Since I haven’t yet been able to convince you that opening a restaurant or bar is a bad idea, the next step is to start asking you questions. What is your vision for the shop? What do you plan to serve? Are you going to provide something new? Are you sure there’s a market for that new thing? Are you going to give people more of something that’s already out there? If so, what is it that you’re going to do to stand out? How, for example, is your Italian restaurant going to bring in customers in a city like Tokyo, which seems like it has thousands of Italian restaurants? And most importantly, can you keep your restaurant open with the prices you charge?
Opening a restaurant that sells something commonly available has one good thing going for it: You know there’s a demand out there. But just because there’s demand, that doesn’t mean you’ll be successful. If you’re trying to open a French restaurant in Tokyo, you’ll be facing educated customers who have strong expectations, and your food will need to match them.
However, if you’re selling something new, you need to be sure that it’s not something the market has already rejected. When we had our shop in Aoyama, some of our regular customers asked us about having brunch options available on weekends. They talked about how they couldn’t find anything decent for brunch, and they thought we would make a killing by offering a small brunch menu on weekends. We thought about it, and gave it a try, but we never sold more than one or two brunch orders a day. We’d promoted the menu as best we could, but we ran into a cultural issue: most Japanese people, if they eat breakfast, eat it at home. As often as expats in Tokyo bemoan the lack of breakfast restaurants, the fact remains that if the market would support brunch, more restaurants would offer it. We were lucky that we only lost a small amount on our ill-conceived brunch venture.
But let’s say you’ve got your menu and it matches a demand. How much do you charge? Your food and drinks are your income. The industry standard for cost of food vs. menu price is 30 percent. If you sell a hamburger with fries, and it costs you ¥375 to serve, you need to be charging ¥1,200. There really isn’t any way around this, as that ¥825 of “profit” is what you’ll need to pay rent, utilities and staff.
One saving grace of opening a restaurant in Japan is that customers here will pay premium prices for food that shows value. If you can offer a gourmet experience, you can charge the prices to support it. As a single shop, though, you simply cannot compare with the prices offered by national chains. You won’t have anywhere near the volume they command to allow the prices they can offer.
As for that ¥375 burger, how do we get to that number? This is the area of restaurant life that will either turn your hair gray or make you into a bizarre math savant. If beef is ¥140/100 grams, and you’re serving a 140-gram burger, your burger patty costs you ¥196. Your bun is going to cost you at least ¥50 or ¥60, then there’s the cost of a slice of onion, of tomato, of a handful of lettuce. There’s the ¥1.5 paper sleeve you’ll give the customer for their burger, and the ¥30 for the fries. You need to know the cost of the spices that go into your burger. And you’ll need to do this for every item on your menu.
When you’ve done that, your next step is to figure out how many of those burgers, or plates of pasta, or glasses of beer you’ll need to sell every day to break even. Take that, and compare your notes on foot traffic in the area you’ve decided on. Be honest with yourself because if you can’t reasonably expect the traffic you’ll need to stay open, you’ll end up with a failed restaurant.
This is the third installment of a six-part series that will appear on the first Sunday of every month through March 2018.