Michael Huynh isn’t the only one who thinks it’s a good time to be in the restaurant business. In Entrepreneur, Regina Schrambling points out that applications to open new restaurants in New York were actually up 25 percent during the first part of the year, and sales are up at certain stripped-down, accessibly priced restaurants like the New French. Schrambling says studies have shown that the risk of closing is just as great during good times and bad, and the reasons are many.
Rents have dropped by as much as 66 percent in prime locations, and landlords are actually offering abatements. There's a huge pool of talented chefs and workers desperate for jobs and willing to work for much less. And, as Hoffman says, “There's money sitting on the sidelines” to be tapped for investments, even if banks are not loaning at all.
Today, a new restaurant will likely need much, much less of it. Just a few years ago, startup costs could easily be in the millions, with most of that shelled out to a designer and publicist. Like many restaurateurs today, Hoffman and his team were able to open on an apron string — a mere $30,000 investment — in part because the expectations for the restaurant experience have changed so radically.
Plush dining rooms, star chefs and menus built around foie gras and truffles feel outdated — while rooms that are simple, with a personal touch, feel right. The trendiest dishes of 2009 were built around less expensive ingredients, such as bacon, seasonal produce and good ground beef — which means restaurants can charge less per dish but still make more money on them. A new generation of diners watching the Food Network and Top Chef is more interested in what's on the plate than if a headwaiter is on the premises: They want value, not glitz.
Sounds great, right? Well, not so great for chefs, contractors, and the guy who used to launder all the napkins: “Restaurant owners have also gained the upper hand in negotiations with service providers from upholsterers to contractors, who are strapped for cash and anxious for jobs. There are ‘deals’ to be made on staff too. Says [Philip] Hoffman [of the New French], ‘A chef who wanted $100,000 before may now deal for as little as $35,000.’”
Ouch. Of course, it’s not a great time for publicists, either. Schrambling points out that blogs like this one make it easy for restaurants to get the word out — and yes, all you have to do is e-mail us. Ain’t the new economy grand?
Why Now is the Time to Open a Restaurant [Entrepreneur]