What is it about getting older that makes us naturally risk-averse?
In our youth we’re fearless. We don’t think twice about cliff diving off a coast into the Pacific, or telling our manager that we deserve to be making 6 figures because we have a graduate degree (and no work experience). Whether you call it brave or brazen, one attribute remains the same: risk-taker.
Few of us would dare attempt to hang glide at the risk of a terrible fall, though perhaps even fewer would risk looking embarrassed on the dance floor. Yet nothing stops us from getting inside of a vehicle every day, which claims thousands of lives each year.
I suppose it’s not terribly surprising then, that the risk of starting a new business—a restaurant at that—stops us right in our tracks. The risk to your reputation, your financial retirement, and time spent with family is high.
So who better to talk about risk than Dave Query, Founder and Owner of Big Red F restaurant group (which will boast 13 restaurants by year’s end), in his session titled, “Trial & Error in Business: Slim Chances, Challenges, and Risks Taken” at Longmont Startup Week. Read on to learn some of Query’s insights into risks in the restaurant biz.
Starting a restaurant requires a lot of capital, and probably a lot more than you think. Financial risk is a big risk to be concerned about, particularly if it concerns the roof over your head.
For Query, it started with a simple and different approach to business. First starting as an LLC, he secured 5 investors for $25,000 at an 18% stake (for a total of 90%). “You have to be willing to take that risk and not assume full ownership from the beginning,” says Query. By doing so, it relieved Query from a tax burden while simultaneously giving lucrative tax credits to investors. The operational agreement not only granted Query full control over branding, menu, concept and other operational decisions, but it would detail an incremental change of ownership over time (dropping to 9% from the initial 18% stake, for a total of 45%) when the investment (plus interest) was repaid.
Consider what risk makes sense to assume in the beginning, and what can be taken on over time.
Congratulations! You’ve not only opened a restaurant in a highly competitive area with a known labor shortage, but you’ve kept it open and thriving for over 2 years. Now what? With extra capital in the bank, you might be considering another location for your concept, or maybe a new concept altogether.
Or maybe you do both, like Big Red F.
Starting with Southwestern favorite Zolo Grill back in 1994, Big Red F has since grown its portfolio to include more than 12 restaurants, including: Zolo Grill, Jax Fish House Boulder, Centro, Lola Coastal Mexican, West End Tavern, Jax Fish House Denver, Jax Fish House Fort Collins, Jax Fish House Glendale, The Post Brewing, Jax Fish House Kansas City, The Post Chicken & Beer Longmont and The Post Chicken & Beer in Rosedale. Big Red F’s newest restaurant, The Post Brewing Boulder, is slated to open in late 2017.
If you’ve visited any of the Big Red F brands, you’ll quickly discover that each one has its own culture and feel. That is all, by design, “Every restaurant has its own design plan, from the food to the décor,” says Query. Social media marketing is done on the individual restaurant level as well so all of the marketing and messaging remains dialed in to each brand. It’s by that plan, that each brand is distinguished by its unique voice and concept.
Sometimes the formula is simple, but even simple can be a challenge. Take The Post Brewing, which serves up chicken and beer. This was the first brand under the Big Red F umbrella that Query felt suited the Longmont culture. Entering a new building at the corner of Highway 119 and Hover, The Post offshoot, GoodBird Kitchen, would be part of an emerging complex at the newly designed ‘Village at the Peaks,’ boasting new neighbors like Whole Foods, Wyatt’s Wet Goods and more.
For the newest iteration of The Post, Query and team tried their hand a quick-service counter model in the form of GoodBird Kitchen, where customers ordered food at the counter and were then taken to a table where they had a server. This model was something new for the Big Red F family, as Query quotes Jimmy Carter’s infamous line, “Go out on a limb. That’s where the fruit is.”
Unfortunately it didn’t take long to realize that the new concept did not jive with customers, who were confused by the setup. The team decided to return to their roots by dissolving GoodBird Kitchen and rebranding it as The Post – Chicken and Beer, providing the same full service that customers were familiar with. Query doesn’t regret going out on a limb, crediting both the courage to take risks with the courage to return to a formula that works, “Don’t be afraid to say you ‘screwed up,’ and don’t be afraid to change.”
Meeting customer expectations and perceived value while sticking to the core of your business is a fine line to tread. A risk that many entrepreneurs continually face, particularly those in the foodservice industry, is keeping customers happy without compromising your own values.
For Query and Big Red F, there were two key values that remained at the core of every restaurant:
“Be a market leader in whatever you’re doing,” says Query, “and for us, that was providing really good food and exceptional service.” Without good food customers would not be interested in returning for a meal, no matter how good the service was. But, without great service, a customer wouldn’t be interested in coming back either. Providing good service starts with something as simple as having good manners, “Service to others is the rent you pay for this room here on earth.”
But what if the food is great, the service is on point, and you still face a negative review on Yelp? As Query say, “You can’t be everything to everybody, and that’s OK.” Query and his staff respond to every Yelp review they receive, taking a customer’s perception of value into careful consideration. For example, are the prices reflective of an adequate portion size? It’s that kind of feedback Query finds extremely valuable for each restaurant.
The Wrap Up
No matter what we do in life, risk will be present. It makes me think of 2004 romcom, Along Came Polly, where Stiller’s character is a life insurance underwriter who measures risk on the daily. Don’t use risk as an excuse to box in your potential. Expect to face challenges. And remember, you won’t be measured by the challenges you face, but rather, how you overcome them.