu just in case. I call it “restaurant gentrification.” Take that as you will.
Here’s the thing: the restaurant closings that get written up are not about the places that were never any good. They are about the ones that should have made it. How can it be that a place everyone loves is closing?
The Grubstreet piece about Thirty Acres is titled, “Another acclaimed, ambitious restaurant is closing — here’s why.” But despite Sierra’s smart reporting, and with full respect to chef Pemoulie, I don’t think she nailed the “why.”
The press, as well as chefs and owners themselves, often seek outside reasons to blame for the closure of a well-regarded restaurant. Rents are exploding and we cannot afford the neighborhood anymore. Critics loved us to death and we couldn’t cope with the influx of customers (that’s a real one!). Tipping is broken and treats all restaurants, regardless of type, the same. Increases in the minimum wage are great for our employees, but make it impossible for owners to turn a profit. Healthcare costs are doubling. The list of reasons is infinite.
Here is the harsh reality:
Chefs are willing to innovate in the kitchen, they’ll drill service to perfection and spend gobs of money on the front-of-house — and then forget that business innovation, restaurant booking templates, yield management, pricing, modern and efficient marketing focusing on search / social media, and accounting are as critical as the food they put on the plate and the hospitality they provide. Moreover, innovating on the business of managing their restaurant gives a chef more freedom to do the kind of cooking, to present the great experiences, they want to offer their patrons. That business stuff isn’t usually sexy and it requires a different mindset. But a well-run business is a virtuous cycle that is better for chefs, owners, their employees and their customers.
You cannot, after all, eat at these great restaurants once they close.
I started writing this blog post many months ago. Then another article would appear, another restaurant would close, and after a dozen meetings with restaurant owners and a few public presentations I’d sit down and start examining another restaurant management topic thinking it’ll be simple to explain, say, the reasons why Flex-Tables are a clusterf*ck, only to find that I’d written another 2,400 words and had still barely scratched the surface.
About two years ago I wrote another very long blog post about the work we were doing at our restaurant group to change the way we booked our restaurants in which I presented data that showed the results of our experimentation. That post garnered millions of page views and resulted in hundreds of emails from restaurants all over the world asking if they could use our “ticketing site” at their restaurants.
Those emails, discussions, and encouragement gave me the push I needed to start a new company. I was fortunate to reach out to Brian Fitzpatrick of Google for advice on how to build a scalable, much more comprehensive version of the reservations software I had created. A few months later Fitz left Google and together we founded Tock. In the intervening 2 years or so we’ve raised money, hired an amazing team of engineers, designers, and customer support staff and have begun offering Tock to a diverse group of restaurants, both geographically and by category. Tock is already helping restaurants in 12 countries and 43 cities around the world.
Because of my role at Tock I’ve talked to restaurant owners around the world. When I read the articles I linked to at the top of this rant I get fired up. Why are chefs being asked about business? Why are they forced to do everything from cooking to accounting and expected to be experts at both? Why can’t the industry make money and be OK with that? Let me tell you — this does NOT need to be a low margin, high anxiety business.
I’ve decided to write down my thoughts and share our data, splitting it into a series of posts instead of one very long screed. I’ve got some strong opinions, not all of which you’re likely to agree with, but the point is to start a discussion and encourage the industry to be a bit more open-source. Over the next few months I’ll be writing on here regularly.
Here’s what’s coming:
Part 1: Restaurant reservations.
Restaurant reservations were built around the telephone, a black book, and a pen. But the telephone died about 8 years ago. Let’s examine the history of restaurant reservations, the pain points, and why your restaurant booking template is the most important thing you can re-examine if you want to drive revenue and efficiency.
Part 2: It’s time to treat restaurant employees as the professionals they are.
A tightening labor market means that the competition for great employees is higher than ever. But what other industry is saddled with an outdated cultural practice that is strictly regulated by the government? Tipping will end for restaurants with mid to high check averages and that’s a good thing for everyone. Here’s the why and how of eliminating voluntary gratuity, and the ethical case for treating all restaurant employees like the professionals they are.
Part 3: The future of restaurant discovery and advertising is search and social media.
The internet is big. Really big. Your restaurant affiliate marketing program is small. Really small. Let’s see what a social media campaign looks like, costs, and how effective it can be in putting butts in seats. (Spoiler: don’t spend your marketing / reservation booking money anywhere else).
Part 4: The new metrics.
Check average. Food cost percentage. Labor cost percentage. Every restaurant owner can cite these off the top of their head. These metrics overly simplify restaurant operations and are not providing actionable data. Let’s consider: revenue per seat minute, food-cost marimekko charts, and other ways to parse your business and make better data-driven decisions. Time to get geeky.
Part 5: Some real numbers.
I’ll practice what I preach and open the kimono to show the changes in our operating revenues and profits as we’ve implemented various experiments within our restaurant group. I’ve asked a few other chefs and restaurateurs to do the same.
This series won’t be comprehensive. It can’t possibly be. But I hope it drives the discussion in a more positive direction. Let’s encourage the press to focus on the restaurants that are innovating in successful ways. We should celebrate those teams who have made the unique, impossible restaurants work.
The restaurant apocalypse need not happen. The bad grammar in the title is purposeful.
It is the apocalypse that isn’t.
