Neighborhood Watch

Crash Course

Due to the stock market crash of October 1987, by early 1988, even companies not directly connected to the securities industry were cutting back on discretionary expenses such as lunches at fine restaurants. That hurt R&B, as did the ensuing recession. Here, too, the downturn exposed a weakness: The restaurant was "too pricey for the neighborhood." But this understanding did not dawn on the partners immediately. At first, in reaction to the slowdown in business, the partners looked for an easy and inexpensive way out. Reasoning that the interior was too dark, "We lightened up the place, let the high ceilings take more focus, put in a big window, made the interior more inviting from the street." A few more customers came in because of the cosmetic surgery, but not enough.

Most of the problems renovation couldn't fix. When a recession takes its toll on a small business, Barbero explains, "You still have to pay your suppliers, your [employees], your taxes; the last people to get paid are the owners." By 1992, to stay afloat, the R&B partners were spending most of their time working outside the business, Barbero as a real estate broker and Rogers as a consultant to a company that helps computerize restaurants. They continued to open R&B's doors every evening but knew they couldn't go on losing money much longer.

Should the partners simply admit defeat and fold their tent? That would waste their most valuable asset, the extensive renovations already made and paid for. But something [else] had to be put in to replace the money-losing R&B. Ten years older than their first time out and "a lot more savvy about the restaurant business," Rogers and Barbero set about charting their new course. It was then they acted on the realization that R&B was too pricey for the neighborhood. The final nudge in the precise direction they took, Barbero recalls, came from a friend who casually reported that he and the group of young men who had gone out to celebrate his 25th birthday would have done so at R&B, but it was too expensive. "I realized young people like to go out several nights a week, and they have some money to spend, but they don't want to spend a lot all at once," Barbero says. This understanding led to an agreement among the partners that whatever they did next, it would not be a "tablecloth" restaurant, and that the tab for dinner must not be high.

« Previous 1 2 3 Page 4 5 6 7 Next »

Like this article? Get this issue right now on iPad, Nook or Kindle Fire.

This article was originally published in the March 1998 print edition of Entrepreneur with the headline: Neighborhood Watch.

Loading the player ...

2014's Most Overhyped Innovation

Ads by Google

Share Your Thoughts

Connect with Entrepreneur

Most Shared Stories