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startups 'high-risk ventures' For restaurateurs, hours, odds long

August 23, 2007 12:35 am

BY BILL FREEHLING

Amy Johnson has borrowed $60,000, lost 25 pounds and worked 14-hour days to get Amy's Cafe off the ground.

That kind of effort may not be unusual for a small-business owner starting up. What is somewhat unusual is the success Amy's Cafe has had in its first year.

The statistics say she has less than an even chance of lasting four years or more.

Restaurateurs such as Johnson, who owns and operates the Falmouth eatery, have higher failure rates than other small businesses.

Restaurants are "high-risk ventures," according to Brian Baker, executive director of the Rappahannock Region Small Business Development Center. Data show that just 30 percent make it 10 years or more. Franchise restaurants have a higher survival rate.

Johnson said it's a tough business for many reasons, including the large number of competitors.

"Unless you have that personal touch, what is going to make you stand out?" she said.

Amy's Cafe stands out as one of the more successful Stafford County independent restaurants to open of late, said Stafford Economic Development Director Tim Baroody.

Johnson said it's been a "huge undertaking," and they're far from raking in the dough. She said friends assume she must be a millionaire when they learn she owns her own business.

She said she's paying the bills, but it's been hard at times. The last month has been especially difficult, as "for sale" signs hang from the building she rents at 103 W. Cambridge St. She's had disputes with her landlord over hours and signage.

Getting started

Johnson, a single mother who spent nearly 15 years bartending and managing bars in the Fredericksburg area, signed her lease in early December. The restaurant opened Feb. 15.

In between, Johnson said she spent nearly every waking minute on the restaurant. It's located in a Falmouth building that dates back to the early 19th century, and it needed extensive repairs.

She and a group of volunteers built the bar, replaced the deck, scrubbed the floors and painted the walls in the 2,200-square-foot restaurant. They had to replace the stove and fryer. Johnson met with a long list of people: health inspectors, plumbers, electricians, food purveyors and the representative from the Virginia Department of Alcoholic Beverage Control.

Staffing was one of the biggest challenges at first. Johnson said she now has a group of servers and preparers that feels like family. One really is: Her 9-year-old son, Seth, waits tables and helps out.

Johnson said she's trying to create a neighborly feel that draws regulars and newcomers for the friendly service and home-cooked meals. She said she wouldn't have been able to afford the rents in more visible spots such as Central Park, where chains prevail.

Small business alliance

Downtown Fredericksburg is another area where non-chain restaurants are making a go of it. Frederick Heller, who owns Frederick's Restaurant and The Loft, is vice president of the downtown restaurant association.

Heller said about 10 Fredericksburg independent restaurants belong to the association and work together to promote their businesses. He said the first year is usually the hardest.

Heller himself has been open for about five years. Business has been good for the most part, although construction near his businesses at the corner of Princess Anne and William streets has made it tough of late.

Addressing the high failure rate, Heller said many new restaurant owners have no experience but think it would be fun to own a food establishment. They often open too quickly without forming a business plan and addressing management issues.

Data from the U.S. Small Business Administration (SBA) show that restaurants have just slightly worse survival rates than many other small businesses. The data show that about two-thirds survive at least two years, and about 44 percent make it at least four years.

John McDowell, spokesman for the Office of Advocacy in the SBA, points out that's far from the popular notion that 90 percent fail in the first year. He said people notice new restaurants more than other types of businesses, which makes the failure rate seem higher.

"You're seeing the restaurant because it's right on the corner there," McDowell said. "You don't see the construction place."

But nobody questions that it's a tough business. Johnson said she feels like she has to be at the restaurant nearly all the time. She's trying to negotiate for longer hours, as her current lease doesn't allow customers to come in for dinner after 7 p.m.

The past eight months haven't been easy, and disputes with her landlord and the possible sale of the building add uncertainty to the future.

But she's pressing on. She's hoping to someday open a steak and seafood restaurant across the street. A sign over the bar at Amy's Cafe shows what the bartender turned restaurateur is hoping for.

"Fairy tales do come true."