Starting a Restaurant Business

Entrepreneur Advice from Carlos Gutierrez, Latin Grill Owner

Oct 28, 2009 Jenny Evans

Tips on successfully opening a restaurant, plus entrepreneur stories from the owner of a Latin grill where business is booming.

It's no joke that opening a restaurant is a risky business: a study commissioned by Restaurant Startup and Growth magazine found that 23% of new restaurants fail in their first year, while Ohio State University researchers found that a similar figure for first-year failure and a 57%-61% chance of failure within three years.

But even with all the risks associated, entrepreneurs with the right passions and skills can learn from each other and find out how to maximize their odds of success.

Entrepreneur Story: Owner Carlos Gutierrez, El Arepazo Latin Grill

Carlos Gutierrez of Columbus, Ohio, opened El Arepazo Latin Grill in 2005. Interior and exterior renovations to the building have just been completed. Gutierrez says that "It's no secret that it's because we're doing well... we're doing better and putting the money back into the business."

But according to Gutierrez, understanding the logistics of how to start a small business is only half the challenge in becoming an entrepreneur.

Find a Unique Concept for a New Restaurant

The first thing to do is zero in on a unique concept for a restaurant. What will set it apart from others in the area?

Smart entrepreneurs incorporate their personal passion into the concept of their restaurant. The groundwork for Gutierrez's restaurant was laid when he found success selling handmade arepas (a traditional food in his native Venezuela) at an annual local Latino festival.

Every new restaurant needs some kind of "hook" to attract customers, bring them back for repeat business, and most importantly, get them to recommend it to their friends. Gutierrez says that especially in the beginning, most of El Arepazo's business came from word-of-mouth advertising.

How to Start a Restaurant - Characteristics of an Entrepreneur

It takes certain traits to become a successful small business entrepreneur. According to Gutierrez, there are three main ingredients necessary for any restaurant entrepreneur to have:

Passion for cooking;
Passion for managing; and
Passion for people.

Restaurants have a unique set of challenges all their own, and potential entrepreneurs who possess these characteristics usually have an advantage in the business over those who don't.

Financial Challenges of Opening a Restaurant

Sticking with it is an important part of making it in a restaurant small business. When starting out, realize that it may be a while before seeing profits. Gutierrez says that he didn't get paid until seven or eight months after his restaurant's opening.

He says that it's important to remember that without investors "giving $2,000 or $3,000 into the business, every dollar counts. You have your home insurance, car insurance, cell phone, employees, and it all comes from the same place." Opening a restaurant takes a willingness to budget, plan, and stick it out even when there's no profit coming in at the end of the day.

Gutierrez admits that starting a business from scratch is definitely a challenge, but it's "also the greatest satisfaction that you can ever have to have your own business... maintain focus and be consistent, and don't be afraid. There's a nice light at the end of the tunnel." Opening a restaurant is a daunting undertaking, but it's possible to succeed with the right ideas, passion, and persistence.

Sources:

"Dallas, Texas 6-Year Phone Book Study." Restaurant Start & Growth Magazine Unit Startup and Failure Study. September 9, 2003.

Jeff Grabmeier, "Restaurant Failure Rate Much Lower than Commonly Assumed, Study Finds." Ohio State Research, 2003.

Exclusive interview with Carlos Gutierrez, 10/21/2009.

The copyright of the article Starting a Restaurant Business in Entrepreneurs is owned by Jenny Evans. Permission to republish Starting a Restaurant Business in print or online must be granted by the author in writing.

How to Start a Restaurant Business