Businesses to be in or not to be in? Future of restaurant business?

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momofseven's picture
momofseven
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Businesses to be in or not to be in? Future of restaurant business?

I have just finished the Crash Course.  It is a lot to take in.  

We live a pretty simple life and the farm and are fairly self-reliant, but we just opened a pizza restaurant in a small community.  We are hoping for the best - that business will increase over time and our children that choose to be a part of it will have a means for providing for their families.

This has been possible for previous generations, but as the Crash Course states, things will most likely not be the same in the next 20 years as they have been.

Just wondering what some of you think about the restaurant industry.  Is it doomed to fail?  Or will low cost food options fair well as people are more busy and have less time to cook?  Or maybe we won't even be able to afford to buy food for our restaurant?  

Any thoughts?

Sorry if this has already been covered.  I couldn't find a way to do a search in the forum.

Johnny Oxygen's picture
Johnny Oxygen
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Hi cpuetz

Welcome to CM

The search box is in the upper right hand corner of the home page. The small white one.

IMO a local pizza shop in a small community could fair well as long as costs are kept down. Pizza is rather simple and goes a long way.

I think the places like McDonalds will survive but mid level restaurants Like Applebees will go under.

Perkin's and Marie Callenders just filed bankrupcy

http://www.sltrib.com/sltrib/money/51996405-79/perkins-marie-bankruptcy-...

On the other end I think the very rich will support high end restaurants or at least some of them.

In your case I think the issue will be more of an overhead problem.

Thats just my opinion. I'm no expert.

deggleton's picture
deggleton
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The 3 Ps: Post Peak Pizza

All the way to peak, there have been places to eat other than at home. During most of the period, most working people did not go far from home regularly. Dining out was very special.

Your shop will persist longer than those of competitors if your ingredients travel less far, your pies are evidently more nutritious and your oven is wood-fired.

RNcarl's picture
RNcarl
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Post peak pizza! - love it!
deggleton wrote:

All the way to peak, there have been places to eat other than at home. During most of the period, most working people did not go far from home regularly. Dining out was very special. Your shop will persist longer than those of competitors if your ingredients travel less far, your pies are evidently more nutritious and your oven is wood-fired.

momofseven's picture
momofseven
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3 p's

I'll have to think on this a bit!

Poet's picture
Poet
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I Love Pizza!
momofseven wrote:

...We just opened a pizza restaurant in a small community.  We are hoping for the best - that business will increase over time and our children that choose to be a part of it will have a means for providing for their families.

Just wondering what some of you think about the restaurant industry.  Is it doomed to fail?  Or will low cost food options fair well as people are more busy and have less time to cook?  Or maybe we won't even be able to afford to buy food for our restaurant?  

Welcome to the community! I hope you can take some time to fill us in on how you found us in the thread I've linked to below:
https://www.PeakProsperity.com/forum/how-did-you-find-out-about-crash-co...

As to your question, Subprime JD's family runs a few restaurants in Southern California, and he had some comments about rising prices.
http://www.peakprosperity.com/comment/97952#comment-97952

Here's another comment he had about how restaurants that were bringing in $40,000 per month are now bringing in far less (as an aside to his tale):
http://www.peakprosperity.com/forum/pre-crisis-now-how-crisis-has-impact...

I don't know enough about your pizza place or your community and its economy to be able to give you an opinon of your restaurant's prospects. But personally, economics plays a huge role. Since our babies were born last year, my wife and I have really cut back on eating out.

I'm in charge of earnings and major bills. My wife is in charge of the grocery budget. If we eat out, then we have that much less for household supplies, baby stuff, and regular food. We may go to a restaurant when relatives invite us, but we try not accept their invitations, because then we'd have to reciprocate.

P.S. Round Table Pizza is my favorite. I love the Gourmet Veggie or the King Arthur on skinny crust.

Poet

PastTense's picture
PastTense
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The economy is liviing

The economy is liviing beyond its means (the government is running up massive debt...). With peak oil, enery costs will explode. Health care costs are exploding. With baby boomer retirement, there will be a massive increase in Social Security payments, etc. The result will be people will have a massive decline in discretionary income. Restaurants will go back to what they were several decades ago--where you only went out to eat for a special occasion.

If you are making good profits with your restaurant, continue with it. But if you aren't making any money now, but are expecting to become profitable in three or four years I think you are making a mistake. A key question is how leveraged you are. What happens if sales decline 25%? If you respond that your income will drop 40%, fine. But if a 25% decline means you will change from making a moderate profit to heavy losses and won't be able to pay your fixed bills, then there is a high probability you will fail.

kaman's picture
kaman
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A small pizza joint may work

A small pizza joint may work if you can keep your overhead down and possibly offer delivery for lazy impulse eaters.  Go after business instead of waiting for it to enter your front door;  as in providing for sporting and public social events, birthday parties, graduations, work offices, etc.

The type of sit-down restaurants I see usually doing the best in tough times are breakfast and maybe soup-n-sandwhich lunch types where inventory is cheap and small as compared to those serving dinners and multi-course meals (soup/salad, entree, dessert) that involve twice the work/cost/inventory/personnel/table space & prep time.

Travlin's picture
Travlin
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Echo Kaman
kaman wrote:

The type of sit-down restaurants I see usually doing the best in tough times are breakfast and maybe soup-n-sandwhich lunch types where inventory is cheap and small as compared to those serving dinners and multi-course meals (soup/salad, entree, dessert) that involve twice the work/cost/inventory/personnel/table space & prep time.

I'm thinking along the same line as Kaman.  I don't know the food business, but something like a basic diner seems to fill a need that will not go away.  Not everyone can be at home at meal time or carry a meal with them.  Simple and inexpensive food will always be in demand.  Pizza fits this need for one or two meals, but you could consider adding breakfast and simple lunches as a way to transition into a broader and more stable market.  You could still keep pizza too.

Travlin 

Johnny Oxygen's picture
Johnny Oxygen
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mmmmmmm

Please send me some

Poet's picture
Poet
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Yes, That's It!
Johnny Oxygen wrote:

Even if we are occupied with important toppings and even if we attain honor or fall into ordering Domino's, still let us remember how good the pizza was here, when we were all together, united by a love for good cheese and crust, which made us perhaps fuller than we were." - Fyodor Deepdishsky

Poet

momofseven's picture
momofseven
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Thanks for your input

Thanks to all that have replied.

We are hoping that people will go for a lower cost eating out option and also stay more local.  We are in a midwest rural community and the 'city' restaurants are always busy.  As of now, a lot of people will spend $3 something on gas to drive to the city to eat out.  Besides the higher cost of gas, we tend to be sheltered from great economic changes (so far.)

I had read part of what Subprime JD had written.  We are in a much lower cost area and our startup costs are a lot lower.  Our food costs are going up, but most fixed costs haven't changed much.  Just as an example, our trash pickup went up $2 per month.  

As far as deggleton's 3p's, our ingredients are delivered so fuel prices do affect us, our pizza is high quality ingredients and closer to homemade so better nutrition than convintient store, our pizza oven is gas so we will be really hurting as prices go up - although we are lower than the average prices.  So that seems like 1 1/2 out of three.

Poet, we have never gone out to eat a lot either - 7 children - but pizza has always been something we have been able to afford.  A large pizza or two and water to drink is a very affordable meal.  The other day a dad and his two teenage daughters came in for an evening meal and it cost him under $14.

But, I think more like PastTense.  Right now we are not in the black yet.  Everyone says 2 - 5 years.  I don't want to go 2 - 5 years only to find all odds were against us and we made a stupid decision.  

Any other input will be greatly appeciated!  

momofseven's picture
momofseven
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Thought you might enjoy seeing this.

How about this?And this...And really, this is what it is all about.

Poet's picture
Poet
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Family Labor: A Crucial Cost Advantage

MomOfSeven

Great pictures! My mouth is watering over the pizza already! I love skinny crust pizza with toppings that go to the edge! And cutting the pizza into squares like that make them easier to handle. And if you are greedy like me, you can eat more pieces without appearing to eat more pieces than your dinner companions!

Oh, and I see you got yourself some low-cost / unpaid family labor! Family labor is a recognized crucial cost advantage that family-run businesses have over other businesses in helping them survive and make ends meet. I am glad you have already recognized this advantage.

Poet

momofseven wrote:

How about this?And this...And really, this is what it is all about.

RNcarl's picture
RNcarl
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Posts: 382
fresh makes the difference

Fresh!

Use only fresh ingredients!!!

Get rid of the canned mushrooms, slice your own olives if you can stand it, same for onions, peppers etc.I know pre-sliced is easier but...

One of my wife's dearest friends is Greek and has owned (and sold) many pizza parlors. She didn't go out of business, she built up the name, reputation, added many locations and then sold them. Now she owns only two stores. She works 80 hours a week.

Each time she sold out before, she took the recipe for the sauce with her.  She said that was her secret and never sold that bit of "intellectual property" with the store. The other thing she did was used only fresh dough made daily for use the following day. Never use frozen dough.

Your pie looks GREAT!!!

Don't listen to  "mainstream" restaurant advice. You need to build your restaurant to be resilient for the coming 20 years, don't base your model on the past 20 years.

Use and offer "in season" toppings from local sources. Makes it a bugger to offer peppers in January I know.

Would it be possible to get a wood fired brick oven? A favorite regional chain named "Bertucci's" uses wood fired brick ovens... They are "gourmet" pies and the margins are huge!!

Just some random thoughts...

C.

 

Johnny Oxygen's picture
Johnny Oxygen
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Re: Yes, That's It!

ROFLMA!

That is brilliant Poet!

I actually just got finished eating Dominos pizza.

momofseven's picture
momofseven
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free labor

Besides the free labor, he and his brothers are learning how to WORK!

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
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I did not need to see that.....

Mo7 -

Is that second pie a Mediterranean?  Do I see sun dried tomatoes and feta?

Do you deliver to Virginia???? 

I would be more than willing to barter - I have 8 orange, 2 white and 2 chocolate habanero plants pushing out blossoms.  Right behind them is a Trinidad Scorpion Tail pepper plant growing like nothing doing.

Would you consider making a habanero powered nuclear pizza?

momofseven's picture
momofseven
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Posts: 6
Ha!

The 'sun dried tomato' is pepperoni and it is just a mozzarella provalone blend cheese - but a good one at that.

The habanero plants sounds great, but with shipping I would have to have more than 4.

And I think our insurance agent would see the nuclear pizza, as a way to get more money from us!

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