Lashings of bargain dishes the recipe for new restaurant

Are you a glass half-full or a glass half-empty type of person? The proud owners of half-full glasses will not be deterred by the daunting realisation that more than half of business start-ups fail within five years. (The failure rate among new restaurants is much higher.) Yet there is no shortage of optimists laying down hard cash to create new dining places. I know because I'm one of them: please don't laugh, not right now, at any rate. It's hard to be precise about how long it's taken to get this project going; by one measure it is around three years, by another it is no longer than four months. In the dark days that followed the financial crash of 2008, I was convinced that commercial rental rates would tumble and the time had come to find a fabulous and much cheaper place to establish a restaurant. My existing company was already in the contract catering business, but we were keen to diversify and the timing seemed just right. So we did what the textbooks tell us to do: we drew up a business plan, identified a suitable product and, because we're talking about a restaurant, we spent a long time on menu planning. However, the expected slump in rents failed to materialise and restaurants were closing all around, whereas our existing business weathered the storm with comparative ease, so lethargy set in and we did nothing. This year, as Hong Kong moved back into economic growth and costs started to rise, but not dramatically, we resumed the search for premises. We realised that there was no 'ideal' time to open a restaurant and that just because we had been disappointed about rents remaining high, this was no excuse for inaction. What was important was getting the product right and working within the parameters of known costs to see if it could work. We had not exactly been idle during the interim period and produced three or four restaurant concepts - time and reflection in these matters is not really wasted - until we came up with the idea of a fast-service restaurant providing genuine and affordable American and European food, with no compromises on quality, tailored to businesspeople and office workers who wanted something to eat during the working day. Fortunately, the company had sufficient funds to obviate the need for borrowing for this project. Although interest rates are currently low, banks are demanding onerous security against loans to smaller businesses. Drawing up the business plan, especially if you have some experience in the industry, is relatively straightforward on the side of the balance sheet dealing with expenditure because costs are not that difficult to calculate. Well, most costs that is, the important exception being the capital costs of construction which seem always to exceed the projected figure; the unexpected happens with daunting regularity and the unexpected always costs money. So we got some of that wrong. On the other side of the balance sheet is income. You can make a stab at these figures by knowing the capacity of the kitchen, the number of seats in the restaurant and the prices to be charged, but there is no certain way of knowing how many people will come through the door. This is sheer guesswork, albeit hopefully of an inspired nature. Who knows whether your wonderful ideas about what people want to eat will match what customers really want? Even long-established restaurant chains can't be sure that a concept which works in location A will also work in location B. Naturally, you need to spend some time surveying the local competition and obtaining an idea of who populates the vicinity, but still it is impossible to be absolutely sure how many people will turn up. The myriad self-help business textbooks are stuffed full of advice at this point - assuming you can make your way through their turgid jargon and perky little tips which tend to leave me anything but perky. You are generally left with the blindingly self-evident assertion that new businesses desperately need to be promoted. There are many ways of doing this but a business that serves a relatively confined catchment area and is targeted to a clearly defined customer base needs to ignore all the grandiose advice about advertising. Indeed, even bigger start-ups could probably ignore some of this advice, but that's another story. In Hong Kong, what people love most is a bargain and the best way to attract customers to a new business is to offer reduced prices. The manager of the new restaurant was far more insistent than I on churning out a whole range of special offers, and he was right. So we dished out leaflets and devised a host of special offers, while quickly introducing a VIP card offering discounts for repeat customers. And, as it turned out, some customers who missed these promotions came into the restaurant and quickly asked what discounts they could expect from a new outlet. Hong Kong people are not bashful in these matters; it's a kind of directness I rather like. It is hard to calculate the exact impact of special offers but there is no doubt that at the very least they bring people through the door and, because Hong Kong people are adventurous - they are generally prepared to try something new. But they are very demanding; if what they try on their first visit is not up to standard, it's tough to get a second chance. So there is a limit to the effectiveness of these promotionsl what really matters is the core offering. That's kind of obvious - but can get lost in the excitement of promotion. It is audacious enough to open a new restaurant, but verging on the arrogant to do so with the self-conscious plan of creating a chain. That's what we have done and for this reason spent a lot of time on producing a menu and design of the premises, because if we get it right it can be replicated, and on creating an image which starts with a name and a logo that embodies what the restaurant is supposed to be. I still have in my drawer a long list of names, ranging from the hopeful to the hopeless and, as ever, the name we settled for is not on this list and did not come from me. Naming is no small matter because it is central to the identity of the business, even though some highly successful businesses have truly uninspiring names like Hutchison Whampoa, a product of history rather than inspiration. We settled for the name 'bistro bistro', which reflects the European roots of the food, slips seamlessly into Cantonese and is amenable to the nickname 'bb', which is already being used. Last Friday, after almost three weeks of operation, we held an official opening. In this short space of time we've managed to be full at lunchtime, increased seating capacity by a quarter and we seem to have already acquired regular customers, so we must be doing something right. But it's very early days yet.