Saturday, November 5, 2011

Inside Look at Opening a Restaurant

There is a saying in the hospitality industry that restaurants open to close.  The odds of opening a successful restaurant or bar are overwhelmingly against you.  That said, every year we applaud those that put their money and countless hours into opening local restaurants to bring new and exciting culinary treats to our city.  Many have often considered investing in or opening a restaurant, but few truly understand what goes into getting a place from a few ideas on a bar napkin during happy hour with friends to flipping the switch on the sign at the door and welcoming your first customers.  Here is a pretty cool article that was in the KC Star by Joyce Smith earlier this week about a new frozen cocktail place that just opened down near the new Kauffman Center for the Performing Arts.  

This article chronicles the successes and setbacks Snow & Co's four owners encountered in getting their new place open.  It's been a long one, but what ultimately we hope is highly successful for this group of dedicated entrepreneurs.

Diary of the Birth of a Frozen-Cocktail Business in KC
Joyce Smith
The Kansas City Star

Updated: 2011-11-01T12:54:08Z
Customers should have been sipping Snow & Co.’s artful frozen cocktails weeks ago, when temperatures were steamy.

Welcome to the world of entrepreneurship. Months before the doors open, costs are piling up with nothing coming into the coffers. The owners start second-guessing themselves — have they picked the right concept, the right location, the right marketing campaign, the right customer service model?

The four partners behind the business, all armed with MBAs, had a 29-page business plan and a 90-day carefully calculated schedule kicking off from when they signed the lease in early June to an opening in early September.

They wanted to open before summer-like weather was gone and to tag onto the hoopla surrounding the opening of the Kauffman Center for the Performing Arts nearby.

So much for the best-laid plans. Among the hitches:

•A supplier didn’t ship their sinks when promised, adding a week to the schedule.
•Issues with meeting parking requirement issues added 2 1/2 weeks.
•A plan submitted for city approval didn’t include a drawing of a lift pump to remove water from the sinks, adding four more days.
•The oven was lost in shipment.
•Those and other problems led contractors to reschedule, fitting the project in where they could, putting the opening even further behind.

“This is where we start bleeding money on legal, design, attorney, utilities — you name it,” said Jerry Nevins, a partner in Snow & Co. at 1815 Wyandotte St. “Once the lease is signed, the financial clock starts ticking, and you’ve got to get things started before you bleed dry, not to mention the fact that we are opening a place selling frozen cocktails, and it is increasingly getting colder.”

Over the last few months The Kansas City Star has followed one of those businesses, Snow & Co., a trendy “artful frozen cocktail” operation. Snow & Co. officials now hope to open to the public on Friday, two months behind schedule.

Here’s a look at their entrepreneurial journey.

April 2010: Three of the partners – Nevins, Andy Talbert and Lauren Cloud — compete in the Regnier Family Foundation’s Venture Creation Challenge, a business idea competition. From there, they start kicking around other ideas, including a frozen cocktail theme similar to one they patronized in Columbia. They discuss names, and then research tropical drinks and food offerings, area demographics and possible locations, and look at what is “trending.”

“We wanted something different than the run-of-the-mill bar where you wait to get served, wait to get your check. How do you speed that up?” Nevins said. “And we wanted our drinks to be something you can only get here.”

November 2010: Kyle Morris joins the partnership. It hires Johnny Lightning Strikes Again, a Kansas City-based advertising and design company, to brand the tavern and build its website.

“They hope to make a name for themselves by providing premium frozen drinks to an underserved market in the kind of way that a nice coffee shop might make you feel,” said David Cecil, owner and director of strategy at Johnny Lightning. “They came to us with the name Snow Company. … We just wanted to shift it slightly to something with a better narrative. There’s nothing better than a good ampersand to suggest premium.”

December 2010: They look at taking the space of existing restaurant, but the deal falls through. Nevins vows to have Snow & Co. open by April 15, his wife’s birthday.

January to March 2011: “We’re talking frozen drinks, and it is getting ready to snow 12 feet,” Nevins said.

Still, they launch the Snow & Co. Facebook page to start building a buzz. Jason Burton, owner of The LAB (for loving all beverages), begins to devise the cocktail recipes using ingredients from local vendors such as Boulevard Brewing Co., Oddly Correct coffee roasters and Soda Vie. They ask their Facebook fans to come up with creative names. Among the submissions — Buffalo Fuzz and Nellie’s Natchez Brothel.

April: They begin preliminary discussions with architect Patrick Lenahan at Berger Devine Yaeger Inc. in Overland Park.

Early May: The partners complete their limited liability company (LLC) agreement. They look at two occupied restaurant spaces in the Crossroads, but negotiations fall through — too much work to be done, not large enough, too few bathrooms or disagreement over rent. They look at the former Black Bamboo space. (Black Bamboo moved in the Crossroads). But parking is a sticking point — not enough available parking spaces to meet city requirements for a tavern license. They consider locating Snow & Co. in Lee’s Summit or Overland Park.

“But we’re all KCMO folks, and that’s where we want to take our shot at it,” Nevins said.

Early June: In the midst of final negotiations for the former Black Bamboo space, Nevins, who has a day job at State Farm, is sent to Joplin, Mo., to help with initial disaster relief efforts. Kansas City chocolatier Christopher Elbow comes on board.

Some of the drinks are tested at the Olathe Community Theatre Association awards event.

Another site is checked out. Regulated Industries makes sure the location at 1815 Wyandotte is 300 feet from a church or school (otherwise Snow & Co. would need a waiver) and that there isn’t a density issue with too many tavern licenses in the vicinity. Snow & Co. also needs approval from 50 percent plus one of surrounding parcel owners.

“We hear through the grapevine that one of the local players is moving to have people not sign the consents,” Nevins said.

They go from person to person explaining their bar concept, getting them on board. Still, they worry that before the 45-day consent period is completed their adversary might convince someone to withdraw their approval. Several individuals control more than one property, even as many as four.

“This essentially allows some of the bigger players the opportunity to block entrants to the neighborhood,” Nevins said.

Still, some landlords worry that Snow & Co.’s theme could change later to one that maybe wouldn’t fit the neighborhood, so they ask for extra provisions in the lease to prevent that.

Mid-June: The partners contact four of their former professors at the Henry W. Bloch School of Management at the University of Missouri-Kansas City, asking them to be mentors. They also submit their application for a U.S. Small Business Administration guaranteed loan but are turned down four hours later.

“So we started panicking. Here we are with four MBAs and we can’t get financing,” Nevins said. “Now we are bootstrapping it with are own personal funds – 401(k)s, house equity, zero-interest credit cards, lines of credit.”

Nevins flies to Las Vegas to check out other frozen-drink concepts, including Numb Bar & Frozen Cocktails and Fat Tuesday. Back home they get their first batch of the Christopher Elbow sauce to mix with the alcohol. They launch their website to keep the buzz going and start discussions with the KC Strip trolley tour to get a stop in front of Snow & Co. They join the Crossroads Community Association.

Build-out estimates come in at nearly 30 percent more than the owners expected.

“This seems to be a common refrain, and we even doubled our original estimates when we started the business plan,” Nevins said. “We find out that starting a business is all about scaling back and focusing on what we need versus what we want. There’s always a tendency to cut back on the important things to save costs. But that’s at odds with our vision for Snow.”

They find similar eggplant-colored couches at Nebraska Furniture Mart, saving $2,000, and if they pay that off in 18 months there is no interest charge. They joke that Warren Buffett is one of their investors.

June 27: Partner Morris looks at alternative financing through private loans, and Cloud sets up meetings with liquor representatives to discuss pricing.

June 29: They have their regular weekly meeting.

“We’re getting nervous on timeframes for opening,” Nevins said. “There are a lot of moving parts, and we aren’t ever sure we’ll have enough money or time to do this right. Some days I think our MBAs showed us so many bad things it’s hard to think about how to make it go right.”

They get a first taste of a new cocktail that mixologist Burton has concocted with Elbow. They think the chocolate-infused Jameson Irish Whiskey overpowers the spices that Elbow added, so Burton heads back to the LAB.

June 30: They work out a sublease for additional parking spaces to meet liquor license requirements, and
double-check insurance quotes. They do an interview with a couple of local magazines — keeping the buzz going.

July 2: Nevins researches point-of-sales systems and talks to some liquor representatives.
“I wake up in cold sweats worrying about things like money. I have nightmares that my partners went overseas for a job opportunity and left me holding the bag at Snow. Crazy stuff,” Nevins said.

July 3: It’s Nevins’ birthday, and he plans to take a break. But friends and family bombard him with questions.

Mid-July: UMB Bank explains why Snow & Co. doesn’t fit its criteria.

“Basically, no one is lending anything to a start-up bar or restaurant these days,” Nevins said. “So we spent all the last week cobbling together our lines of credit/credit cards and applying for more. We found a few leasing companies to cover part of the financing as well. We at least feel like we’re not going to close before we open now.”

They post an ad for assistant manager and get more than 40 resumes in a week, including some top chefs and mixologists in the area. They finish design plans with Berger Devine Yaeger. They will have a fast-casual style of ordering at the counter, using iPads and iPod touch devices. Servers will then roam the floor, taking orders and reorders.

“Pretty slick and about 20 percent off a comparable system from one of the major POS companies,” Nevins said.

July 8: They lend out their machines and provide their drink recipes to the Young Friends of Art’s White Party at the Nelson-Atkins Museum of Art, creating more buzz.

July 26: They hire Tekia Thompson as their executive chef. Menu items will include sandwiches, salads, appetizers and small-bite desserts.

Aug. 10: Mixologist Burton of the LAB finishes a specialty cocktail concoction with Elbow — a mix of spiced chocolate, Cointreau, St. Germain (an elderflower liqueur) and cream. Burton has more than 35 cocktail recipes, including nonalcoholic ones, and about 10 will be on the menu at any given time. The partners have their first food tasting at a friend’s home-based commercial kitchen.

Aug. 22: They have a conference call with a music company to discuss how sound can build on the customer experience.

Aug. 25: Meeting with Sysco, a national food-service supplier, to talk menu and pricing.

Aug. 31: The partners have secured 21 dedicated parking spaces, paying $360 a month for 18 of the spaces. City officials disagree on how many spaces they need, with one saying the first 2,000 square feet of a ground floor space is exempt so they would then need only 20 parking spaces per the 1,000 square feet, while another official wants the entire 3,000 square feet counted for 40 dedicated parking spaces.

“We’re hoping we can get this resolved amicably, since finding 40 dedicated parking spaces within proximity of the building is next to impossible and will likely kill this whole venture,” Nevins said.

They also can’t get their building permit until the parking issue is settled.

Sept. 2: After more delays on the parking issues that would have them waiting until October for a Board of Zoning Adjustment meeting (and still no guarantee they would get approval at that meeting), their attorney, Lisa Drummond of Richard T. Bryant & Associates P.C., advises them to change their business model to meet criteria for a restaurant, which means fewer parking requirements, but 50 percent of their sales would have to be in food.

Sept. 14: Still waiting on permits.

Sept. 26: Plumbing inspection. The lift pump for bar sinks wasn’t on the plan submitted to the city, so the plan doesn’t pass.

Oct. 11: Opening day is scheduled for Oct. 21. But they have to wait until the bar is installed before the inspection by the Kansas City Health Department and the Fire Department.

“We’re telling people a 50 percent chance of Snow next week unless City Hall blows in from the north,” Nevins said.

Oct. 14: Sinks are scheduled to be delivered but aren’t shipped as promised. They are scheduled for delivery on Oct. 21, the planned opening day.

“Needless to say, this didn’t make me very happy,” Nevins said. “So I threw a fit and talked and talked and talked until I was blue in the face, all to no avail.”

The opening is pushed back a week to Oct. 27.

Oct. 18: Electrical is completed and the walk-in cooler arrives. Bar starts to go in.

Oct. 23 to 25: Employee training.

Oct. 26: Bar top installation is a week late with no date rescheduled with a subcontractor. Snow & Co. partner Talbert said he had learned to get more things in writing, including incentives to get work done early and punitive measures if a subcontractor falls behind.

“They just say ‘indefinitely.’ We can’t even get a date of when they are going to do it and no apologies,” Talbert said. “And we have 15 employees we are paying and events on November 3rd that we scheduled months ago. There was no way we wouldn’t be open by then. That wasn’t even a concern.”

Oct. 27: Managers and owners take a six-hour course from the Health Department.

Oct. 28: The contractor puts in a temporary bar top.

Oct. 31: Final inspections.

Nov. 3: Friends and family night, a dress rehearsal for Snow & Co. Patrons are to get free samples in return for being patient while the operation works out any glitches.

Nov. 4: Opening? Maybe.

“My dad owned a Tucson strip bar called the Birdcage. It’s where he met my mother, a cocktail waitress. He said he wouldn’t take a million dollars for the memories but wouldn’t pay a nickel for 20 more just like it,” Nevins said. “There are so many variables and too much to know.

“But we hope this is a successful endeavor and that it’s something we can grow. But if not, we are even better prepared to try it again.”

Read the Original Article Here

1 comment:

  1. Having a business like a restaurant is not easy. You must spend wisely your time and money to it and you must have an effective strategy to succeed. You must manage it well to have a good outcome.