Recipes for success

Sunday July 29, 2012

PITTSFIELD -- Business is looking up for Berkshire restaurant owners who know their business.

MadJack’s BBQ has expanded from a storefront on Fenn Street to a big space on North Street, most recently occupied by Jae Chung’s Shabu 297 Korean barbecue.

Chung, himself, opened an Asian Bistro in Lenox where three previous restaurants had failed.

Koto Japanese Steakhouse Hibachi and Sushi Bar, a small regional chain, has taken over where Panda Inn used to be at Allendale Shopping Center and Brava Wine Bar and Tapas is in the space that Fin Sushi and Sake occupied in Lenox.

In Adams, the new Haflinger Haus is serving Austrian and contemporary cuisine where two previous restaurants had been. And Eastover Resort in Lenox plans to open a new restaurant full time in a few weeks.

Those who track, support and finance restaurants among other businesses, say creating a successful restaurant takes more than good intentions. It even takes more than good cooking, though few restaurants succeed without good food. It takes experience and a well-thought-out business plan.

"I have a concept. It’s not a cookie cutter but I know what I want," said Chung, who has owned and run restaurants for 22 years. "Restaurants are a risky business," he said. "Ninety percent fail in the first year."

(The actual restaurant failure rate is between 25 and 30 percent in the first year and up to 60 percent by the third year -- the same rate as other new businesses, according to Bloomberg Businessweek.)

Michael Supranowicz, president and CEO of the Berkshire Chamber of Commerce agreed the restaurant industry is a tough business.

"In the best of times you see restaurants come and go," he said. "Someone has an idea to open a restaurant, but they don’t know how hard it is."

Yet Supranowicz is optimistic about Berkshire restaurants and the local economy in general.

"I believe that things are getting better," he said. "I don’t think that we are out of the down economy, but I see things improving. When I drive by a restaurant and see the parking lot full, I see the economy improving."

Between 2010 and 2012, he said, the Berkshires added 1,500 new jobs in finance, administrative support, health care, arts and entertainment although construction and man ufacturing are weak.

Everyone was nervous

"Last year, everyone was nervous about the security of their jobs. They were more apt to save more and spend less. Right now, people are more comfortable that their jobs will be more long term."

That sense of security is filling Pittsfield’s restaurants to 80-percent capacity at lunch, he said, and bringing young professionals who occupy new downtown apartments out for dinner.

Michael J. Ferry, senior vice president of Berkshire Bank, said he was also "guardedly optimistic."

"The restaurant industry is a high-risk industry with a high rate of failure financially," he said. "A chef may have critical acclaim, but the business may struggle for any number of reasons: the economy, change in people’s tastes or from competition.

"We’re looking to lend money to well-planned-out situations. First they have to come up with a well-thought-out business plan. Then we will consider them," Ferry said.

A track record of success helps.

"Look at Mazzeo’s. They are a perfect example," he said. "They’re a poster child for it and it is attributable to good management. They had a historical operation, but we do not need 20 years. Two years of a good track record will do. What we’re looking for is trends in the business. It helps to be known, but that is not necessary.

Logical progression

"Both Mazzeo’s and Mad Jack’s stepped out of a small facility to a larger one," he said. It was a "logical progression as these facilities get their feet under them. Pat rick’s Pub [which doubled in size a couple of years ago with the help of some bank financing], and Mission are other good examples."

Madjack’s chef/owner Jabari Powell, 37, grew up around cooking and restaurants. He was mentored by his father, Dennis Powell, a chef, restaurateur and longtime Culinary Institute of America teacher. The elder Powell spends weekday mornings prepping all the food and guiding and training the kitchen staff.

The new MadJack’s is more than 10 times larger than the original on Fenn Street. It maintains tight kitchen quality control and offers an expanded menu.

Ferry said banks partner with the state, the Chamber of Commerce and "quasi public" programs such as the Pitts field Economic Revitalization Corp. (PERC), the Mass achusetts Small Business Program, Mass Capital Access, University of Massachusetts and others to offer loans but still minimize their own risk.

"The worst thing to do is to go into a business situation and have too much debt. They [restaurants] have to be properly financed yet not overfinanced."

Keith Girouard, director of the Berkshire regional office of the Massachusetts Small Busi ness Development Center (MSBDC) in Pittsfield said, "Customers are watchful of the price-to-value ratio when they eat out. Attention to detail is very important in the food, but I stress that training staff and maintaining consistent levels of good customer service often is a fall-down place for restaurants and the food industry in general. It’s difficult to get good quality people as staff."

One of Chung’s strengths is that, over the years, he has kept his kitchen and wait staffs.

"They followed me here when I opened," he said.

Uses holistic model

Girouard said, "I’m working with a couple dozen eating establishments and I like to use a holistic business model. I take the personal situations of each person who comes in into account. It is a competitive market out there today. For every person doing well there’s a number who are not."

"I tell them, ‘You’ve got tons of competition. What’s your distinction? And how can you use it as a competitive advantage?’ "

"For the customer, going out to a restaurant has to be a signature food experience -- how it looks, how it feels, the quality of service, feeling of staff welcome, good food. Each signature is unique. The restaurants are embracing that, creating a very valuable experience as defined by their customers."

Like Ferry, Girouard stressed, "They have to be well capitalized. They have to have a high enough level of daily transactions to meet their overhead costs and any financing costs as well."

"To be successful in this tight market," he said, "anyone starting a restaurant needs to be a really tight operation, maintain tight control over their costs and create a ‘signature food experience’ for the customer -- how it looks, how it feels, the quality of service, the staff, the feeling of welcome, good food.

"It all has to be creative and interesting."


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