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Bankruptcy, Lawsuits, and Public Humilation: Confessions of a Failed Restauranteur

Let’s get this out of the way right now: If you open a restaurant, you will very likely go bankrupt. You will lose access to all professional and personal credit. At least that’s what happened to me.
Photo via Flickr user Owen Byrne

Welcome back to Restaurant Confessionals, where we talk to the unheard voices of the restaurant industry from both the front-of-house (FOH) and back-of-house (BOH) about what really goes on behind the scenes at your favorite establishments.

Aspiring restaurant owners will find no shortage of websites, books, lawyers, accountants, or consultants prepared to guide them down the right path as they start building their new business. Many of these same professionals and resources will, with a chuckle or a joke, also tell you not to do it. An old adage about the fastest way to make a buck in the restaurant industry is frequently used at this juncture: spend a hundred.

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But beyond the nearly universal warning to please reconsider, nobody tells you much of anything about what your life will be like when it all falls apart on you. Considering that an estimated 25 percent of restaurants will shutter their doors before their first anniversary, and 60 percent will close up shop before the three-year mark, shouldn't we be talking about this?

Let's get this out of the way right now: If you open a restaurant, you will very likely go bankrupt. You will lose access to professional and personal credit for nearly a decade. Do you currently lease your car? It will be taken from you, leaving you unable to secure a new vehicle. At least that's what happened to me.

Do you own your home? Depending on the state you live in, and the amount of equity you have put into that home in the form of mortgage payments, you may very well have your house seized by creditors and banks seeking to be made whole. Nobody told me that.

With loser stink, a scarlet letter and an albatross now publicly affixed to me, professional colleagues—industry types that I thought were friends— hesitated to be seen with me.

After several years of running one of the busiest and hippest restaurants in town, I made the decision to open a second restaurant. The new spot was warmly received, garnering national press at opening time.

Here's another thing I didn't quite understand: your restaurant is almost begging to fail, and almost anything can give it the push it needs—one bad review, one of your chefs coming down with a freak case of hepatitis, or, in my case, a construction accident in the building you lease.

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Through no fault of my own, that construction accident forced me to close up shop for months. The ensuing months-long construction scene to correct the infrastructure problem eventually forced me to shutter the new business shortly out the gate.

Eventually, a mountain of legal bills, controversy, and finger pointing took a measurable toll on business at my first restaurant, and I was forced to close that business as well. My face went from being on the front page of the newspaper, touted as the city's next big thing, to being on the front page of the paper for failing to live up to those expectations.

My marriage suffered leading up to and following the closing. In order to protect their family in the face of that bankruptcy, failed restaurateurs will sometimes turn to divorce in order to protect the credit and liquidity of a spouse. However, I built the restaurants with with my spouse, so we were both guarantors on the loans now being defaulted upon. Divorce couldn't save us. But my spouse did eventually come to tell me that every time he looked at me, he is reminded of our joint failure.

Why I thought that I was somehow protected from these eventual outcomes remains a mystery to me today. Why did I open a restaurant? And why on earth, after catching lightning in a bottle with an honest-to-God successful, profitable restaurant the first time out, did I press my luck and try my hand at a second business?

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With loser stink, a scarlet letter and an albatross now publicly affixed to me, professional colleagues—industry types that I thought were friends— hesitated to be seen with me. The industry secret handshake of chefs sending out their latest experimentations or bartenders shaking you up an icy palate-cleanser each time I popped by to say hello was the first thing to stop. "Please stop coming in for a bit, just until this all blows over for you", everyone said without saying.

It eventually dawned on me that most of my friendships were transactional. When you spend 70 hours a week with a small team of cooks, bartenders and servers, it is easy to confuse these relationships for friendships. But it occurred to me quite quickly when closing my restaurant that I had no friends. Those people were paid to hang out with me each day. After tearful, empathetic goodbyes and promises to get a drink soon, they never spoke to me again.

Somebody really ought to tell you that when you go out of business, you will cry and you will curse and you will forget to eat most days for some time. You will either lose or gain a tremendous amount of weight. Did you like the way you looked naked when you first opened your restaurant? Because that is not the body you will inhabit when you close the place down.

Eventually, I didn't feel anything at all. My life had become unrecognizable to me. It was difficult to remember who I even was as a human.

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But even now, I don't know whether I'd do it all over again. I miss having that family, and people wanting in. I miss the feeling of having a line out the door of people on an hour-long wait. I miss the highs that came with each new achievement. I miss having built something that people loved.

I wish I had stopped with one. Or that I that chosen a different opportunity for the second spot.

Why I thought that I was somehow protected from these eventual outcomes remains a mystery to me today. Why did I open a restaurant? And why on earth, after catching lightning in a bottle with an honest-to-God successful, profitable restaurant the first time out, did I press my luck and try my hand at a second business? You have to possess a certain arrogance to will a new business into physical form. If you're the type of person who can actually succeed at building a restaurant (if not successfully operating one), I think that that same blinding confidence might in turn prove to be your downfall.

If if if— you are the rare person possessing the strength of character, personal resolve, financial liquidity and depth of relationships necessary to weather the storms that will inevitably occur, then by all means open a restaurant. If you have absolutely no history of mental illness or substance abuse in your entire family tree, then open a restaurant. If you prepared to lose your home and husband and ability to pay for your children's college education someday, then be my guest and open a restaurant.

But failing those qualifications, please just save yourself the humiliation and heartbreak that will haunt you for years. Building a restaurant is difficult. Successfully operating a restaurant is statistically nearly impossible. But closing down a restaurant is the worst thing you will experience in your life short of death of loved ones.

And somebody really ought to tell you that from the start.