How bad restaurant employees, customer revolts, miscalculations can sink the business

Small business owners face a plethora of challenges to find and sustain success, no matter their particular industry. But those who run restaurants operate in a sector perpetually vulnerable to failure.

The Business Journal found a multitude of reasons restaurateurs could be forced to take quick action if they want to survive. It could be a poor menu choice, great food in the wrong location, miscalculating the customer base, lacking enough capital or poor management. Bottom line: A wrong turn not quickly recognized or corrected can lead to insolvency.

'Restaurants have a lot of expenditures,' said Nicole Serres, president and co-owner of Petaluma-based Star Staffing. 'The overhead is astounding, and in the first five years of operation, there's zero guarantee of success. On top of that, restaurants classically have high turnover, and many people don't realize how expensive repetitive hiring and training can get.'

And poor management can exacerbate turnover.

'There have been restaurants that have closed due to their inability to manage their workforce,' said Louise Dawson, restaurant specialist and business adviser for the Napa-Sonoma Small Business Development Center, an arm of the U.S. Small Business Administration. The nonprofit SBDC provides existing businesses and some startups with free in-depth, no-cost professional advisement services.

Older generations taught to respect authority may not understand that for the younger set, respect for authority is reserved for leaders who exemplify a strong sense of fairness, ethics, purpose and transparency, Dawson noted.

Transparency also means open communication and setting realistic expectations for new employees so they understand what to expect in an industry that is largely unpredictable, according to Sonu Chandi, founder and president of Santa Rosa-based Chandi Hospitality Group, which owns, operates, and develops restaurants and real estate with a focus on the North Bay.

'That's the toughest part in a restaurant,' Chandi said. 'The unpredictability leads to the turnover.'

Chandi Group is responsible for 13 Mountain Mike's stores. They own nine outright; the other four are owned/operated by franchise partners. They also operate four restaurants in downtown Santa Rosa: Stout Brothers Irish Pub and Restaurant, Beer Baron, Mercato Pasta & Produce, and Bollywood Bar & Oven.

Restaurateurs who operate more than one eatery have an advantage in retaining staff, Chandi notes. 'Employees can start at a Mountain Mike's and we can transition them to another like Bollywood and Beer Baron, where they can work as a server,' he said. 'Those people are more likely to make it a career than at Mountain Mike's. So we're always looking at how we can keep them engaged … to stick around and see a longer path as possible.'

Like many restaurant operators, Chandi Group also has experienced failure.

A little more than a year after it opened, County Bench closed in Aug. 2017. Bibi's soon followed, shuttering last year after less than two years in business.

'If it's not working out, you don't want to go too long,' Chandi said. 'For an independent restaurant, you have to be unique and different, but still be acceptable for your local audience. … We thought (County Bench) was a great product and beautiful space but the food itself didn't set it apart.'

The Chandi Group rebranded County Bench and reopened in October as an authentic Indian restaurant called Bollywood Bar & Oven. The former Bibi's site was retooled and returned in November as an Italian eatery called Mercato Pasta & Produce. So far, so good for both restaurants, Chandi said.

But sometimes, even proper research and judicious planning aren't enough.

On Feb. 10, the Mint & Liberty Diner in Sonoma shuttered its doors after just 13 weeks in business. James Hahn and Mila Chaname purchased the former site of the Breakaway Café from its owner when he retired in 2016. He had operated the café for more than 20 years.

The diner's demise wasn't due to a lack of business acumen, or even a miscalculation of location. Hahn and Chaname, along with partners Aaron Mills and Melissa Cameron, operate several other hospitality-based ventures, including the popular Sunflower Caffé, also in Sonoma, in business since 2007 and less than two miles from the failed diner.

What might have led to the diner's failure was an unforeseen resistance from a community that was loyal for decades to the Breakaway Café.

The Mint & Liberty team opened its diner in November, keeping with the Breakaway's general formula while also injecting its own, but the grumbling began quickly, with patrons complaining about everything about the diner's name, its mint green color, the new menu and corkage, according to Sonoma Magazine's Bite Club blog, a sister publication to the Business Journal.

'We listened to the feedback and tried to make changes as quickly as possible to appease our guests,' Hahn and Chaname stated in a press release announcing the imminent closure. 'Some ideas were quick and easy to make; other ideas would take longer and require great expense.'

Ultimately, the time the Mint & Liberty Diner needed to find its footing didn't align with available funds, Hahn said.

The restaurant industry is a highly competitive environment, Serres said, 'where one one-star review can have a real impact. It's a ton of pressure to be consistent, fast, accurate, friendly and frugal, while on your feet for long periods of time. Restaurants are no joke, and they're also a really special kind of rewarding.'

Staff Writer Cheryl Sarfaty covers tourism, hospitality, health care and education. Reach her at cheryl.sarfaty@busjrnl.com or 707-521-4259.