🚗 🚙 Turn your trusty old car into trustworthy journalism Learn more

How to start a new restaurant for less money, less risk

Deena Prichep Sep 6, 2013

How to start a new restaurant for less money, less risk

Deena Prichep Sep 6, 2013

We’ve all heard how opening a new restaurant is a notoriously risky proposition. By some estimates, three out of five fail within the first few years. So what if you want to open a new permanent sit-down restaurant, but don’t want to deal with the expense of a new lease, new staff, new plates, new bathrooms? You can try what restaurants across the country are exploring — put your new restaurant inside your existing restaurant.

By carving a few seats or a back room out of a larger, often more established venue, chefs get to explore a new idea without the new expense. This is cropping up across the country, from Portland, Maine to New York.

In Portland, Ore., Block and Tackle seems on the surface to be a fairly casual neighborhood seafood joint. There are definitely well-crafted touches — the corn comes with tarragon aioli, and the oyster shooter has smoked tomato. But the price point is low, and the atmosphere is loud and friendly. And when Stephanie Cranley’s husband took her there for their eighth anniversary, she was not impressed.

“My first reaction was it’s a little too casual for our anniversary,” Cranley says, laughing.

But then the hostess led them through the rowdy restaurant, to a candlelit foyer, and into a whole other restaurant. “It’s like being led into a secret society,” jokes Cranley’s husband, Jack.

The back restaurant is called Roe, and it’s a quiet, intimate, restaurant, the sort that gets written up in fine dining articles — definitely worthy of an anniversary dinner. Chef Trent Pierce runs both places, and estimates that he saved about $75,000 by using the back room instead of opening a new place.  The whole overhaul cost about $20,000, and it’s helped keep the cost for this fine dining in line with the Portland market.

“If we were doing this exact concept in its own stand-alone, I would say we’d probably charge about 10-15 percent more than what we’re charging now,” Pierce figures.

Like many restaurants within restaurants, Roe is small — just 26 seats. And it’s much more fine dining. The set menu starts at $65, compared to an $8 bowl of chowder out front.

But Pierce says it’s surprisingly not where the money is: “Every restaurant is a volume business, no matter what. You have to really be destroying it in terms of how many people that you’re doing in order to be killing it in profit.” And when people spend three or four hours lingering over a fine meal — instead of the quick turnaround of casual dining — it’s hard to achieve that volume.

Journalist Tom Downey has written about these sorts of small spaces from New York to Tokyo. And he says that being paired up with a larger restaurant makes sense.

“Typically they need some other venture that kind of underwrites the losses or just the breakeven-ness of these micro-restaurants,” says Downey.

Which begs the question:  Why do chefs go through to the trouble of creating a restaurant within a restaurant if they’re not going to make much money?

Downey says it’s not just an economic decision. “There’s something they see as creative, as special, as interesting, about the dynamic of a small restaurant that they want to pursue, despite the fact that it doesn’t make as much economic sense as a larger venture.”

And for chef Trent Pierce, the small space lets him play around with new techniques, from fennel salt to butterfish confit.  He can control every aspect of every plate. And he gets feedback from diners who are never more than few feet away.

“What happens back here is very personal cuisine,” notes Pierce. “It’s fine dining. It’s an experience, is kind of what you’re paying for. You’re not just going out to get full.”

And if this experience comes with the feel of a secret society — especially one that saves the chef $75,000 — all the better.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.