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Should you need a licence to run a restaurant?

It is too easy to open a restaurant and much harder to make a go of it. When a new restaurant opens, it takes away staff, patrons and interest from other venues – and if it closes, which many do, everyone loses. One option is to introduce licencing with a set of minimum skills to try to reduce the failure rate. We debated this issue at the recent Melbourne Mise en Place forum.

By Jeremy Ryland

@expertgourmand


At the Melbourne Mise en Place, on Monday 22 October, we held a forum to debate the question of "There are simply too many restaurants in Australia and it is too easy to open one. Should you need a licence to run a restaurant?" 

 

To help us debate this question, we invited two very eminent speakers:


·      Francis Loughran, who has been involved in the food service industry for 40 years and is the founding Director of Future Food which specialises in Retail and Food Service Management.

 

·      Matteo Pignatelli, who is the owner of Matteo’s restaurant in North Fitzroy. He is also the Immediate Past President of the Restaurant & Caterers Association National Board and current Chairman of the RCA Victorian Council. 

 

The question "Should you need a licence to run a restaurant?" came out of discussions at the Brisbane Mise en Place last month, when we were discussing "Can we afford to pay our chefs a fair wage?".

 

Australian’s are eating out more – we had 1.35 billion eating out occasions last year. But there are about 85 000 food service outlets in Australia. Around 1.3 million seats!  So this only equates to about 90 diners per outlet per day. People still love to open restaurants and it’s one of the few professions for which you do not have to have any experience. Many people who open restaurants and cafes have no commercial experience, just a love of food and hospitality.

 

Running a restaurant looks glamorous: restaurants look like fun and a good business opportunity. But owning and running a restaurant is tough. There are simply too many restaurants and not enough people dining out. And whilst there is competition for guests, there is also competition for good staff. Running a restaurant requires more than just good culinary skills. It requires a multitude of skills that many people are simply not ready for. A restaurateur has to be a businessperson, a lawyer, an accountant, a human resources expert, a purchasing manager, a cleaner, a food safety expert, a marketer, a mechanic, a social worker and a shoulder to cry on – a jack of all trades. The hours are long and the profits small! There are no barriers to entry and no licences necessary to be a restaurateur.

 

However, both of our speakers suggest that a licence is not the way to go. There are already too many bureaucratic hurdles to jump. But this leads to the need for some sort of accreditation training. Too many people open restaurants and cafes without any knowledge or understanding of what they are getting into and their obligations. Francis gave the example of a client he knows who has just signed a $320 000 lease on a 300 mproperty yet has no restaurant experience, no staff and little forward planning.

 

It is vital that prospective restaurateurs not only understand the business of food but also understand the market they are in and have a business plan, that covers all eventualities. It is important to have sufficient resources to cover the first few months of opening - start-up costs are far beyond what you imagine! And it will take time to build repeat business.

 

It’s a fickle business! Restaurants come and go. Tastes change. Good staff are hard to find and soon become complacent. Most service staff in Australia do not see their work as a career. Training is often poor, service becomes inconsistent and when sales are slow, staff become bored.

 

Matteo pointed out that it is still too easy to open a restaurant or café. He has been delighting guests at “Matteo’s” for over 24 years. But he has seen a lot of changes, and many businesses around him are struggling. Stories of venues underpaying staff are sadly common. And many staff are overworked. It takes hard work, good hospitality and specific business skills to run a successful restaurant.

 

Matteo suggests a short, say, one week course for prospective owners, that covers topics such as the legislation, ATO requirements, workplace obligations, food safety, payroll, council regulations, liquor requirements, staff recruitment, marketing and other aspects of restaurant operation. Such a course should cover the challenges ahead so new operators are fully prepared. A certificate of completion would be issued at the end of the course, perhaps making getting leases and finance easier.

 

It is important that we ensure future owners get it right from the start and understand the challenges. A restaurant is a business, a food factory, designed to make money for its owners. Only open a restaurant if you know the risks – and rewards.

 

As Francis highlighted, restaurants are small businesses that can be affected by all sorts of unexpected events: divorce, ill health, staff shortages, cash flow problems and more. Prospective new owners must have a business plan. An understanding of the business of food and planning to succeed is a must!

 

Ask yourself, how much garlic bread do you have to sell to pay the rent?

 

If you would like some advice on restaurant design or master planning food and beverage spaces, please contact Francis Loughran at Future Food Pty Ltd: floughran@futurefood.com.au.

 

And if you wish to contact the Restaurant & Catering Association, please go to the contacts page at http://rca.asn.au/rca/online-contact-form/.