The advantages of opening a restaurant in bad economy

Opening a restaurant or bar is a risky endeavor even under the most ideal of circumstances. So when the economy is in a downturn it would seem like the worst possible time to take the plunge into the uncertain world small business.

Not so fast, says Tony Marchese. In 2008 Marchese opened a restaurant called Trio in Palm Springs. In a recent article for iSante Magazine Marchese wrote that there are a number of factors associated with bad economies that can actually help the process.

Marchese pointed to:

-Bad economies tend to mean lower costs with respect to rent and vendors. Because of those savings you can sometimes open with lower prices.

-In a climate with higher unemployment there are often higher quality people looking for jobs, meaning the team that gets you off the ground will be stronger. Marchese actually looked for out-of-work people in other professions where he thought skills like listening would transfer well to serving and bartending.

He also touched on a few additional steps his ownership team took to try and give themselves the best chance at making it, including studying other businesses in the area and getting involved with charities in the community.

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Comment by Jammie Mountz on December 8, 2011 at 12:50pm

This is good news!

As someone who did cold-call B2B sales, I've been involved with countless small businesses and I've been hearing the same kind of optimism from them.  Many of the owners and managers I worked with told me that now is actually one of the best times to start a small business.

Comment by Martin Szalay on December 7, 2011 at 2:40pm

I would agree with most of that, especially regarding valued, educated, and reliable employees being available.  It is much easier now to pick up good chefs and staff than it was when everything was screaming along like gangbusters. 

It just seemed that at 3% unemployment, anyone worthwhile had a job.  The only ones left applying were uneducated, unenthusiastic and inexperienced.  The practice of competing with offers on benefits, flex hours, vacation and other benefits became like a bidding war.

However I would add that there seems to be more focus on the food now.  I know it sounds crazy, like why wouldn't you focus on that from the begining?  But it costs allot to have a dozen custom Harleys and imported, hand blown, Italian crystal hanging in your lobby.  This kind of economy does not lend itself to risky VC money that gravitates to eye candy and gimmicks.  Investors seem to be allot more pragmatic and “get back to basics."

On that note, as a foodservice or restaurant start up, it is much harder to secure business loans right now.  You used to be able to put your house on the line.  But with the housing market the way it is, I doubt that your home secures even half of what it would have in 2006.  Besides the last thing the bank wants is another home to foreclose on.

Comment by Paul Paz on December 6, 2011 at 2:40pm

We did it in Oregon at Oswego Grill!

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