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This sounds like it was written by someone who has no direct experience (side note: selling people food you made in your home kitchen is illegal) and I am pretty sure restaurants, generally, aren't like tech startups, where you experiment to get product-market fit and so on.

People like food, they want to eat it, and chances are high you're making food that's generally recognizable as such and part of a general culinary category and price range. There are acceptable standards for service, wait times, cleanliness, and so on, that you can meet or exceed to provide a certain level of experience.

From what I understand, and being around the business, restaurants almost invariably sink or swim based on how good a real estate deal they've been able to get, and their ability to have a stable staff and be relentless about controlling costs, things like spoilage, advance planning, etc.

Software based startups are all about growth. You fuck around as you describe and when you nail the product it grows like crazy at a very low marginal cost.

Restaurant economics essentially look nothing like that. They aren't about growth, they are about margins, and since they have to be highly price competitive, that means fundamentally the business is about managing expenses.

What about unique dishes ? According to the article , they have a lot of value, together with a chef's brand.

And does IP protection happens in that business ? How ?

When's the last time you dined out --- had a whole meal --- on a "unique dish" in something other than a conventional table-service restaurant? Pretty much just food trucks, right?

I once had an entire meal at an exclusively vegan/vegetarian Malaysian cuisine restaurant. The people serving were apparently staunch Buddhists. It was unconventional and great.

Was the restaurant itself unconventional in some meaningful way? Did it not have table service? Was it in an outdoor pop-up space?

I guess I'm wondering:

The comment at the root of the thread suggests restaurant aspirants can address the risks of opening a new place by adopting the "MVP" ethos of startups.

Some discussion ensues suggesting that's unlikely to be the case.

Someone suggests that diners are likely to accept "MVP" restaurants, without the dominant expenses (notably: commercial real estate, staff expenses), if the dishes are original enough.

I'm wondering, outside of food trucks, does that ever happen?

It happened quite frequently in my hometown of Buffalo, NY – I think. I want to double check before I write up some examples, what do you envision that isn't a food truck, yet has no commercial real estate? Does opening a restaurant in a residential district count?

EDIT: I remembered one of them was featured in the NY Times this week, that makes it very to explain :) They started without a store front, selling bread to co-ops and food markets. It became a cult favorite, then it became a staple at local restaurants and coffee shops. They partnered with a excellent coffee shop, Public Espresso, to do a food truck, and launched this beautiful restaurant, in a light commercial corner in a heavily residential district. http://www.nytimes.com/2016/09/18/travel/breadhive-buffalo-r...

Responding to your side note: while home kitchen prep is illegal, there are plenty of options for commercial kitchen prep off-premises. A successful cafe in my city started by baking in a church's commercial kitchen, for example. Another is a food truck that also gets some time in another restaurant's kitchen.

From what I understand, and being around the business, restaurants almost invariably sink or swim based on how good a real estate deal they've been able to get, and their ability to have a stable staff and be relentless about controlling costs, things like spoilage, advance planning, etc.

This sounds like it was written by someone who doesn't like food. What I've seen in NYC, over and over again, is that of course you don't want the worst location (or financing terms), and you don't want to shoot yourself in the foot with incompetent operational management or an ever-churning staff. However, those are simply the prerequisites; they're necessary, but not sufficient for success.

If you want to thrive, you absolutely have to have a kick-ass product† (that you also happen to wholeheartedly believe in). If your menu just isn't inspiring (or it's too expensive or otherwise not right for the neighborhood / night-time crowd) -- it doesn't matter what your staff turnover is or much forethought you put into the operations. Inevitably you will fail.

But if your menu is truly awesome, people will make a beeline to your little hole-in-the-wall, wherever it is, and jostle for a spot at your narrow formica sitting counter and a chance to wolf down your product, nevermind the styrofoam bowls, plastic sporks and tissue-thin napkins.

Case in point: http://xianfoods.com

† By product I mean the combination of "menu offering, ambience, staff and cultural vibe." The interplay between these can be quite subtle, and it's tricky to get them right (which is why it's really to believe in what you're doing, and have taste in all things, not just food). The point I'm trying to make is that from what I've observed, it's definitely not primarily a matter of managing your margins and not getting screwed by your lease.

I think you have it backwards. Generally edible and tasty food at a non insulting price is the prerequisite. It's not that hard to cook good food, I bet you know many amateurs that cook very well. And the subset of people with actual restaurant experience who can't make food people are willing to pay for is pretty small.

Nearly everyone in the restaurant business cooks good food. Many however can't figure out how to do it profitably.

There are always edge cases. If your food is incredibly good then people will beat a path to your door sure. But in a city of 24,000 restaurants the exceptions, the hundred or two out of the way culinary sensations tend to prove my general rule not undermine it. And even most of those don't make it to a seventh profitable year.

Xianfoods is far from an example you want. It is a large space that is relatively clean and has a strong brand in its area in an absolutely prime location for its food.

You'll more likely want one of the tens of hole in the wall spots around xianfoods that have no website, no name, not even a Yelp or a Google map indicator. Things that serve steamed buns out on the street or shops that are little more that hallways to order food and leave.

But that't the whole point - Xi'an foods started as exactly the kind of a no-name, hole-in-the-wall like you describe.

How'd they get to where they are now? Because they get food, they get what what people really want, and they found a culinary niche that until that point had been widely ignored.

That's how they made their "brand".

If you're in NYC, and you're truly awesome, but have a shitty lease, you'll find yourself with a 5x increase that puts you out of business.

The places that last own the building or have a long lease.

I already acknowledged, in my post above, that of course you shouldn't have a "shitty" lease.

My point is that (along with all the other boxes one should tick in starting a restaurant in a cutthroat market like NYC) -- and in particular if your goal is to run a business that's actually thriving, and not just marginally surviving -- it's not sufficient.

"...restaurants almost invariably sink or swim based on how good a real estate deal they've been able to get..."

This. One of my online contacts was the general manager of the world famous Armadillo World Headquarters in Austin, and that ended in 1983 because they lost their lease.

That's not exactly a restaurant, but it's close enough IMO for comparison.

> selling people food you made in your home kitchen is illegal

That depends. Minnesota passed a new law in 2015 called the Cottage Food law that allows certain types of food (primarily baked and canned goods) to be made in a home kitchen and sold to the public. See http://www.mda.state.mn.us/licensing/licensetypes/cottagefoo... for details.

I think this is pretty great. Regulation has its place, but there's a lot of value in allowing people to easily make an income too.

Just because that restaurant had a line out the door, doesn't mean that it was a successful business. Often food and beverage "businesses" will be incredibly busy, but not be turning a profit.

Restaurants have horrendously low margins[0] - from 1% - 5%, so even if you're selling hundreds of plates of pasta/burger/lobster it's quite possible that your restaurant is making a loss.

[0]: https://www.sageworks.com/pdf/Data_Release_06102014.pdf

The same is true for many tech companies.

Yes but an Internet tech company has the potential to expand its scale without increasing its costs and so may, might be able to turn small amounts of money per customer into profits. A restaurant basically can't - food costs money no matter what. Selling food at below your costs may bring in customers but it will lose you money no matter what your scale.

Edit: (remembering article from years ago) A few, very few restaurants have been successful based on low-prices through economies of scale these are a very exceptional group I believe.

That's one way of doing it, sure, but some restaraunts are themselves the product. My parents, for instance, would be completely lost trying to eat in a startup type restaraunt like you describe. They want familiar menu items served in a nicely apportioned, comfortable restaraunt. The operators of those kind of places are usually more business people than artists. Getting a restaraunt like that up and running on time and within budget is it's own challenge, requiring a different set of skills.

1. You can't sell homemade food in a restaurant with the exception of a few items like bread that don't require refrigerators or a grease trap or a ventilation system (stove hood). There are slight variations on this theme per locality

2. Compliance, permitting, inspections and so on make your idea of a restaurant MVP literally impossible in Manhattan and the state of New York.

People seem to forget the principle that while a great salesman can sell dirt, any idiot can sell gold.

And people think they are great salesmen like they think they are great drivers.

There are great divers and great salesmen though...

Execution matters too. Where I work, there's a limited number of restaurants in walking distance, and a number of office parks in close proximity. A restaurant recently opened up. It has good food, and initially, there were lines out the door. Unfortunately, their execution has been shoddy. Bathrooms not always stocked, not always able to give change for cash purchases, frequently get the orders wrong, slow customer throughput due to poor layout and poor planning. They're at only a handful of customers at prime lunchtime now, which is a pity since the same old restaurants have gotten beyond boring, and it's nice to walk instead of spending the entire day indoors.

I guess this is a long way of saying "make sure you have good food, that sells, and make sure you can actually sell it (at a profit)".

Restaurants are about ( for lack of a better term ) UX. I'm not familiar with the situation in New York City, but out along the Interstates and big suburban road-pipes in flyover country, the most popular restaurants have pretty medium-quality food.

And it depend son what sort of restaurant. It'd pretty clear that, for example, Mexican food places tend to be more interested in selling (higher margin) Margaritas than enchiladas.

Montreal has/had much better restaurants, but it seems that was much about immigrants wanting to have their own place in the New World. I was there between 2002 and 2003 and the best places seem to have vanished.

case in point regarding primacy of good product: Pepe Rosso in SoHo [1]. True that it is a charming place and has a definite take on presentation, but seating, utensils, etc. are all subpar. But the food is great and it is always packing them in. The nearby Tomoe Sushi is kinda the same deal. It is a hassle because of the ever present line and the interior is ~shabby but it has an excellent product.

[1]: http://onthegrid1.imgix.net/Pepe-2.jpg

I could never understand how come people are patient enough in order to stand in line at a restaurant. I understand lines in front of things like doughnot shops, where you're sure that in 5-10 minutes you'll have a precious and delicious doughnot in your hands, but having to wait 30 minutes to 1 hour in front of a restaurant in order to have some food that will satisfy your appetite it's just to much, it borders on food fetishism.

If you are living on expenses, so can/must eat out every night, you quickly notice that empty restaurants have shocking food; and conversely the ones that are full, and have lines, have the most awesome food/atmosphere.

Exactly, just like facebook. Every restaurant should be like your example, every startup should be like facebook. Accept no substitutes.

"Have good food, that sells. Nothing else matters." Not

I have zero experience in the food industry. But I tell you two things from observation:

1. First, learn where the profit is made. For many restaurants the profits are made with alcohol, not with the food.

2. I have seen restaurants with the most delicious and affordable food bite the dust. It is my impression that in places like NYC you are more in the real estate business than in the food business. Your landlord raises the rent and you are out.

I respect people that run successful restaurants. I think the difficulty is often highly underestimated.

I second this. I have a lot of family in the restaurant business, and you don't need amazing food. Don't poison people, of course. But it doesn't have to be special.

Booze is the easiest thing to make money on. The only labour involved is opening the bottle and pouring. My parents were always happy to keep the place open if there was a table of drinkers at the end of the evening.

Buy into a brand that is cool. Not an actual brand like coca-cola, but a cuisine type like Thai or Vietnamese. Those are way more in fashion at the moment than Chinese (bad rep for unhealthiness), but you can make them with the same staff.

Decor and ambience matter more than anything. Being in a fine restaurant is as much about being seen in the right place as eating good food. It's like art; most people can't tell the difference between mediocre and great. But a gallery in Chelsea sends a different signal to one in Shoreditch.

Finally, running a restaurant is indeed difficult. You're competing with people's own cooking, ready-made meals, and every other eatery in the area. Sure, there's three meals a day to sell to each person, but there's also a constant influx of people wanting to give it a go.

Dead on. For someone who doesn't know this business you are a quick study

I worked in three resturants.

Even if I had the money, I don't think I would open a resturant, other than a pizza place, or a burrito place with a long lease. I heard the failure rate of resturants in New York City is 95%. Those odds might be wrong, but I wouldn't want to try to beat them.

I worked in three restaurants. I was a cook at two. I'm aging myself, they are called chefs now. I was making roux based soups, and bread, so I guess I was a chef? All the resturants I worked in failed, and I always felt like a cook.

If I ever owned a resturant, I would try to minimize risk.

I'm not a foodie anymore, so it would probally be a pizza/burrito place. My food costs would have to be low. And yes--the food would need to be good, and plentiful. I would want to have customers take the leftovers home, and remember why they ate at my resturant.

It would be located where young people interact/spend money. Example--near a university.

It would have a long lease, or a lease tied to profitability. The business would be a corporation for bankruptcy purposes.

Their would be no wait staff. (People can pick up their own food). Then again, I have seen a pretty face bring in masses. First dilemma!

I would definetly want a liquor licence. My place would only need a beer/wine license. Next dilemma! I gave seen little dives do great because they have a full liquor licence.

I would fire all my help every six months. Yes--gasp! Harsh, but I have read two of the better books on resturant managent, and both say this in a round about way. I don't belive everything I read, but this one rang true. There's a lot of theft in the business. A bad attitude by a server/manager can empty a place slowly. I would be upfront in the interview though. I'm not sure how I would verbalize the fact they they will get fired in nine months from now though. I might keep the right people? Then again, at the places I worked in, the nicest/wardest working person was usually embezzling money. I will say that I was accused in high school of embezzling money fron a resturant, and honestly, I wasen't. I just wanted to do a good job. After all I just said--I couldn't just fire good employees after a period of time. Then again, I will probally never open up a place. Third dilemma!

I would Never load my resturant up with cheap labor. I will walk out of any resturant that loads up their resturant with cheap help.

I'll get a lot of flack for this next one, but if I opened up a resturant/bar, I would load it up with pretty women. I am still shocked how much young guys spend in order to impress a pretty women. The demographics of the men were from 20's to late 30's--no wonder? I was one of those guys. "Oh Ari--the tips I gave you."

Isn't the resturant business lovely? It's too bad we have so many resturant positions available in America. It's a horrid job on so many levels. I feel bad for everyone, especially the owner because so many of them go out of business, and so many went in with the right attitude.

A lot of dilemmas? That's why it seems like every successful business owner I knew had a successful/helpful father. A father that can take on financial risk, and wanted to help his kids. I sometimes think success in America is comming from a enabling family that can take on risk?

"they are called chefs now"

To be precise, the people in the kitchen are: the chef, zero or more sous-chefs, zero or more specialists (gard-manger, pastry...), zero or more cooks, an expediter and the dishwasher(s). In a very large restaurant, each specialist may have cooks working under them.

There's only one unadorned "chef".

> but if I opened up a resturant/bar, I would load it up with pretty women.

This hits home. There are plenty of bars that have absolutely atrocious service but still get repeat patrons because the bartenders are smoking hot. Sex sells.

I'm a musician, so I've been in a lot of restaurants. At one, I struck up an acquaintance with the chef. He told me: Every chef dreams of being in the food business, but they all realize after a while that they're making all of their money at the bar.

Coincidentally, his restaurant was financed by his dad.