Starting a restaurant may be a dream shared by many, but success is reserved for relatively few. According to Kep Sweeney, author of The New Restaurant Entrepreneur, about 90 percent of all independently owned restaurants fail within five years. But don't cast your dreams aside just yet. Sweeney, who boasts 20 years of experience in the restaurant industry as an investment banking analyst, restaurateur and chef, gave us some insight into how restaurateurs can beat the odds.
Entrepreneur: What makes a restaurant succeed?
Sweeney: The success of your business is the inter-section of your team, your concept, your real estate and your capitalization. A lot of people do a square-peg-in-a-round-hole approach. They'll get real estate because it's available, but it might not be in concert with the concept that they want to do.
Entrepreneur: What is the ideal background to have when starting a restaurant?
Sweeney: You have to be an autocrat. You have to look at yourself and ask: What am I good at? What do I like? What am I passionate about? You need to build your first concept around that. Success or failure is determined during the planning phases. Most people just don't plan.
Entrepreneur: Is there anything would-be restaurateurs can do before startup to increase their chances of success?
Sweeney: Read what a shareholder agreement is. Understand a buy/sell agreement. Understand what your investors are after. Read every line of the lease yourself. Don't turn to your attorney and ask, "Should I sign it?" These are important documents, and people are signing their lives away.