How to Open a Restaurant

Opening a restaurant is the pipe dream of many people who think they can make it with a clutch of their grandmother’s precious recipes, or a unique concept.

And it is no longer only the dream of retirees who think a restaurant is the best investment to for their EPF savings; more and more young people want to jump onto the bandwagon as well.

Thanks to the popularity of food shows, being a restaurateur or chef is now cool.

But heartache and financial disaster await the unwary. The reality of the food and beverage industry is that “for every restaurant that opens, another closes”, says hospitality consultant Jean-Michel Fraisse of HTC in Asia, who is running a three-day workshop on How To Open Your Own Restaurant from Nov 6-8 in Kuala Lumpur.

This unique course, first drawn up for an education programme for the University of Toulouse, is being adapted for Malaysia.

“Many people have a romantic idea of running a restaurant and are not aware of the inherent pitfalls of going into the business without proper planning. This course is designed to bring the reality home,” he says.

In a career that spans two decades, Fraisse has held various positions in the F&B industry including that of executive chef and lecturer in France and Asia.

The former director of the School of Hospitality and Tourism of Taylors College in Kuala Lumpur holds a Master of Science degree in Hotel, Tourism and Spa Management and has operated several restaurant and catering businesses. He draws his case studies from his experiences.

“People are just not prepared enough to succeed in the business,” stresses Fraisse. “You have to be a professional but that doesn’t guarantee success. The most successful restaurant operators seem to be the non-professionals as they are more creative and are able to think out of the box. The professionally trained operators may have the technical skills but sometimes they may be too afraid to try something new.”

In his opinion, many restaurant failures stem from ignorance of accounting.

“You need to be good in cost analysis,” says Fraisse. “Many restaurant owners don’t even know how to calculate the break-even point of the business.

“The break-even point is the ABC of the restaurant business,” he stresses. “Each business has a different equation, and if you don’t know basic accounting, you can’t do the calculation.”

Fraisse points out, however, that only simple arithmetics is required to run a restaurant business.

“It is not at all difficult to learn to do the simple accounting needed to manage a restaurant,” he says. “In fact, you can learn it in two hours — if I show you how!”

One of the mistakes made by restaurateurs is to price their products (menu) based on guesswork, says Fraisse.

“You are taking a big risk when you use such an arbitrary method to do your pricing; under-pricing or over-pricing your products will have a negative impact on the business and cause it to lose its com-petitiveness.”

He also cautions against basing pricing on so-called “industry norms” as the same formula does not work everywhere.

“The right formula is the one that provides a palatable price for the market and a decent profit for the company,” says Fraisse, who will give the participants of his workshop the formulas to calculate the selling price of each item on the menu.

The first day of the course covers restaurant concepts and trends, citing success and failure stories, and explains the complexity of licensing requirements in Kuala Lumpur and current rental rates for prime properties in the Klang Valley which are based on a survey of 300 F&B establishments in the Klang Valley.

Music copyright tariffs, EPF and Socso requirements, employment letter and insurance coverage — some of the vital bits of information that a would-be restaurant operator will need to know — are also touched on.

Interestingly, the course also covers the psychology of the eating habits of the people besides menu planning, the consequences of an ineffective menu, kitchen planning, equipment needs and working out the bottom line

Although the three-day course may not cover everything you want to know about opening a restaurant, it covers the essentials and gives a novice the necessary direction as to where to begin. Past participants have praised the course, which Fraisse tries to run once a year, as being practical, useful and empowering.

Patrick Teo, who attended the first workshop, said he came to the workshop to find out if his business approach was on the right track. Teo had quit his job as a tax consultant to pursue his ambition of owning a restaurant.

“I find the course most useful as Fraisse is very experienced and practical. The course content is also very relevant. Having gone through the course, I can say this course is a must for those intending to go into the restaurant business.

“Of course I have done my own research and the necessary reading before this, but books only gave me the theoretical knowledge. Most books on the subject are general and do not consider the Malaysian business environment.

“Fraisse’s course gave me instant working knowledge of the restaurant business. I already had a business concept before attending the course but I dared not firm it up; with Fraisse’s tips and teachings, I am better able to make a decision,” said Teo.

For Karen Gan, who wanted to open an Argentinian beef grillhouse, the course has given her the big picture of the business.

“When you have passion, you tend to have tunnel vision. The course has been very good for me as I have a concept but no experience in the business. The course has helped put me in the right direction and helped me to see if I am ready for this commitment. I need to rethink my business plan now that I know the scientific approach to arrive at my pricing and the bottom line.”

o For course registration and enquiries, call (03) 2026 9188 or e-mail: professional@htcinasia.com

Source: The Star

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Author's bio: Zul is the founder and principal contributor for the SKOR Career blog. He is the author of two books, The Malaysian Job Seeker's Dilemma and Buat Duit Tanpa Kerja Makan Gaji (How to Make Money Without a Job), available in major book stores nationwide. You can reach him at zulkiflimusa[at]gmail.com.