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Comment by jpatokal | Hacker News Reader

There's a menu here: https://sf.eater.com/2017/6/23/15864260/robin-sushi-menu-hay...

Omakase courses $79-$179. The profit margin of a successful restaurant is around 5%, so he's going to need >100,000 customers at $100/head just to pay off the $700k he's put in.

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Is the margin that thin even in that price range? I would think the 5% number is for cheaper restaurants but not for higher prices ones.

The most profitable restaurants are typically the ones with cheap food. It is counterintuitive, but true.

Profit and margin aren't the same thing though.

There's a difference between profit and profit margin. A cheap restaurant with a low margin can be more profitable due to volume.

Yes, and fine dining is typically worse in every metric imaginable. That's why there is no McDonald's of fine dining. Besides being an oxymoron, the business model is terrible.

You turn over fewer tables with more expensive food, more staff, more real estate, more everything. Then the landlord raises your rent, sucks out all the profit, and you're done.

Exactly. The part where the owner raises the rent and eats the profit is a horrible thought. But it made me think. Take a look at the World's 50 Best Restaurant list Top 10 [0]. 4 out of the Top 10 are located in cities that I expect the rent to be below national average. I myself have dined at Azurmendi, which currently sits at a hill top somewhere in the Basque countryside, really remote. Maybe they can afford to be remote and pay less rent because they are on this list or strive to be on there.

[0] http://www.theworlds50best.com/list/1-50-winners

I find it absurd to rate restaurants from best to less best. I prefer the michelin rating star.

That's called revenue, not profit.

That's not called revenue at all. A business with a small profit margin can be more profitable than a business with a large profit margin, not just have higher revenue (although higher revenue would be required).

Pretty much hit the nail on the head. So many restaurants are funded with little regard for profit (backers provide capital for vanity, amongst other non-profit related reasons) which makes financial success in the field rather difficult.

Majority of the people i know just go with individual sashimi they like on the menu, so the average diner is gonna pay quite a bit less than the Omakase courses.

Also it was nice to see vegetarian options in the menu. A couple of times I've been in situations were there was one vegetarian person in the group so we would have to skip over restaurants that don't offer even a single vegetarian dish.

..or just skip over the vegetarian. Being in San Francisco social scenes can be exhausting. There is the gluten free guy, the vegetarian, the vegan, the one that avoids dairy, the dude with the nut allergy, the one that only eats pedigreed beef from a specific Colorado mountain. The Paleo guy..

There used to be a time when people would just eat and it was far less exhausting finding a restaurant.

You need different sets of friends ;)

(I live in the bay area)

He has only put in 300k through his family. The rest are friends and invests he could lose.

It's more or less certain that his investors have the most senior shares and get paid first.

Margin is more like 10-20 percent if you're not overpaying on rent...

Something tells me if the landlord knew you were making 20% margin you wouldn't be making 20% margin for long.

This is why you sign long term leases. It's not unusual for restaurants to move out after the first lease term is done, so you need to be able to recoup your entire investment and make a profit in the first term (typically 10 years).

But yes, you're right, landlords raise rent, and restaurants often move out because of it.

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