BOULDER -- In a city with more than 325 restaurants, many who dine out believe they have a better idea.
It all starts as they sit down to eat with a group of friends and glance over the menu prices.
"Eight dollars for a burger and fries. That's highway robbery. We could do it for $3 and still make a profit." By the end of the evening, the group thinks it has one solid restaurant idea that could scorch the local steakhouse or out-spice Luigi's down the street.
But there are realities to the romance of running a restaurant. Too bad the menu doesn't list that $30,000 water heater the health inspectors require. Not to mention the $4,000 grease trap, or the thousands of dollars spent on wages, insurance and taxes.
That $3 burger just got a bit more expensive.
"It seems easy and a lot of people think they can run a restaurant," said Steven Ross, owner of Lazy Dog Sports Bar and Grill in Boulder. "They come in here and see 200 people eating, and they think I'm a millionaire. But there really isn't a whole lot of percentage profit in this business," he said. "You're maybe making eight to 10 cents on every dollar."
And those few cents can disappear in a hurry, Ross said, particularly with wages.
"Payroll is usually about 25 percent of gross costs," Ross said. "But if it goes a little higher, maybe to 30 percent one month (because of overtime pay or staff insurance costs), half of your profit is gone. This business is extremely sensitive."
A high utility bill or rising food supply expenses can make profits fluctuate widely month to month. But effectively managing the sensitive profit balance can pay off.
Since starting the original Lazy Dog in Boulder seven years ago, Ross has expanded his business to that of owning and operating four restaurants in the Boulder/Denver area. And he plans to open two more restaurants on the Pearl Street Mall this spring.
The two new restaurants will be side by side at the corner of 14th and Pearl streets, Ross said.
The first will be a new Lazy Dog restaurant with 190 indoor seats and a pool hall downstairs. Next door, Ross will open an East Coast fish house, called Naked Fish, with 150 indoor seats. Both new restaurants will share about 100 outdoor seats on the rooftop, he said.
The whole complex will cover about 12,000 square feet and present a new challenge for Ross amongst a growing downtown market of restaurants. According to Switchboard.com, an online directory service, Boulder has 326 restaurants 65 of them are located within a mile radius of the Pearl Street Mall. And don't forget that's just Boulder; new restaurants are opening almost weekly in nearby cities throughout the Boulder Valley.
The survival rate of new restaurants is not an appetizing figure for any entrepreneur. A recent Ohio State University study found that 60 percent of all new restaurants fail within their first three years of business. In some areas, the restaurant failure rate has been quoted as high as 90 percent.
Ross said too many new restaurateurs fall behind quickly with the initial startup costs.
"There are a huge number of food vendors that are keenly aware of the failure rate, and it became clear to me that they aren't always interested in the longevity of your restaurant," Ross said. "They know you've just borrowed a lot of money, and so they try to sell you more than you need."
Frugal finances
Keeping the opening costs down, particularly with the buildings, is a key financial strategy for local restaurant owner and operator Dave Query. The Boulder native runs four restaurants in the city, including Zolo Grill, Jax Fish House, Rhumba and the recently reopened West End Tavern. He also owns two restaurants in Denver.
"We always use buildings that were former restaurants," Query said. "A lot of the existing restaurant structure is in place, and we try not to over design." For Jax Fish House, Query said he spent only $200,000 in renovations, when the norm is usually around $1 million, he said.
And although three of Query's restaurants are on the same block of Pearl Street, each provides a different type of cuisine and environment to the Boulder market. Rhumba, for example, serves Caribbean food, and the rum mojitos are a popular drink for the late-night college crowd.
Frugal finances and fine food account for a lot of Query's success, but a large slice of the pie also involves finding the right staff, he said.
"There's a common theme that a chef who can cook or a businessman who can make money will be successful in running a restaurant, but it's also largely about creating an environment that people want to work in," Query said.
"People tend to focus on a satisfied customer first, but an unsatisfied employee will never create a satisfied customer." Query said his goals with his staff (which numbers more than 200) is to treat each one with respect, serve a good product that they believe in and make sure they are making the money they want.
Query also believes that variety in food is a good thing for both his staff and customers. His menus change at least once every season and most often every six weeks.
"It keeps the kitchen staff motivated and inspired to work with food seasonally," Query said. The consumer also likes to keep trying new things, he said.
As successful as Query has been, it might surprise customers to learn he also has seen failure. In 1997, Query opened The Blue Plate Kitchen in Boulder, but it was out of business two years later.
"You need to be crystal clear with a vision when you open a restaurant," Query said. "The environment, the food, the prices, the vibe & everyone needs to know what you are doing there.
At Blue Plate our vision was blurred. The worst thing you can do to a customer is to confuse them in what you are trying to achieve."
Query hasn't confused anyone with his remaining restaurants, and he continues to expand the business. He plans to open a new bakery on the 1900 block of Pearl Street within the next two months and then looks toward opening other restaurants outside the Boulder market.
Cozy hangout
Away from the hustle and bustle of the touristy Pearl Street Mall, Buddy Kring walks five blocks to his restaurant Burnt Toast every morning to open at 7 a.m. There is a more relaxed feel and an unhurried environment for this 1-year-old restaurant on the Hill, but a lot of same principles apply to it being successful.
Living in the neighborhood for many years, Kring said he saw a need for a cozy hangout area where college students could get a home-cooked meal and some drinks. The 1912 building on the corner of Pennsylvania Avenue and 13th Street, which used to be a bookstore and before that a home, provided the perfect setting.
Kring admits that putting a restaurant where one wasn't before was a tough and expensive task, but he feels the homey environment will pay off in the end.
Burnt Toast is truly a family affair with Kring and his wife, Ellen Dale, operating the restaurant with help from their seven children. When customers walk into Burnt Toast, they can't help feeling as if they're back home. The floor is wooden and every table is different, collected from antique stores and garage sales. The food is fresh and served in large portions. Breakfast and lunch are served everyday with dinners served on Tuesday, Wednesday and Thursday. Just like mom, the dinners vary based on whatever the cook finds appetizing down at the market.
"If chicken is on sale, then I can provide a good chicken meal at lower price," Kring said. "Our biggest success is that we are consistently putting out good food, and a lot of people just find out about us through word of mouth."
As a former chef in Paris, Kring places a lot of focus on his fresh food and environment, but he said there are many surprises away from those two topics when starting a restaurant.
"There are a lot of taxes and fees that the customers don't see," Kring said. He added that the paperwork is endless, and there are a lot of inspections and red tape to go through.
All three restaurant owners said there is plenty of romance and pride in running a restaurant in Boulder, but if you're thinking about adding another to the 326, just remember you might want to be realistic about being an all-in-one good chef, businessman, people manager, interior designer, accountant and lawyer.