Why do so many people open new restaurants, Veeky Forums?

This
Lack of imagination and/or skill

There's a place in my area that opened up a few years ago that served COLUMBIAN food. You can't even find a Columbian restaurant in the whole state. They're pretty damn successful, but there's a lot that have failed before them though.

You can always launder drug money in a business like this

But the niches are always too small.

There aren't enough people desperate to eat nothing but quinoa bowls or Mexican-French fusion cuisine for it to be a real market; even if you end up with 100% of that market, you can't make money.

But if you go for large markets (e.g. burgers, chinese food etc) there's so much competition that you cannot develop a large market share and you can never attain any pricing power, and so nobody makes any money doing that either.

It's just a terrible industry all round.

This is perhaps the only economically rational reason for opening a restaurant - but you'll probably get caught after a while, and you would've made more money in the interim period doing something else.

How do you know they're successful?

They could be very busy all the time and still be barely making payroll at the end of the month - or the owner could've been getting up to his eyeballs in debt to keep the place afloat. It's very hard to tell whether they're actually making money or just making enough to stay in business, but without generating any meaningful kind of return.

Opening a restaurant is a real estate play.

you buy the property, the restaurant pays the mortgage, at the end of 30 years you sell the property and the business.

This is true of a lot of low margin businesses. Farming, ranching, retail. A lot of these operations are just there to pay the bank for 20 or 30 years. The property is where the actual money is made.

Family restaurant business is the oldest meme around.

There's a (relatively) low barrier to entry and therefore a saturated market.

What percentage of people running restaurants own the property rather than lease it?

I would imagine it's rather low.

In my country (Belgium) more than 50% of newly opened restaurants go bankrupt within the year. However, the restaurant and bar owners that I know are making a fortune and often branching out after a few years. So there is good money to be made for sure.

Hard to say since most that own the property probably put it in a holding company and lease it back to themselves because reasons.

Also most franchises lease the property from the company afaik. But in those cases you have to count on making money from the business itself, which is really hard to do until you own a bunch of them.

It depends on what you mean by 'good money', I suppose.

Perhaps I should've specified in the original post; if I had to put a lower limit on what I mean by 'making money', in this context I would say it would be a bare minimum of 100 million dollars of net profit in the space of 10 years.

That would be the lowest amount I would consider to be 'making money' - and I don't think that's particularly unreasonable, given how much money can be made in genuinely profitable businesses (orders of magnitude more than that) in that timespan.

another economic argument could be:
The market is huugge. i mean, come on, it's fuckting EATING. People always eat. in good times, in bad times, during wars etc..
Name another so solid industriy besides prostitution.

so, theoretically, if you obtain a 0.0000001 marketshare and manage to keep it,you could be successful.

*sign*
couldn't you marked in the OP that you're only elementarty school educated? would have made the discussion easier for everyone.

OP is right.

> elementary school educated

k

Depends on what kind of restaurant desu. Around here sushi places make good money. Especially ones that are always busy. Also its all.about owning several locations.

See here.

There's a saying in my non-country.
"Ein guter Jurist und auch sonst von mäßigem Verstande"

"A good lawyer and otherwise of moderate understanding"

A lot of chains don't make that kind of money, I can't see it being possible with a single venue. Unless you cater to the gold plated caviar market.

I know it's silly but personally I'd love to own a gaming bar & cafe.

> implying I'm Alois Eschenberger

>he saved a pic of his bachelor's just in case someone on a malaysian scuba diving forum questions his intelligence.

congrats on the degree

Malaysian scuba diving forum?

I thought this was a Lithuanian faberge egg collecting forum.

Hello Pat,

Thanks for taking the time to present your question in such a through and well thought way!

Here at Veeky Forums, biz department - we strive to answer your questions in a thoughtful and timely manner.

Often times people fundamentally enjoy working on a specific endeavor. Often times restaurateurs have a passion for the culinary arts and providing a quality service to patrons. Even in the event of low compensation. Alternatively, compensation can take forms beyond monetary! Some are delighted to substitute high dollar income for fame or notoriety and access to social arenas they otherwise wouldn't have access to! Often times we call this a "lifestyle business" -

Thank you for taking the time to place your question. Your thread will be marked --Answered--
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Thank you,
-Veeky Forums.biz Answer Team Member #1458732

I'm printing out this reply and framing it.

Thank you, team member #1458732.

It's the same with pubs, bars and clubs.

I doubt most people expect to make a fortune. Just enough to pay the bills, doing something they enjoy, being their own boss and making everything "perfect". There could be a social status attraction too.

You could also look at it from the opposite perspective. Nobody grows up dreaming of having their own accountancy firm. They do it to pay the bills - not out of a passion for calculating tax bills.

Clearly most people would want the best of both worlds, but "fun" jobs rarely pay well.

What is..... Money Laundering

Do I win the /biz prize now?

Protip
>Look at McDonald's profit
>Divide that profit by number of restaurants
>They literally each only make a few hundred dollars per day

Because people are fucking retarded

Good point.

mcd is a franchise retard

>he doesn't realise that a law degree is worth only slightly more than a history degree these days

jej, might as well show us your high school results while you're at it

Resident fags hating on the prospects of a law degree

I don't like this Veeky Forums. It's sterile and lacking "nigger" "faggot" "retard" and most importantly memes.

They're possibly conflating the U.S. legal market with the foreign legal market.

The U.S. market is oversaturated and absolutely rife with shitty lawyers, but my understanding is that foreign markets aren't quite as bad.

I can see why a restaurant would be alien to most of Veeky Forums's modus operandi.

After all it's something that offers a service and product in exchange for money, with expenditures. rather than trying to scam your way into some free money for the bare minimum of effort.

agreed.

it's kinda funny, for a board ostensibly about business, these jokers sure don't even seem to know what business is.

Most restaurants where I live are generational businesses

Like our correspondent from biz team stated. Money isn't everything. Imagine this, you're married, your partner is making 2 times what you both need to live off of. Instead of pouring cash into those risky cooky hard to understand stocks. You decide your grandmas cook book is worth sharing. Opening up a restaurant can be more rewarding than traditional investments. Scraping 1% ROI , all the while serving your friends, meeting new people, enjoying the fresh food market and having the thrill of running your own company, that has a name you chose..... Can be better than traditional long term investments.

Can anyone confirm if this OP is an exact repost from a few weeks ago?

I could never wrap my head around this stuff as well. Why the fuck do people open their own restaurant instead of just opening a McDonalds, Subway, Burgerking or KFC? It's incredibly easy and pays a shitload if you have good location.

My uncle makes a good 3 million a year and he has only 2 McDonalds.

There is a gaming bar in Cincinnati where I am from, it is incredibly successful. It has tons of vintage arcade games,and old Xboxes and N64s and such

google.com/search?q=gaming bar cincinnati&ie=utf-8&oe=utf-8#q=gaming bar cincinnati&tbs=lf_msr:-1,lf_od:-1,lf_oh:-1,lf:1,lf_ui:9&rflfq=1&rlha=0&rllag=39105662,-84475898,8023&tbm=lcl&rldimm=9826030380390399934&rlfi=hd:;si:9826030380390399934

How much of that is retarded corporate overhead? What do the individual franchisees make? (Shouldn't we judge on franchise, not corporate profit?)

McD's requires you to have a million dollars in the bank before you can buy a franchise, and you have to keep at least that much in the bank at all times for remodels and such.

so you have to be a millionaire to begin with before you can even think of getting one. Less than 1% of americans meet those criteria.

You need 500k and you buy the rights to use McDonalds + equiment with these 500k.

Subway requires you to have 50k if I remember right, my sister has a subway and makes good money with it and is planning on opening 2 more.

Why anybody wouldnt just open a subway instead of opening a restaurant is beyond me. It's not like opening a restaurant doesnt require cash.

...

Oh, sorry for spreading missinformation then. It must have changed, my uncle opened his first mcdonalds like 10 years ago.

I was wrong as well, you have to have 3/4 million on hand and one million or so for the purchase.

either way, more than most people can afford or finance.

I agree, most people wont be able to afford to open a mcdonalds but subway is at around 110k according to this website:

franchisedirect.com/directory/subway/ufoc/915/

Most restaurants will have to pay that much anyways for starting up, might as well open a subway and feed NEETS near you.

Hah, a restaurant just went bankrupt in my street.

I never went there either because the staff was slow and just talking with each other while you were waiting on them.

They also offered no real dinners for some reason. It was more of a lunch room. I guess ithe owner thought one of the three meals didnt fit within their niche.

I hear the restaurant industry is highly competitive. I dont know for sure though.

this sounds highly illogical?!
Why should i buy realestate, then hold a business in it for 30 years just to pay the mortage? i could simply rent out the place and have someone else have the risk of operating a restaurant. if he fail, the next entrepreneur comes with his new unique restuarant concept.

buying+opening a restaurant sounds stupid if your not on a greece island or else.

This is true, especially if you have the money for it in a big city.

I worked for bar company that was started by 2 dudes with some money who opened up their first bar and it became a success.

3 years later, they owned about 8 bars in the city. All the bars operated the same serving all the same stuff. The bars came off as loungey and hipster. But were all extremely easy to run. Some of them serving the same food with a small kitchen in the back.

The next few years they sold a couple off, for profit (real estate is booming here) and now have branched off with other investors doing different things (running festivals, opening breweries, more bars, restaurants etc).

I'm thinking of opening a glory hole. Can I do business in your restaurant? Already own kneepads...

But what is the profit margin for the median franchisee?

And, more important than just the margin, what is the actual median net profit figure?