Restaurants are big business in Westchester, as evidenced by (if nothing else) the amount of coverage they get in our sister publication, Westchester Magazine. But the industry is made up of hundreds and hundreds of small enterprises, many of them mom-and-pop affairs, whose owners work long, hard hours for not much money to keep their businesses afloat. Most of these restaurateurs love what they do, but few of them are going to retire millionaires.
There are about 1,000 full-service restaurants in the county, and more than 60 percent of them have fewer than 10 employees. Using data on sales per employee from the National Restaurant Association, we estimate the average restaurant in Westchester grosses $821,000 annually. But it produces an estimated annual income of just $25,000 for the owners because the net profit margin of restaurants of this type, according to financial information firm Sageworks, Inc., is a tiny 3 percent. Not many restaurants are minting money in their hot, crowded kitchens.
“One of the reasons we’re still around is flexibility. We’ve reacted and changed to changing times. I don’t know what would have happened if we’d stayed as a very expensive restaurant.”
—Matt Karp, chef/owner of Plates
“The biggest challenge is juggling myriad moving parts,” says Plates chef/owner Matt Karp, who explains that a tremendous amount of planning and attention to detail is needed to fill his restaurant’s 57 seats in Larchmont every night. “Execution is the biggest problem every day. Multiple layers and steps go into [each] process. In the kitchen, there are 20 different steps where things can go awry,” he says.
Plates has been open for about 10 years, which makes it an unequivocal success in restaurant land, but Karp takes nothing for granted. “One of the reasons we’re still around is flexibility,” he says. “We’ve reacted and changed to changing times. I don’t know what would have happened if we’d stayed as a very expensive restaurant.” He’s added brunch and a Sunday night all-you-can-eat barbecue recently to expand his appeal to a younger, more family-oriented market.
One of the common tropes in the industry is that the failure rate for new restaurants is ridiculously high, which isn’t surprising given how thin margins are and how difficult it is to make any new business fly. A study by Cornell University showed that about 26 percent of new restaurants fail in the first year, with nearly 60 percent of them gone by the end of year three.
“People only know the restaurant business from the customer point of view, but that’s just the tip of the iceberg,” explains Nuno DeCosta, partner with his brother, Pedro, in DeCosta’s Restaurant in Yonkers. “My brother and I do everything from washing dishes to cooking to taking orders if someone doesn’t show up.” The pair has owned the Italian eatery for 10 years, but worked for the previous owners for 10 years before they took over the space.
As in any service business, DeCosta says, “Staffing is your biggest problem. You have multiple job descriptions for prep guy, cook, host, server. One can’t really cover for the other.” And it’s not like the people applying for jobs are looking for their big break in the food service industry. “Most people don’t make a career out of it,” he points out. “The average employee is in their early 20s. They are looking to make a few dollars, perhaps while they are in school.” Not necessarily the most reliable group of employees.
Expenses in the restaurant business, especially food costs that equal about 25 percent of total sales, are uniquely difficult to control. A restaurant’s inventory is perishable—like guests at your weekend home, fresh fish doesn’t smell pleasant after sitting around for more than a day or so. James Contacessa, who opened Fattoria Dinner House in Armonk last year, cites a prime example: “Let’s say I bought 20 three-pound lobsters at $11 per pound, but they didn’t sell because there was a snowstorm or something that weekend. Now I’m stuck with the lobsters, so the employees end up eating them.” Dishes also get sent back to the kitchen by picky customers, meaning additional meals have to be sold to make up for the loss.
Food prices aren’t going down, either. “Commodities have gone through the roof,” says Casey Egan, proprietor of Emma’s Ale House in White Plains. “Peeled garlic used to be $14 per case. Now it’s $79.”
Marketing a restaurant, whether it’s brand new or decades old, is crucial to the establishment’s success. “The customer votes with their dollar,” Egan points out. “If you’re not giving them what they want, they won’t come back.”
Westchester restaurateurs have to be strong marketers because they face stiff competition. It’s bad enough that Manhattan is 40 minutes down the road, but celebrity chefs like Jean-Georges Vongerichten (The Inn at Pound Ridge by Jean-Georges), Michael White (Campagna at Bedford Post), Dan Barber (Blue Hill at Stone Barns), and Mario Batali (Tarry Lodge) have brought their oversized brands to compete in the county. Then there are homegrown impressarios like Yonkers’ own Peter Kelly (X2O) and the Livanos family (Moderne Barn, City Limits Diner), who are major players as well.
In general, successful full-service restaurants in the county are packed Thursday, Friday, and Saturday nights, but you can fire a pumpkin cannon through most of them the rest of the week. Tourism and business entertainment help restaurants in New York City stay full on weeknights, but that’s not necessarily the case in Westchester. During the week, Westchesterites are “all about dinner at home with the kids,” according to Wendy Weinstein Karp, wife of Plates chef/owner Matt Karp, and owner of marketing firm W2K Consulting. “The city has a powerful engine fueling mid-week dining that we don’t.”
Wendy Karp is a big proponent of digital marketing (and social media) for restaurants, in addition to well-targeted print advertising. “You’re conspicuous by your absence from all these channels if you’re not in them,” she says. Where should restaurants start? “A website is basic because that’s where people turn to for information about you. When it comes to social media, Facebook gives a personal feel for who you are. It takes managing, so maybe you only want to add another channel or two like Instagram, which is great for food. Foursquare is geo-based so you can target customers in your area. Those are good starting points.”
Egan agrees wholeheartedly. “If you don’t have an Internet presence, the big chains will eat your lunch,” he says. “With digital ads, I can reach every male aged 25-54 from 5:30 to 7:30 pm who is using certain apps on their phone within two miles of the restaurant with an ad that says ‘Come to Emma’s for dinner.’ That’s spooky!”
The digital world is spooky in another way, too. “Just consider online reviews,” notes Nuno DeCosta. “Five years ago, if there was negative word of mouth, it eventually stopped. Now, it lives forever on the Internet.”
One of the biggest developments in the restaurant business has been the growth of online reservation systems like OpenTable. Currently, about 191 Westchester restaurants are available through the service, which allows patrons to search and choose where to dine by location, cuisine, popularity, and other metrics, then make a no-charge reservation with their mobile phone or computer. They can also earn points good for future visits and, of course, post reviews and share their experience on social media.
For the restaurant, such tools are becoming essential. “Nobody books a reservation by phone anymore,” says Wendy Karp. In addition, she points out, OpenTable has other value for the restaurant. “You can market to your customers through OpenTable with tactical messages like, ‘We have seven four-pound Prince Edward Island lobsters in tonight!’” The service allows the restaurant to build a database of customer-specific preferences, too, which is another aid to the marketing effort. This may be a free tool for the customer, but it isn’t for the restaurant, of course, which pays a fee for every reservation made through the system.
All the digital tools in the world won’t make a customer come back if they’re not pleased, however, and repeat business is crucial. “The value of the repeat customer is immeasurable,” says DeCosta. “You know when they keep coming in that they’re also talking about the place and recommending it to their friends.”
Matt Karp agrees. “It always comes down to the basics. Good food and service is still the best advertising there is. Making the person feel special and important is part of the theater.” Theater? Says Karp, “Dining in a restaurant is the ultimate form of entertainment.”