In the News / Break Even / Cash Flow Statement

In the news rolled along nicely. Dave was excited about this French restaurant, Relais de Venise, famous for a menu that has only one dish - steak frites (which reminds me of the original concept of Kentucky Fried Chicken) They're opening a new location in NYC, and we're all a bit skeptical that it will make it here. How often do you have 4 people going out to dinner together who ALL want steak frites?

L.I. Jenni was featured in this week's LI Newsday in a feature about the best places in L.I. to get iced coffee. Spice Market, a monstrous and pretentious restaurant in the Meat Packing district, went from 3 to 1 star in a recent review in the NY Times. In optimistic news, in the "Off the Menu" section of Dining in the paper, there were no closings listed.

Since the bebe, I grabbed one quick meal at McDonalds and one quick meal at Burger King, and was impressed by how superior the former one was (but still not that good over all.) Unsurprisingly, fo the best half decade, McD's has been clobbering King, and the horrible ad campaigns that BK has been waging has not helped. Recently, a smutty BK ad from the Hong Kong market has been making it's way around the internet, which certainly doesn't help their case.

As bizarre as the gross burgers of McD's and BK are, you can always get stranger over seas. Most beverages don't involve meat and animal product, but it doesn't have to be like that....Swine placenta soda from Japan, Eel essence flavored beverages, garnishes of penis, etc...

The next part of class was working out a P&L statement and calculating various cost percents and break even points.

Dave, while working on his business plan, tracked down a quote from a contractor who is installing a restaurant kitchen from scratch. Going through the $400K item by item comparing to prices on the internet, the whole thing was outrageously padded. If one were to just buy the stuff themselves, it would probably knock a solid $100K off the bill.

The last thing we looked at was a cash flow statement: where the cash comes from, and where it goes. Pre-opening, cash comes from personal funds, loans, investors, etc, because there is no income from the business. As you move across time across the statement, business income is accounted for, but the outflow is, too. It shows in stark detail why many restaurants fail: the outflow overwhelms the inflow early on because it takes a few months minimum to get to a point where you can start paying off the debts. If you don't have a reserve to get you through the opening months, don't bother.