Ten Questions to ask Before You Toss in the Restaurant Towel

My last two restaurants were financial disasters. We'll call them numbers seven and eight.

Seven was a beautiful, top of the line, 125 seat gem in Carmel, Ca.

I overdesigned it, over built it, over priced it, over staffed it, over inventoried it (my initial wine order was astronomical - I placed someone in charge of ordering without reviewing their selections and eventually realized they were buying for themselves and consuming much of that first order before I gave them the corkscrew boot…) and spent too much on the elegant silverware, china, tables, chairs and artwork. Oh, I forgot to mention the hand carved signage that was so abundant it had to be hung by crane and that alone almost depleted one investor's investment.

There was one other mistake in number seven – probably the most important – I stayed too long. Carmel is an emotional magnate. The salt air whisping through the pines is addictive.  And although I was in love with the restaurant, the town and the location of the beach- right next to the ocean - allured me and fogged my ability to think survival mode. The crucial mistake was by the time I realized I needed survival mode, the wolves were at the door, taking large bites from my back pocket before they broke the skin on the piece of flesh they came for.

Every survival mode plan has a starting point and a stopping point. You can't survive in survival mode. It only buys time to implement an exit plan or turn the business around. Because of this my exit plan was blurred and I became dysfunctional. In the end, there was nothing to sell, no cash to take, and little, very little saleable assets. The place albeit beautiful was one of the worst financial culinary disasters in my history.

Number eight was a financial disaster on paper, but I left with my shirt, recouped my investment and also replaced some of the money I lost on restaurant seven. The real bonus, however, was realizing how narrowly I escaped a second financial Armageddon. I never would have recovered from two disasters in a row. Plus, the team that bought the restaurant could never have been replicated, (another story).  I told Kranston I had had enough of the business and have looked back every day.

Mark Twain said it best. "Common sense is not that common." And, in the culinary arts field, common sense is really all we can rely on. Obstacles occur daily and the play book has never been completely written on how to deal with them.

But for survival mode a plan needs to be developed.

Here are ten questions you need to consider when developing the plan:

1). What are the assets - perceived and actual- that my restaurant offers?

2). What are my liabilities – actual and perceived?

3) How much cash reserve do I have and what portion am I willing to gamble. (This is a tough one because you may not have any cash reserve at all. You may be waiting for Thursday's credit card receipts to cover payroll.) Many of us have been there?

4) Do I have any investors that believe in me enough to invest enough seed money to revamp, remodel or refresh?

5). Can I change my menu and lower my prices while decreasing my food costs?

6). Are my numbers attractive enough for a new buyer to purchase the restaurant?

7). Is my lease long enough, with enough renewable options to sell to a new buyer?

8). If I change my concept can I reintroduce myself to the marketplace?

9). If a potential buyer looks at my restaurant will he see ways to improve it in order to increase volume?

10). Do I still enjoy the business?

Each of these questions needs to be seriously considered before deciding to toss the towel into the culinary ring and call it a day. Since you are in the restaurant business, your investment is not necessarily protected and you could very easily lose everything if not more. That is why a plan is important and answering the questions above imperative.

Once you answer the questions, think about those answers and decide if you want to continue, sell or just lock the door and move on.