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CAN RESTAURANTS BE BOTH CREATIVE AND PROFITABLE? That is the question industry insiders are asking as rising real estate, labor and food costs have coincided with a spate of big name closings.

Despite the romantic notions of owning your own joint, it’s far too easy to lose dough in the restaurant business. Still, there are a few proven strategies to fill seats, preserve margins, and thrive. One thing is certain: good food alone won’t pay the bills. To make money in 2017, restaurants have to think beyond the plate.

1 SERVE FAST-CASUAL Chefs have been copying the Shake Shack model of offering a focused product that tastes as good as fine-dining fare but without frills like waitstaff or china.

2 HAWK PRODUCTS When Frank Castronovo and Frank Falcinelli (above) opened Frankies 457 Spuntino in Carroll Gardens in 2004, they decided to save on the imported Sicilian olive oil they used for cooking by buying in bulk and selling the surplus direct to customers. Twelve years, three restaurants and one coffee shop later, they have a national line of oils and olives, including an exclusive blend for supermarket chain 365 by Whole Foods Market, which launched last year and will have 13 locations nationwide by the end of 2017. Revenue from its retail products lifts Frankies Spuntino Group’s total annual sales by 15%.

3 EXPORT NEW YORK Restaurant groups are looking beyond the boroughs in hopes that their branding success in New York can help conquer other markets in the United States.

4 LET CUSTOMERS PICK When dinner guests asked to pick meat from the butcher counter and have it cooked to order, the owners were skeptical. But then they figured, why not?

5 OPEN EARLY, CLOSE LATE Breakfast, happy hour, late-night snacks, catering, events. Fine-?dining chefs now open for brunch (once a meal they disdained), use off-hour kitchen capacity for catering and redesign back rooms as event spaces.

6 GET A LIQUOR LICENSE It sounds obvious but is not to be overlooked: Wine sells for three times what it costs, and booze, nine times.

7 COOK UP INNOVATION City consumers reward originality and artistry, and that creativity tends to stem from passionate chefs, not tightfisted business partners. Following through on a chef’s big—and sometimes expensive—innovation can set a spot apart.

8 CALL IT MARKETING Partner with a landlord that wants to use a food business in the lobby as a way to sell residential or commercial space above. It adds value to a residential or commercial building and provides a service, a convenience, to have multiple food options at the bottom of the building.

9 DESIGN SOFTWARE A 30-person company licenses its software to more than 1,000 restaurants in 50 markets for $89 to $899 a month. This technology powers reservations and customer-tracking systems. It powers their hospitality. There are other local software companies which provides operational software, and provides software that restaurants use to manage menus, orders, payments, customers’ checks and employees’ schedules.

10 SIGN LONG LEASES Tell brokers you want a 100-year lease. Get a landlord who wants a long-term tenant. Five- or 10-year leases set restaurants up for a reckoning when rent prices jump. For restaurants in up-and-coming neighborhoods, this is key.

11 WRITE COOKBOOKS ?Dozens of city restaurants and food companies produce cookbooks, unwieldy projects that usually pay marketing dividends rather than financial ones. But signing bonuses for buzzworthy businesses can be substantial, especially now that print cookbooks are proving they can hold their own against e-books and recipe websites.

12 RUN HOTEL RESTAURANTS ?Hoteliers finance the build-out of the space, eliminating one big startup cost. Plus, they’ll give restaurateurs the contract for room service, breakfast or the rooftop bar. In exchange, the hotel takes a percentage of sales. Reduced financial risk means less creativity, however. The restaurant’s brand has to blend easily into the hotel’s look and feel. But when there’s synergy, the partnership works

13 SUPPLY HIGH-QUALITY MEAT   So many other chopped-beef makers use trimmings or mechanically deboned beef, which are secondary- and tertiary-market items.  Start with whole muscle.

14 KNOW THE MATH It can take a long time to recoup the investment in building out a new restaurant—$500,000 to $1 million—even when you’re selling $59 steaks. Three to four years is normal for eateries intending to be neighborhood stalwarts rather than boom-and-bust trends. When I run the numbers, if I don’t see money by four years, I get out, states an owner of a hospitality company. he keeps rent at 8% of sales and will walk away from a deal when it creeps to 9% or 10% states .

15 SET THE MOOD To make a restaurant worthy of charging enough to stay in business, owners spare no detail. They seek out restaurant design firms. Firms that provide lighting, brand identity, graphic design and clothing are also in demand. One sound group charges $119 per month for custom music playlists; it also supplies speakers and the app that streams its music. The company has been growing at a clip of 30% to 40% each year since its founding 10 years ago.

16 CERTIFY A healthful fine-dining restaurant in Chelsea, runs his eatery around the idea that food can be good for you and good for the environment. So he created a designation called SPE Certified that restaurants can obtain to verify their wholesome food and transparent sourcing. The goal is to improve loyalty among customers.

17 FIND ECONOMIES OF SCALE  While a landlord won’t negotiate cheaper rent just because you’re a group, centralized resources such as a bakery, garden or administrative staff can save restaurant groups money.

18 DELIVER Grubhub—delivered $3 billion worth of food last year, up from $2.4 billion in 2015. UberEats, Caviar, Amazon Prime Now and Postmates are also vying for takeout orders and dollars.

19 UP THE PRICE Rising costs have led many restaurateurs to raise menu prices. But high prices don’t lead to revenue if no one is buying. So you have to change expectations. Customers might initially balk at paying $23 for a plate of spaghetti aglio, olio e peperoncino (spaghetti with garlic, red pepper and olive oil), but if you’re expecting to eat a plate of pasta on Madison Avenue, on beautiful china, with pasta that’s artisanal, there has to be a resetting of expectations.
Source:, 4-24-2017

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