If thereâs one thing that could be said about my professional endeavors, itâs that Iâm no coward … either that, or Iâm completely crazy. I tend to think itâs a little of both.
A year ago, I got the idea to start the Sun Day, a PRINT newspaper, when the Big Bad Economic Wolf was blowing them down like straw houses all over the country, knocking out heavy-weights like the Rocky Mountain News just 55 days shy of its 150th anniversary.
But my largest leap into the great What-the-Heck-Is-He-Thinking came 10 years ago when my wife and I opened a coffee house in Park Ridge, our hometown. Putting aside current economic instability, the restaurant business is largely believed to be shaky territory, one upon which to tread very carefully, as we all just saw with the Walleye Grill closing a few weeks ago.
For many years, it was reported that 90% percent of restaurants fail within the first year. In light of this statistic, many people asked, when we were neck-deep in opening our cafĂ©, âWhat makes you think youâll make it?â These were largely unsupportive people, but the question wasnât off base up against that almost apocalyptic stat and was one I never really had an answer to. It made me feel like I was riding on a thin prayer, and in a way, I was.
But not so thin as I thought.
Turns out that statistic is no more than whatâs called âgrandmother research.â Basically, hearsay. Not only is a 90% failure rate wrong, but itâs impossible with restaurant growth rate, even now, despite current economic strain.
A study conducted by H.G. Parsa, an associate professor in Ohio State University’s Hospitality Management program, tracked 2,500 restaurants in Columbus, OH, over three years and found that the failure rate is actually 1 in 4 in the first year. The percent rises in years after, ending on a 70% failure rate over a 10-year period. However, the term âfailureâ grays when changing names, changing ownership, changing management, or closing for numerous reasons beyond economic difficulties classifies as failure. In all, the numbers show that restaurants are almost right in line with any other business type, according to Small Business Administration and the Bureau of Labor Statistics records. (Information found here is taken from the Bloomberg Businessweek online article âThe Restaurant-Failure Mythâ dated April 16, 2007 and other online resources).
Youâre reading my newspaper and not enjoying a cup of coffee in my cafĂ©, so youâve probably guessed our restaurant closed. Specific conditions contributed to our situation.
When we opened, there was one Starbucks in the downtown area. It was small, practically a kiosk, and didnât present much competition. However, shortly after word of our cafĂ© spread, Starbucks bought a free-standing building right across the street from us and about a half-block down. It was the building of a bank that moved locations. To compete with our bigger facilities (3,000 sq ft.), Starbucks rushed a remodel and opened not long after we did. Were this where the competition ended, we still would have been fine. But within the next few months, three other coffeehouses/cafĂ©s opened within shouting distance of each other. Our coffee house, the two Starbucks, and then the others made a grand total of six similar businesses in the same downtown area. None of us could survive, so we closed (incidentally right on my wifeâs birthday). Today, only the two Starbucks remain. The building our storefront was in was demolished a few years ago by the city to build a parking lot.
When people ask me what owning a restaurant was like, I always tell them itâs like trying to ice skate on pavement, a lot of work to go nowhere. Of course, thatâs just my opinion. Many restaurants thrive, and many restaurateurs love what they do.
I wouldnât own another coffee house unless I could very literally burn $200,000 and have it not affect my life in any way. And even then, I could think of a dozen other things I could put that money toward that would be a lot more enjoyable than saying âSkim? 2%? Or Soy?â everyday. I had a long and miserable career managing restaurants after we closed ours, as well. However, working in restaurants remains in my blood, and Iâd rather work in a restaurant than in a typical office setting any day.
But then again, I might just be crazy.
