he opened two restaurants and one bar in the same building. but had to find a way to maintain their separate identities. and wolfgang puck and bobby fa lay on lessons they learned to help small businesses. how you too can run a restaurant coming up next on "your business." >> small businesses are revitalizing the economy. and american express open is here to help. that's why we are proud to present "your business" on msnbc.

>> hi there, everyone. i'm j.j. ramberg and welcome to a special edition of "your business" where we give you tips and advice to help your business grow. today our entire show is devoted to starting and running a restaurant. it's an industry that has so many lessons to share with small business owners. the entrepreneur we introduce you to first jumped at the chance to set up shop in a building she'd always admired. unlike many small business owners she saw not one, not two, but three different concepts existing side by side in one space. ♪ >> i'm pretty crazy but i'm not crazy enough to just want to open up three businesses that close together. i'd like the idea of having three smaller concepts.

>> restaurateur ashley christensen had always admired the building at the corner of south wilmington and east martin streets in downtown raleigh. >> i'd been living in raleigh 17 years. i came here to go to school at north carolina state. this was always a building i noticed. >> when the space opened up the wheels started to turn. >> i think about food all the time. i think about restaurants all the time. i think about hospitality, entertaining, sharing things within my community. >> christensen, who gained fame competing against bobby flay on "iron chef," already owned a restaurant just blocks away but she was itching for more. >> i'm definitely one of those people who when things are going well i get a little antsy and start thinking about what needs to creatively happen next. >> the building's landlord suggested it be dwighted into three spaces. >> within, you know, two weeks we had decided that i would take the whole first floor, and wind

four weeks we'd decided i would take the whole building. >> as a result, three businesses were born. there's beasley's chicken and honey. >> i knew that i wanted to do a fried chicken joint. >> just next door, chuck's. >> kind of a fan of a really wonderful hamburger and i think most people are. >> and down stars is fox liquor bar. >> what i wanted to create in that space is a place where people could count on having a great cocktail, count on having a unique selection. >> one key component is christens christensen's business model is that on paper, these three concepts actually exist on one. >> we can obviously track sales and what goes on in the different profit centers, i guess you could call them. but it's one set of books. >> the plan from the start was to share resources. >> we wouldn't have had the ability financially to open up three concepts independent of each other. when it comes to all those things that are services that you invest in, you're doing at once, as opposed to doing it three times. >> part of that design includes things like shared phones, a

sale system, a keg room, and storage for food. the most dynamic part of the structure is the shared kitchen. the staff simultaneously prepares meals for two restaurants with ease. >> the pos system will ring orders to one specific line on the kitchen. the actual food is very different so it's hard to confuse chicken and burgers. most chefs shouldn't, anyway. >> having a shared kitchen does pose a unique challenge. when customers ask to share burgers at beesley's and chicken at chuck's? no. >> we coach our staff on talking points and how to address it. >> if we allow people to come on the burger side and have fried chicken, it's just one big restaurant and that's not what we wanted. >> these are two different restaurants, they're two different concepts. you have to draw the line somewhere. >> and while there's an emergency exit that links

beasley's and chuck's, customers can't use it. they must leave one space and go outside to get to the other two. >> just like you would if you were in one restaurant and decided to go to another restaurant, you'd have to exit that restaurant. it is something that people find challenging knowing us pretty interest meat. >> while fox liquor bar largely has its own staff the employees at the restaurants are interchangeable. people move around to meet customer demands. >> there are subtle differences in the way you approach things. at the end of the day, good service is good service. >> if you're wondering why christensen didn't go with just one large business her answer is simple. >> i'm not personally a fan, nor do i feel that i -- that it's one of my strengths, to open up a large restaurant. it's just not something that i enjoy. i like to be able to see everything that's happening. >> to ensure a sense of order with three businesses in one space, christensen staggered each opening to let staff acclimate. >> i think it would have been physically -- first, physically

impossible to open all three at one time. i know emotionally it would have absolutely destroyed me to do it all at one time. in a new location, you have the ability to find the fault in this your space. you might as well learn how to operate in that space. >> even though beesley's, chuck's and fox's are a few feet away from each other that connection only gets modest attention. >> i won't say we actively talk about it but we comfortably discuss it. most people are aware of it. if we can start to establish a clientele through the first concept and get really comfortable it only serves us well to then associate that with the next concept. >> since the experiences are different, christensen says they're not dependent on each other. if one concept hits hard times some retooling can happen fast. >> i think what makes it very simple is that i am my only partner. sofy have to make a move, i can make it quickly. we'd swallow our pride and figure out how to make something else work in its place. >> but this entrepreneur has high hopes. she seems to have struck a

balance and so far, her customers have responded. >> these three concepts are things that are pretty natural to a field of people regardless of economic climate. i think that they are really comfort-driven concepts. >> starting up a restaurant can be exhilarating and rewarding but remember, restaurants are businesses first and food is merely the product for sale. successful restaurants are generally not the result of pure luck. you need to know how to run a company. john tapper is chairman of tapper dynamics, a business that consults with major restaurants, nightclubs and hotels worldwide. "bar rescue" which returns for its second season this summer. steven starr is the owner and founder ta fast-growing multi-concept restaurant business with 26 properties. frank ritella is co-founder and principal of landmark hospitality. he owns and manages several venues such as liberty

restaurant inside liberty state park in new jersey. great to see all you guys. >> great to be here. >> i talked to you guys a little bit about this before. you must get the question, i want to open a restaurant, how do i do this, all the time. because it's a passion for so many people. food. and what do you tell them, frank? >> usually you try to gauge their passion. because it is a difficult business. but if you love what you're doing, obviously, you know it helps a lot, you tend to be successful. so i tell them that they should really build a good team around them. i think that's important. an accountant. especially if it's your first time in the restaurant business. i always advise somebody to do a break-even analysis. your pro formas to really know what you're getting into and what it takes to generate revenues to cover your expenses. not just what it takes to make good food. john, you go in and you revamp a lot of bars for your shows that are having troubles. what do you see most? what's the problem most people have? >> i step into a lot of failures

as you know, j.j. often when i walk in all serious mistakes have been made which makes them hit me between the eyes. a lot of the people want to open a restaurant, they have a passion for the front of the house, for the social experience, they envision running a fun place, almost a showbiz aspect of a restaurant. where i find the problem is in accounting and controls. most people get into the business of envisioning the front of the house, the fun part of the business, but they don't do the numbers. they don't crank the financial controls. and as frank said, do their pro formas and all of those numbers that protect their success. >> and the first person you said, build a good team around you, you said build your accountant. we asked -- go ahead. >> so i would tell the person something different. >> okay. >> because pro formas and accountants and all that seem very foreign to people that are passionate about what they do. i would first tell them to make sure that your idea is awesome. and the way i would do it and the way i did it when i started because i didn't know what a pro

forma was, i would vet my idea and i would analyze it, would pick it apart, i would take this notion of what this concept is, beat it up, come up with a list of why it wouldn't work, and if in the end the list was greater for the pros i would attack it. i believe, and this goes against what you would think i would say to you, that if you build it and it's fantastic, they're going to come and you'll figure out the accounting stuff later. just make sure you budget it right in your construction costs. let me ask you guys,we put this out to facebook facebook. we got a couple of questions. this came from dennis who wrote, i want to open a restaurant and have almost everything down from how to interview and hire to the name, the logo, the marketing idea. is there one formula to figure out the retail price of a dish plus account for overhead such as utilities farks tillties, so forth? >> typically food cost runs

about 30%. operations can get it down to 27%, 28%. the food sales. but you're not going to get a food cost to run much better than that typically. but there's also an issue of value. guests have perceived value. when a plate hits the table what's it worth to them in perception? then there's absolute value. if the restaurant across the street is selling a hamburg burger for $8, it's going to be difficult to sell it for $12 if you don't have a better perceived experience. >> i want to follow up on that, this is about brand too? >> absolutely. >> you can sell the same thing for one price or another price -- >> to answer his question, the facebook question, your pricing is based upon what the food costs. add money in for air conditioning or for uniforms. that comes out of your overall gross sales. when you price something you price it based upon what the hamburger costs, what that egg costs, what that piece of lettuce costs, and like your expert said, it should be

anywhere between 26%% and 30% food cost. >> another question from facebook. lin linda wrote, does offering local foods give a competitive advantage or is it only the taste and pricing people look for? what do you think? >> i think that customers want to patron it's a facility, a restaurant, that they feel represents them. so i think in today's world, i think it does help. but more importantly than that, i think if you're sourcing locally, you're forced to use in-season ingredients. so it keeps the kitchen team motiva motivated, there's constantly changes which also front of house team gets to share with the guests. so i think there's a lot of importance to it. we actually at one of our facilities have a farm that, you know, all our staff participates in helping to maintain and grow. and it gives them so many different talking points with the customer. >> john, if somebody, speaking of starting a restaurant right now, is there a resource that

you send them to? >> there are a lot of resources. score as great one. retired business executives can be supportive. other restaurateurs. there's great chef consultants. great bar skuconsultants. the key point is when we looked at the piece on the triple concept, every restaurant that's successful really is typically known for something. she had one restaurant known for hamburgers, another restaurant known for chicken, another restaurant known for liquor. when you have an identity like that and you build it around a hamburger or fried chicken you better darn well have great chicken. typically that requires some real hard work in a test chicken developing a product or your home kitchen. if you're not passionate about what you're selling the whole thing falls apart right from the get-go. >> how important is location? >> i think it's very important. i've been in locations where we've had rent of 40%, you know,

more of a concession. and you're generating the volume. obviously your pricing adjusts for that type of rent. >> right. >> i find that i typically look for now unique sites. i'm more into waterfront locations or conversions of estates into restaurants. i think others look for high visibility, high traffic. i think it's very important. >> my instinct and my heart is to find locations that are off-kilter. a little off the beaten path. now, that's not always intelligent. i've been wrong about that sometimes. but i like things that are not on the corner of main and main. a little off so that you feel a little different, a little special about where you're going. >> what do you think, you've started so many restaurants stephen. if you have to say one thing that the successful ones have had, what do you think it is? >> incredible concepts.

and unbelievable perseverance on our part and making sure the food tastes the same all the time. a lot of people come up with great ideas, open it, and then they have to maintain it. and maintaining the food quality is the most daunting thing any of us have to face. >> what about you, frank? >> i would say consistency in staff. i think customers like the fact that, you know, they'll recognize the same faces in a restaurant. and i think if you could build consistency in your kitchen team it also shows in consistency with your food. so i think staffing. >> and i'm going to end with you. if you had to give one warning for somebody who was interested in starting a bar or restaurant, what would it be? >> capitalize yourself well. because if it's your first time you're going to make a few mistakes along the way and mistaketh cost money. make sure you have a few bucks to last a little longer until you achieve profitability. the most important part of a restaurant is connect. connect with your marketplace. connect through your employees.

connect through your products. connect through your branding and your marketing. if you connect you'll be successful. >> all right. well, thank you all so much for joining us. really interesting talking to you. congratulations to all of you guys on your success. it is a tough industry and you've all done really well in it. thanks for joining us. >> thanks, j.j. >> no matter what your business is knowing who your customers are and what they want is essential for success. two restaurant owners learned this the hard way. when they tried to change things up they ended up with empty seats and thousands of dollars down the drain. >> i hate the way you made your restaurant. it used to be great, we don't like it any more, we're never coming back. i hate your restaurant. those are pretty harsh words. >> christian says he and partner keith knew they made a mistake when they upscaled their weymouth, massachusetts, restaurant.

>> why did you mess with it? you should have left it alone. we don't think you're net. why did you do this? a brutal piece of hate mail. >> what changes sparked this negative feedback? >> flowers on the tables with some candles. new salt and pepper shakers. linen napkins instead of paper napkins. we brought in new silverware, we brought in a chef, we brought in a general manager. >> we changed to a nicer, larger format. the food changed a little bit. we added a lot more seafood, higher-end steaks. >> dupuis says the reason for upcaming the family establishment was simply economics. after serving food like burgers, pizza, and plenty of fried stuff, the first-time business owners saw what they thought was an opportunity to bring in more cash. >> we weren't doing what people wanted evidently at the time. and tried to make that change to make ate little bit nicer. there was really nothing else in the area. so we took a chance. >> taking that chance resulted in some pretty significant

losses. their $40,000 investment actually translated into a 15% drop in revenue. customers weren't shy in their upset either. to some, it seemed like the restaurant was having an identity crisis. >> some was very angry, some was frustrated, some was sincere, a little bit of everything. but they were definitely honest and blunt. >> both men were committed to letting the experiment run its course. but about nine months in they decided it was time to rethink their business plan. there were simply too many empty seats. customers and staff noticed changes almost immediately. >> the flowers came off the tables. went back to the old salt and pepper shakers. made it look nicer. we incorporated some more specials. we slowly decreased the menu a little bit. >> the decision to scale back meant letting go of the chef and general manager hired to supervise the venture in the first place. it's been a process trying to get the main street grill back to where it was but every move

has one group in mind, the customers. >> it took about a month and a half, two months. just really, you know, putting up some specials, making sure that those are the things that people wanted on the menu. it's a very loyal crowd. and you don't have that transient crowd like you do in a metropolitan area. you always have to really focus on customer service and really pay attention to everybody's needs. >> it's been a costly learning experience for these high school friends but the lesson is clear. >> do research and get the information before you make a drastic change. asking your existing patrons what they like, what they don't like. and go from there. >> it could take as long as two years for them to recoup their losses. but food specials, plenty of tvs, and a customer loyalty program have helped get people back in the door. while he takes the blame for the failed experiment he says he'll never underestimate his customers again. >> the customers run the business, it's not me. they're the most important thing

to the business, not me. so, you know, that was something that i really learned from it that was very valued. there's not one perfect formula for managing a successful restaurant. but there are some clear ways to increase your profits. here now are five management tips for restaurant owners kurtcy of ink.com. number one, stay close to your staff. ask them so help with brain storming ideas and listen to their opinions. two, focus on your guests' moods. make it your priority to do whatever it takes to make every diner leave your restaurant happier than when they came in. number three, make sure you have room to expand. pay attention to local building codes and zoning laws. not doing so could be a costly mistake down the road. four, push yourself to understand your profit and loss. good food anded a atmosphere does not equal a successful restaurant. the business side is equally important. so make sure you spend just as

much time balancing your books as you do thinking up the menu. number five, learn to delegate. as owner figure out what you're best suited to and stick to those tasks. delegate everything else to others who are better equipped to carry out those jobs. when we come back on this super bowl sunday food show we catch up with former nfl great tony saragusa, who went from the gridiron to the griddle with his new york-based tiffany restaurant. and super chefs like wolfgang puck and bobby flay cook up wisdom for small business owners as we learn from the pros. shazi: seven years ago, i had this idea. to make baby food the way moms would. happybaby strives to make the best organic baby food. in a business like ours, personal connections are so important.

we use our american express open gold card to further those connections. last year we took dozens of trips using membership rewards points to meet with farmers that grow our sweet potatoes and merchants that sell our product. vo: get the card built for business spending. call 1-800-now-open to find out how the gold card can serve your business. there have been discussions about a whole set of measures to provide tax breaks to startups that are interested in hiring more workers or increasing their wages. >> food and football go hand in hand. so whether you're going to a tailgate or a sports bar on this super bowl sunday, we thought wide revisit the story of a gridiron great. tony saragusa. he took what he learned in the nfl to become a successful restaurant owner.

like many entrepreneurs, this restaurant owner is hands-on. he spends his days checking in at each of hit six new jersey restaurants.st six new jersey restaurants. six new jersey restaurants. >>i try to go and lead by example. i come in, i clean tables, i have no problem going in the back and washing dishes, i've done it all. >> like many entrepreneurs this is his second career. but that's where the similarity stops. his first career? super bowl champ. this entrepreneur is tony saragusa, who for 12 seasons played defensive tackle in the nfl, winning a championship with the baltimore ravens in 2001. >> the tough thing about getting into this world as a professional athlete is you've got to sort of -- it's a big change. a huge change. >> though you can still catch

saragusa any given sunday as fox sports' on-field analyst -- >> this is an explosive offense -- >> those days he's here at tiffany's. >> i take care of things and i want it to be good. when people talk about tiffany's or any one of our restaurants it's a reflection on me. i make sure i visit them all and they're up to my standards. >> saragusa says the nfl gave him the discipline to run his own company. >> i refer to everything, football. if you're a head coach you need to surround yourself with really smart people, almost people who are smarting than you. >> he doesn't discount the edge his fame has given him. he knows in the restaurant business, as in football, the competition is fears. and he'll use everything he's got to make sure his business is a success. >> we do monday night football shows, radio shows from here. we do a lot of stuff. we're always changing, moving. trying to keep up to date. as we've seen today,

operating a successful restaurant takes the hard work and innovation. that combination has been a recipe for success for many of the country's highest-profile chefs and owners. here's a sample platter of some of the wisdom and secrets that we'verred heard over the years in this "learning from the pros." ♪ >> well, i think for us, we really have -- our motto is quality. we don't try to sell out, we don't try to cheapen our brand, so everybody who is with me basically has the same vision. we want to open restaurants but we only open restaurants when we have really good people running them. if i don't have a wonderful chef who i feel is talented, who i feel can handle the pressure, who is not only a good chef but a good businessman, i wouldn't open another spago just because somebody gives me a good deal.

it has to be made positive for our organization in the long run. ♪ >> promoting from wind is really important. i think that's a phrase that you hear a lot but we really utilize it as much as possible. you know, promoting from within, obviously the person who you're promoting already knows the philosophies of your company. very, very important. and i think even more importantly, it lets other people who have just started, who have been around for a while, know that there's going to be opportunity down the line, that they're not just going to be the assistant manager for the next 12 years, that they're doing a great job. we want them to be able to look forward and know that we're going to try to create opportunities as we grow our business as well. ♪ >> my management style is one on one, person to person. i believe in talking to the chefs in the kitchen, talking to the bus boys, talking to each of the employees who are here,

joking, being serious, telling them what they do right. because you have to tell people that they're doing a great job for you. i treat everybody with respect and i expect to be treated with respect. i love what i do. i love people. i have fun with my customers. it doesn't always go well. i mean, there's always something that can happen. but i try to work with that situation and work with, whether it's an employee or whether it's a guest. and i believe in great service. ♪ >> people, yes they come here because they're hungry, but they also come here to experience. so much what was we try to do is based on experience and creating memories. guess what i did last night? i had an incredible meal. and i saw this incredible jazz singer. that's an experience that wherever you come from you're going to take back to your family, your office, whatever

country or state you come from. being part of creating unique experiences, that gives us the highest chance of return of customers. we've got to be good story tellers, we've got to be authentic, we've got to give good value for money. do you wish there were a more efficient way to get customers in and out of your restaurant? if so, check out our website of the week. tabbedout lets consumers view their bill in realtime and pay when they're ready. tabbedout is available to android and smartphone users. find information at tabbedout.com. to learn more about today's show click on our website. openforum.com/yourbusiness. you'll find all of today's segments plus web-exclusive content to help your business grow. become a fan of the show on facebook. follow us on twitter too. @msnbcyourbiz.

next week when big box stores come to town it doesn't always have to be bad news for local small businesses. >> when we buy something we're buying it at "x" amount. i have no idea what the guy down the street is buying it for but there's no way he can buy it at what i'm buying it for. >> find out how this independent carpet dealer has used a cooperative to keep her competitive edge even though she's surrounded by national chains and getting hammered by the recession. i'm j.j. ramberg. remember, we make your business our business. >> "your business" is brought to you by american express open. tell your business video through video. learn how at youtube.com/mybusinessstory. we purchase as much as we can on the american express open gold card. so we can accumulate as many points as possible. i pass on these points to my employees to go on trips with their families.