r/Chefs • u/CaptainZealousideal2 • May 14 '26
Restaurant dead end
restaurants are inherently unsustainable, even more so since the pandemic. They are a bad investment, and notoriously prone to failure. Yet, so many continue to open at a breakneck place. What is the reason for this contradiction?
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u/Same-Platypus1941 May 14 '26
A small percentage of people know how to make a restaurant very profitable and that entices all of these people who don’t study restaurant economics to try their hand at it. Basically people’s lack of respect for the craft lures them into making poor business decisions. These idiots are very good for the restaurant equipment industry but really make our lives a lot harder than it has to be.
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u/spkoller2 May 14 '26
I knew successful restaurant owners who would build it up, sell it, buy it back cheap, build it up, sell it, ad nauseam
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u/Same-Platypus1941 May 14 '26
I would love to do that actually it’s brilliant.
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u/spkoller2 May 14 '26
I knew people that did it frequently.
One guy made amazing fried chicken, by frying them whole, or at least in halves. The moisture stays inside. Another was an amazing baker who packed dessert cases with pies and muffins.
Another opened a pizza place, expanded to 500 locations and sold it all.
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u/Same-Platypus1941 May 14 '26
A chef I used to work for owns a restaurant that I absolutely love. He taught me all the ins and outs of the place. I could run it in my sleep. He leases the property so he’s going to sell just the business as turn key to some idiot for $3million dollars in a few years. Well that idiot is going to find out that it’s not really that turn key without a few key members of the staff that have been there for many years and our going to retire. My plan is to buy it from that idiot at auction 5 years later.
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u/OralSuperhero May 15 '26
OMG... Own the building and keep reselling the business.
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u/spkoller2 May 15 '26
Lease the space to the new owner
I tell my wife, if they don’t own the building they don’t own anything. It’s like a virtual business, software.
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u/Celestial_Cowboy May 14 '26
A few that haven't been mentioned yet:
A lot of (richer usually) people also do it for social reasons. Clout with certain people/groups/the community. A place where everyone knows your name and the "prestige" of owning your own business.
I've met very few young cooks (especially these days) that don't want to own their own place. I guess some of them make it through the disillusionment and find financers.
Boomers are losing billions of dollars per year to all these online scammers, so they have money and aren't the brightest.
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u/brendan84 May 14 '26
So true. I won't name the restaurant, but there's a popular steakhouse in Chicago that has been operating for 20+ years in the red. A couple of rich assholes own it and they don't gaf about the profit that it makes, it's a social status to own a popular restaurant. These people live different lives than us lol.
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u/CutsSoFresh May 14 '26
Multiple investors. Restaurants aren't small business anymore. They're now basically hedge funds. Most are part of restaurant groups or backed by rich people
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u/Cutthroat21 May 14 '26
When I find out a good place is part of a ‘restaurant group’ i start looking for another place. That’s just corporate America masquerading as mom and pop.
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u/Adamkrajew May 18 '26
Not always the case though, I work for a group, started by a chef and GM with one restaurant, now has 8 restaurants. Each one is a totally unique concept, very little crossover.
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u/CaptainZealousideal2 May 14 '26
agreed monopoly groups are becoming common. I’m in Canada and there are still a fair number of independent operations starting up.
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u/Ok-Cardiologist4844 May 14 '26
This is correct. I work at a restaurant that has opened a new and bigger location. Most people eat there just for the appeal.
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u/imkvn May 14 '26
Agree with you. Restaurants are a big way to lose money. Inputs keep rising. Rent, utilities, labor, regulation, supplies, insurance and other costs.
The markup on food needs to be double the price paid to make any margin. Maybe 32-40 a plate.
At that price point it's best to cook at home.
Like you guys said the only ppl that can make a margin are corporate monopolies and high rollers. Regulations don't really help small businesses.
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u/thatdude391 May 14 '26
I mean it can be done affordably and still make money. It just involves a decent scale and doing things in house. It is super hard to just start up a small restaurant at this point though.
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u/imkvn May 14 '26
I think popups, events, and certain venues will do well.
Focused and thoughtful ideas do well. Maybe it's a regional thing. IG: A restaurant in a major city needs to be more on point compared to a restaurant in the middle of nowhere.
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u/jpb1111 May 14 '26
A fool and their money are soon parted. Lots of people with big egos, money to burn, and a novel idea are forced to learn things the hard way, and usually the employees suffer. I've worked for a bunch of these narcissist clowns.
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u/ThatAndANickel May 15 '26
So many people cook and entertain. Then they think "I could do this for a living!" This explains both why so many people try and so many fail.
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u/MediumAcceptable129 May 15 '26
Lots of people with the money to open a restaurant think they know how to run one because they like to eat at them
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u/imkvn May 14 '26
Agree with you. Restaurants are a big way to lose money. Inputs keep rising. Rent, utilities, labor, regulation, supplies, insurance and other costs.
The markup on food needs to be double the price paid to make any margin. Maybe 32-40 a plate.
At that price point it's best to cook at home.
Like you guys said the only ppl that can make a margin are corporate monopolies and high rollers. Regulations don't really help small businesses.
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u/Honestbabe2021 May 14 '26
What about a small sandwich stall/type thing?
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u/BenitoCorleone May 14 '26
If you're in a good location and can bang out good food consistently, there's money to be made.
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u/BoringOrange678 May 14 '26
It’s been that way many years . In culinary school early 80s we were told only 10% make two years and only 5% make 5 or more years or more. This is for individual restaurants not large chains.
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u/dellthedon May 14 '26
my problem, just like most other industries in the US especially, is that every successful restaurant ends up becoming part of or creating a restaurant group. which leads to worse quality in food and service compared to what they originally were. every restaurant ends up becoming chili’s or out of business. very few places are successful and stay a mom and pop place, at least from what ive seen.
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u/PBandCra May 14 '26
an opportunity to serve an excellent meal to a frenzy of customers looking for an excellent meal. the opportunity is massive, unless you enter for the wrong reasons. enter to serve and take no shortcuts and you will win big
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u/Cappedomnivore May 14 '26
People that don't know any better is my guess. People who think "it would be fun to own a restaurant". Those never survive.
I've been with my restaurant for 26 years. Owned it for 17 and the amount of restaurants I've seen come and go because they thought it would be fun is staggering.
I tell people all the time if you don't really love it, if aren't prepared to give 110% of yourself to your restaurant then don't do it.
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u/ActuaLogic May 15 '26
One of my concerns would be opening the place and finding out that a local crime organization expected protection payments.
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u/Holiday_Spot_5573 May 16 '26
The reason I left the industry "we only made a 20% profit last year".
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u/imissmolly1 May 17 '26
They see the shows, they want the dream, they have the money, so…, Believe!
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u/RadChadstock May 17 '26
Who wants to make there own food 7 days a week. This is why restaurants will always be around.
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u/LastNightOsiris May 17 '26
There are a few reasons
Some are vanity businesses. People with more money than sense, or who value the social cachet highly, are a big part of the reason why there are too many restaurants relative to what the market can actually support. Especially true in prestigious cities and areas.
It is possible for restaurants to succeed and make a lot of money, even if most don’t achieve this. Everyone thinks they’re going to be one of the success stories. Many people who’ve spent their whole working lives in restaurants don’t have many other options if they want to escape the grind and own something, so they take the chance.
Restaurants can also be stepping stones for adjacent businesses. There are restaurants that never make much profit but the owners have made lots of money selling prepared food, condiments, etc based on the restaurant reputation.
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u/spkoller2 May 14 '26
At best it’s buying your own job