Chris Koszyk Chef Joe in the garden: Understanding and adventurous.
Start-Up Chronicle
Getting a restaurant off the ground.
Editor’s Note: For more than two years, Bruce Buschel chronicled his experiences creating a restaurant on this blog. In a series of posts this week, Mr. Buschel explains why Southfork Kitchen will not be opening in Bridgehampton, N.Y., this season.
In 2011, after the popular East Hampton restaurant Della Femina was sold, the displaced chef and manager asked to meet with me. They wanted to open a new restaurant, and of all the spaces in the Hamptons, they said mine was the one they coveted most. They wanted to buy it or rent it or work it. First pleased, then taken aback, I couldn’t tell if they were romancing me or strong-arming me.
Turns out, they had heard Southfork Kitchen was closing. And we were. But only for the winter of 2011-12. Not forever. At that point, I had no intention of selling out, even if the two gentlemen from Della Femina had run a successful restaurant for well over a decade and were convinced they could replicate that prosperity seven miles down the road.
I listened to their stories. Restaurant people love to tell stories, usually suffused with alcohol, fame, famine or money. I smiled and nodded. They knew the terrain — the stark seasonality, the staffing issues, the culinary peccadilloes of Hamptonites.
Even as we spoke, Tom Colicchio, top dog on “Top Chef,” was building a restaurant a stone’s throw away, and my little strip of the world in Bridgehampton was, it seemed, growing more glamorous and more valuable by the hour. Curiosity got the best of me. I wanted to know what my place was worth. I decided to approach a real estate agent. Call him Broker A.
Asked what my place was worth, Broker A regaled me with restaurant deals he had consummated, deals that were pending, deals he had caught wind of, deals he thought would be coming down the pike and deals that would never happen. He quoted rents and key fees and lengths of contracts. He knew secure tenants and scuffling landlords and vice versa. He knew of flourishing affairs and trysts gone bad. I stood there, smiling and nodding, as the anecdotes of finance and finagling rained down upon me like rice at a wedding. I suppose he was displaying the depth of his savvy, but I heard a different message: tell Broker A nothing you don’t want broadcast to the entire gossip-crazed, real estate-obsessed community known as the East End of Long Island.
Ethics aside, his indiscreet dissertation provided me with lots of numbers. And the more I ran them, the less intractable was my stance. Maybe I could part with my baby after all. If turning it over to another couple was never my intention, veering from plans was now commonplace. Ironies are much sturdier: it was Jerry Della Femina who had been my role model from the outset. He had opened his restaurant some 17 years ago, had spent the first two years intimately involved, and then handed his baby over to the same two gentlemen who were now asking me to do the same thing.
Within a couple of months, however, the two gents took positions in other establishments, leaving me empty-handed save the huge gift of knowing I could detach if wanted to — not painlessly, yet not cripplingly. If the price were right, I now knew I could part with Southfork Kitchen. It was, in the end, just a structure, even if I knew every inch of it better than I knew my own body. Detachment was, at my age, something that needed serious practice, with the big detachment looming.
Time marched on. With minimal involvement from me, Chef Joe Isidori opened a place in Brooklyn during our winter hiatus. I was a quiet investor. I put up a quarter of the $400,000 start-up costs. My two cents about style and substance would be transmitted, often telepathically, through the chef, with whom I saw eye to eye eerily often. But our experience in Brooklyn confirmed our worst intuitions about our sustainable restaurant in the Hamptons: it cost more to open, more to run, more to stock, was harder to staff, harder to attract patrons outside the summer, and harder to please them within. Profits were possible three months of the year instead of nine or 10.
Brooklyn’s no snap, far from it, but the payoff can be juicier. It became apparent to the chef and to me that opening restaurants in non-resort areas made much more sense. Pick a borough, any borough, or Westchester, Connecticut, New Jersey, Miami. The world would be our oyster if we just stopped giving away oysters in Bridgehampton. Some Hampton restaurants could stay open year-round. Southfork Kitchen was not one of them. We were neither a long-standing institution nor a flexible, casual, off-season, three-courses-for-$19.95 kind of place — not that there’s anything wrong with that. Unless, that is, it’s inimical to your vision, and then the sugarplum fairies stop dancing in your head the very first Christmas.
As we faced last winter and began plotting for the summer of 2013, we heard ourselves making plans to gin up business at Southfork by dumbing down the food, turning over more tables, hiring fewer cooks, soliciting more events, starting a catering division, accepting (invariably disruptive) parties of 12, maybe turning on the television at happy hour. Parties of 12? Television? Happy hour? It was depressing. There are enough Hamptons restaurants in the Hamptons without adding another.
So I thought we would test the real estate market. Put the place up for sale. Retail price. Get everything back, plus. If it sold, fine. If not, back to the cutting board; we would re-open in the spring. I conferred with Chef Isidori every step of the way, and he was, as usual, understanding and adventurous — and keenly aware that the Hamptons were attracting out-of-town heavyweights: Laurent Tourondel, Nobu, BLT Steak, Delmonico’s, Hillstone Restaurant Group and the aforementioned Mr. Colicchio.
A real estate broker had been a regular at Southfork Kitchen. Call her Broker Amiga. Knowing that I had little experience with and little trust in real estate agents, she promised to dance me gently to the end of the process. I had faith in her, despite her employment at a powerhouse brokerage firm. Call it Powerhouse Brokers. At a large conference table, I was shown a list of comps, or the vital statistics of other restaurants on the market.
It felt as if we were in a baseball arbitration. Any somewhat local restaurant with 100 seats was considered comparable, even if it was located in Montauk or was falling apart. One comp dished up bad burgers in the north woods but had a fireplace like ours. Powerhouse’s brokers thought they knew my value before scouting my game or my restaurant. They were like blind Sabermetricians. I felt like Robinson Cano’s agent hearing my player compared to Chase Utley and Dan Uggla. No, we’re not on Main Street, and we don’t have a banquet room, but our best days are ahead, we are a box-office draw, and we can adapt to any strategy — barbecue or bistro or dim sum or izakaya.
The second meeting went even worse. Commissions and payment schedules were discussed. Friction arose when it turned out the brokers were in hurry-up mode and I was still mulling, still unsure about the whole project. It was only November, and the real estate selling season would not commence, in earnest, until the turn of the year. I called a time out.
I called a friend in Florida, a commercial real estate maven, and he was appalled by my naïveté. He told me to negotiate with my brokers — my own team — as ruthlessly as they would in turn negotiate with prospective buyers. Everything was negotiable, he said, everything.
They want 6 percent commission? Offer 4 or 5 percent. They want 10 percent of the deposit? Offer 5 or 7 percent. It’s hardball! They want the first year’s rent commission at the closing? Say no. Never pay the broker money you have not yet received. Include a “good guy clause” — better to let the chef walk than for him to fall behind in rent. Make it “triple net” so you don’t pay property taxes, building insurance or maintenance. Refuse the right of first refusal — when a tenant can match any offer, it undermines a possible sale. On and on. Like a hailstorm of rice balls at a second wedding. Which was appropriate because two contracts would be needed, one for a possible sale, one for a rental. Just in case.
Thursday: Would You Be Willing to Accept Cash?
Article source: http://boss.blogs.nytimes.com/2013/06/26/my-restaurant-adventure-why-i-started-talking-to-brokers/?partner=rss&emc=rss
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