Restaurants: The Most Brutal Business In The Entire World

Billionaire entrepreneur Andrew Wilkinson “shocked at how much money he could lose” when he tried to open a pizzeria. 

Andrew Wilkinson is the last guy on earth you’d expect to screw up a pizza place. He built his first successful business when he was 20, and he now owns 38 companies. People call him the Warren Buffet of the internet – just an absolute monster of an entrepreneur.

And yet, here we are. Not long ago on the My First Million podcast, Andrew opened up about the time when he thought he’d take a swing at the restaurant business.

“I’m a designer, and I always fetishized the idea of having a brick-and-mortar business, I was so sick of all these internet things … so I came up with this restaurant concept of bar and pizzeria called famous original. Me and some friends did it together, and we basically learned the hard way that restaurants are brutal.”

“You know we went into it super egotistical, “oh, we’re great entrepreneurs, we’re gonna be able to nail it in restaurants” … we just learned it was the most brutal business in the entire world ”

“We were shocked by how much money we could lose — we hired the wrong management, we got the incentives wrong, we overspent on the build-out to the point where we could never get our money back, labor shortages, we had slippage, there were tonnes of issues.”

“The hardest possible businesses are brick and mortar, where you have to move physical goods and you have a lot of employees. One of the hardest businesses I own is a bakery and deli in Victoria …They have to have about 40 or 50 employees. Someone has to get there at 2 in the morning, go into the basement of the bakery, and bake croissants”

“The amount of coordination that has to go right where — If there are a couple of people that are sick, how messed up the business can be — is just night and day compared to any internet business.”

“In the medium camp of challenge, I would say you have Agencies. They are asset Light (You really just need an internet connection), you can hire the people as you need them, and they are scaleable. The challenge is that you’re constantly balancing supply and demand. It’s feast or famine.”

“The easiest business I own is a job board called we work remotely. We bought that business and with some very simple best practices, and a very small team, we were able to build a very large business.”

But wait, what’s this?!

It actually gets worse 😂 

It’s not just that restaurants are inherently difficult. There’s more going on.

Here’s just some of the sh*t that restaurant operators, at least in the UK have been faced with in the last few years. 

How I Swallowed The Restaurant Red Pill

When I decided I wanted to be a chef, I knew I’d have to start at the bottom. I was on £18,000 a year, but I didn’t care. I was learning. I could see a clear path to the top. After a few years of graft in a decent kitchen, I would be a chef de partie on £30,000 a year. 

From there, I thought, I’d keep working hard. I’d change restaurants every 2-3 years, and keep working in the best kitchens I could. 10 years in, maybe I’d be a sous chef. 15 years, I could be a head chef. Maybe I’d have a Michelin star. Maybe I’d be on 75 grand! I’d be minted!

Except I wouldn’t be, would I?

When you’re on £35k, your take home is £2300 a month. With a wage like that you work, maybe go on a couple of holidays a year, pay your rent, and put a bit away.

On £75,000, you’re taking home £4300 a month. Think about it – What would you do with a wage like that? Maybe you’d work, and go on a couple of more expensive holidays a year, pay your mortgage, and put a bit away.

You’ll retire at 55 instead of 65.

That is, basically, the same life.

£75k is £35k.

It’s a bit more than enough to keep your head above the water, and it’s nowhere near enough to not have to rent your life out to someone else.  

If you want to own the house you live in and be in a position where you dont have to work just to survive, you’re gonna need a few million. And it’s hard to make that kind of money, but it’s damn near impossible to make that kind of money in restaurants. 

When I realized that there are people out there who had made enough that they could do whatever they wanted with their time, who were living rather than earning a living, I became obsessed with the idea of making and selling a business.

Obviously, that’s a difficult fish to catch. But it’s definitely easier in some industries than others, and the restaurant business just looks like an absolute acid lake of an industry to fish in. (If you catch my drift)

So what should you do instead?

If you’re a purebred artisan, that ambitious passionate cook who loves the game and doesn’t care about money, fair play to you. Keep your head down.

But if you want a restaurant because you want a business, because you want to be rich when it’s all said and done, then you might be making your life difficult for yourself. 

M.J. Demarco is a self-made multimillionaire entrepreneur who wrote an absolute gem of a book called The Millionaire Fastlane. Here’s why he believes that “following your passion” is god-awful advice for wannabe entrepreneurs in search of freedom:

“90% of businesses fail within the first 5 years – and I know why they fail. They fail because they violate the commandment of need.

The winning premise of business is simple, yet often forgotten by most business owners:

Businesses that solve needs, win. Businesses provide value, win. Businesses that solve problems, win profits. Selfish, narcissistic motives, do not make good long-term business models

Stop chasing money. Chase needs.”

When Andrew Wilkinson got into the restaurant business, it was because he wanted to own a restaurant. When I dreamed of owning a restaurant in London, it was because I wanted to open a restaurant. It seems like such a romantic idea. 

This is exactly the kind of flawed thinking that Demarco is talking about. He suggests that you need to search for needs, for problems to solve, rather than just thinking about the business you’d like to build.

Wrapping Up

As you might have guessed, it was thinking like this that made me start Poundcake. 

I love the restaurant business, and it’s pretty much all I know. But my hope is that building an internet business will be more fruitful over the long term, than slaving away in restaurants trying to work my way up the ranks. 

I’ll let you know how it goes.