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 had 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 liked the idea of having three smaller concepts. >> reporter: restaurateur ashley christensen had always admired the building at the corner of south wilmington and east martin streets in downtown raleigh. >> i've been living in raleigh for 17 years. i came here to go to school at north carolina state. but this was always a building that i noticed. >> reporter: and when the space, which was originally a piggly wiggly, 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. >> reporter: christensen who gained some fame competing against bobby flay on "iron chef," already owned a restaurant, poole's diner, just blocks away. but she was itching for more. >> i'm definitely one of those people who, when things are going really well, i get a little antsy and start thinking about what needs to creatively happen next. >> reporter: the building's landlord suggested it be divided into three spaces. >> within, you know, two weeks,

we had decided that i would take the whole first floor. and within four weeks, we decided i would take the whole building. >> reporter: 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. >> reporter: just next door is chuck's. >> i'm a big fan of a really wonderful hamburger, and i think most people are. >> reporter: and then downstairs is fox liquor bar. >> what i wanted to create in that space was a people where people could count on having a great cocktail, count on having a unique selection. >> reporter: one key component of christensen's business model is that on paper, these three concepts actually exist as 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. >> reporter: 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 it once as opposed to three times. >> reporter: part of that design includes things like shared phones, a sales 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 p.o.s. 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 when you're -- or most chefs shouldn't, anyway. >> reporter: having a shared kitchen does pose a unique challenge. when customers ask to eat burgers at beasley's and chicken at chuck's instead of the other way around, the response is, no. >> we try to do it gently. we coach our staff on kind of some talking points and how to address it. >> if we allow people to come over on the burger side and have fried chick. or come over on the fried chicken side and order burgers, it's just one big restaurant, and that's not what we wanted. >> these are two different restaurants, two different concepts.

you have to draw the line somewhere. >> reporter: 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 you decided that you wanted to go to another restaurant. you would have to exit that restaurant. and it is something that people find challenging, knowing us pretty intimately. >> reporter: while fox liquor bar largely has its own staff, the employees at the restaurants are interchangeable. people move around to meet customer demand. >> there are subtle differences in the way you approach things, but at the end of the day, good service is good service. >> reporter: 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 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. >> reporter: 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 faults in your space. and you might as well learn how to operate in that space. >> reporter: even though beasley'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. you know, it's nothing -- i think 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. >> reporter: since the experiences are different, christensen says they're not dependent on each other. if one consent hits hard times, some retooling can happen fast. >> i think what makes it very simple is that i am my only partner. if i have to make a move, i can make it quickly. we swallow our pride and figure out how to make something else

work in its place. >> reporter: 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 appeal to people regardless of economic climate. and 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 taffer is chairman of taffer dynamics, a business that consults with major restaurants, nightclubs and hotels worldwide. john hosts spike tv's "bar rescue," which returns for its second season this summer. steven starr is the owner and founder of starr restaurants, a fast-growing multiconcept restaurant business with 26 properties including budicon. frank is a co-founder and principal of landmark

hospitality. he owns and manages liberty house restaurant inside liberty state park in new jersey. great to see all of you guys. >> great to be here. >> i talked to you a little bit about this before, but 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. 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, and 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 performers to really know what you're getting into and what it takes to generate revenues to cover your expenses. >> john, you go in and you revamp a lot of bars for your

show that are having troubles. what do you see most? what's the problem most people have? >> well, i step into a lot of failures, as you know, j.j. so often when i walk in, all the serious mistakes have been made which makes them hit me between the eyes. a lot of people want to open a restaurant, they have a position for the front of the house, for the social experience. they envision running a fun place. almost a show biz aspect of a restaurant. where i find a problem is is in accounting and controls. most people get into the business of envisioning a 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 performers and all of those numbers that protect their success. >> and i love that, frank. the first person you said build a good team around, and you said build an accountant. oh, 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, was that i would vet my idea, and i would analyze it. i 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, then 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. all right? just make sure you budget it right in your construction costs. >> let me ask you guys, we put this question out to facebook, our facebook fans. we told them we were doing this show, and 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. he has a question concerning pricing. is there one formula to figure out the retail price of a dish plus account for overhead such

as utilities, facilities and so forth?" what do you think, jon? >> well, typically food cost runs about 30%. operations that push it, can get it down to 27%, 28% of 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. you know, guests have perceived value. when a plate hits the table, what's it worth to them in perception, and then there's absolute value. if the restaurant across the street is selling a hamburger for $8, it's going to be difficult to sell it for $12 if you don't have a better perceived experience. >> i just want to follow up on that. business is about brand, too, right? >> absolutely. >> you could sell the same price or another price. >> but to answer his question, the facebook question, your pricing is based upon what the food costs. not -- you know, money in for air conditioning or for uniforms. that comes out of your overall, you know, gross sales. so when you price something, you price it based upon what the hamburger costs, what that egg

costs, what that piece of lettuce costs. like your expert said, it should be anywhere from between 26% and 30% food costs. >> another question from facebook. linda wrote, "does offering local foods give a competitive advantage, or is it only the taste and pricing that people look for?" what do you think, frank? >> i think that customers want to patronize a facility or 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 motivated. you know, there's constantly changes. also front of the 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 form 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. >> jon, if somebody is thinking of starting a restaurant right now, is there a resource that you send them to? >> there are a lot of resources. score is a great one, retired business executives who can be supportive, other restaurateurs can be extremely helpful. there's great chef consultants who can help you build menus, great bar consultants who can help you put together fantastic beverage programs. but you know, the key point is that -- and i think the guys would agree with me, 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 known for chicken, another known for liquor. when you have an identity like that and you build it around a hamburger or fried chicken, you'd better darn well have great chicken. and typically that requires some real hard work in a test chicken developing a product. or your home chicken. but 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 mean, 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 to are 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. and i think others look for high visibility, high traffic. i think it's very important. >> my instinct in 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 & 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 had to say one thing that the successful ones have had,

what do you think it is? >> incredible concepts. and unbelievable perseverance on our part in 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 jon, i'm going to end this with you. if you had to give one warning for somebody who is 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 mistakes cost money. make sure you have a few bucks to last a little longer until you achieve profitability.

and 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. and 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. >> thank you. >> 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 anymore. we're never coming back. i hate your restaurant. those are some pretty harsh words. >> reporter: chris says he and his partner knew they made a mistake when they upscaled their

weymouth, massachusetts, restaurant, but they never thought they'd get a response like this. >> why did you mess with it? you should have left it alone, you know, we don't think you're intelligent. why did you do this? you know, so on and so forth. just a really brutal piece of hate mail. >> reporter: what changes at the 78-seat main street grille sparked such negative feedback? >> flowers on the tables with some candles, new salt and pepper shakers, we went to linen instead of paper napkins, new silverware, a chef, a general manager. >> reporter: that wasn't all. >> a nicer, larger format. the food changed a little bit. we added a lot more seafood. higher-end steaks. >> reporter: dupuy says the reason for upscaling the family establishment was simply economic. 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 some more cash. >> we weren't doing what people wanted evidently at the time. and tried to make that change to make it a little bit nicer.

there was really nothing else in the area. so we took a chance. >> reporter: 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 there were definitely honest and blunt. >> reporter: both men were committed to letting their 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. and we slowly decreased our menu a little bit. >> reporter: the decision to scale back also meant letting go of the chef and general manager hired to supervise the failed venture in the first place.

he says it's been a process trying to get the main street grille back to where it was, but they have one group in mind, the customers. >> it took about a month and a half, two months, just really, you know, putting out 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. so you always have to really focus on customer service and really pay attention to everybody's needs. >> reporter: it's been a costly learning experience for these high school friends, but the lesson is clear. >> do the research and get some information before you make a drastic change. asking your existing patrons what they like, what they don't like, and go from there. >> reporter: 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 experience, he says he'll

never underestimate his customers again. >> it's the customers that 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 that was very valuable. >> there's not one perfect formula for managing a successful restaurant but there are some clear ways to increase your profits. here are five management tips for restaurant owners. stay close to your staff. ask them to help with brainstorming ideas and listen to their opinions. two, focus on your guests moods. make it your priority to do whatever it takes to make them leave happier than when they came in. 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 profit and loss. good food and atmosphere does not equal -- spend as much time balancing your books as picking up the menu. five, learn to dell game. as owner, figure out what you are best suited to and figure out the tasks. delegate to others best to carry out those jobs. when we come back on this super bowl sunday food show, we catch up with tony, who went from the gridiron to the griddle with the new jersey based restaurants. we cook up wisdom for small business owners as we learn from the pros. you won't find a "home rule" on every corner, a "stag provisions" down every block,

or a "hugh and crye" in every town. these are the small businesses of america, and all across the nation they're getting ready for their day. hundreds of thousands of small businesses are preparing for november 24, a day to open doors, and welcome the millions of customers who will turn out to shop small. small business saturday. visit shopsmall.com and get ready. because your day is coming. there have been discussions between republicans and democrats about a whole set of measures that can accelerate financing to start up companies, provide tax breaks to start ups who are interested in hiring more workers or increasing their wages. >> food and football go hand-in-hand. whether you are going to a tailgate or sports bar, we thought we would resiz sit this

story of a great, tony. 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 his six new jersey restaurants. >> how you doing? don't steal the ketchup. >> i try to lead by example. i have no problem going in the back and washing dishes. i have done it all. >> like many entrepreneurs, this is his second career. that's where the similarities stop. his first career -- super bowl champ. this entrepreneur is tony siragusa. for 12 seasons, he played defensive tackle for the nfl winning the championship against the baltimore ravens in 2001. >> the toughest part about

getting into the business world, it's a big change. a huge change. >> though you can still catch him any given sunday as an on field analyst. >> this is an explosive offense. >> most days, he's here at tiffany's. >> i take care of things. i want it to be good. when people talk of tiffany's or any one of our restaurants, it's a reflection of me. i make sure they are up to my standards. >> the nfl gave him the discipline. >> you need to surround yourself around smart people. >> he doesn't discount the edge his fame gave him. he knows, in the restaurant business, the competition is fierce. he will use everything he's got to make sure his business is a success. >> we do monday night football shows and radio shows. we do a lot of stuff. we are always changing, moving

and trying to keep up to date. >> as we have seen today, operating a successful restaurant takes hard work and innovation. that combination has been a recipe for success for many of the country's highest profile chefs and owners. here is a sample of the secrets we have learned over the years in this "learning from the pros." ♪ >> for us, we really have one motto, quality. we don't try to sell out. we don't try to cheapen our brand. everybody who is with me, basically has the same vision. we want to open a restaurant. 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 can handle the pressure, who is not

only a good chef but businessman, i wouldn't open it because somebody gives me a good deal. it has to be positive for our organization in the long run. ♪ >> promoting from within is important. i think it's a phrase you hear a lot. we utilize it as much as possible. promoting from within, obviously, the person who you are promoting already knows the philosophies of your company. very, very important. and i think more importantly, it lets other people who have just started or have been around for awhile know there's going to be opportunity down the line, they are not going to be the assistant manager for the next 12 years. we want them to look forward and know we are going to create opportunities as we create our business. ♪ >> my management style is one-on-one, person-to-person. i believe in talking to the chefs in the kitchen, talking to

the busboys, talking to each of the employees who are here, joking, being serious, telling them what they do right. you have to tell people they are 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. there's always something that can happen. but, i try to -- to work with that situation and work with, you know, whether it's an employee or guest and i believe in great service. ♪ >> people come in because they are hungry, but they also come here to experience. so much of what we are trying to do today is based on experience and creating memories. guess what i did last night. i went to harlan. i had an incredible meal. it's an experience.

you are going to take it to your family, your office, whatever country or state you come from. part of creating unique experienc experiences. it gives the highest chance of return. good story tellers, be authentic. ♪ do you wish there were a more efficient way to get customers in and out of your restaurant? if so, check out tabbedout.com. you can view your bill online and pay when you are ready. you can finds information about the app 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 more information to help your business grow. become a fan of us on facebook.

we love getting your feedback. follow us on twitter, too. next week, when big box stores come to town, it doesn't have to be bad news for local small businesses. >> when we buy something, we are 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 for what i'm buying it ffr. >> how she used a cooperative to get an edge. until then, i'm j.j. ramberg. remember, we make your business our business. you won't find a "home rule" on every corner, a "stag provisions" down every block, or a "hugh and crye" in every town. these are the small businesses of america, and all across the nation they're getting ready for their day. hundreds of thousands of small businesses

are preparing for november 24, a day to open doors, and welcome the millions of customers who will turn out to shop small. small business saturday. visit shopsmall.com and get ready. because your day is coming. hello from new york. i'm chris hayes. preliminary reports suggest shoppers spent $11.2 billion. it's down fwr the $11.4 billion spent last year. judges calling for a nationwide strike to protest the unlimited power president morsi granted for himself on thursday. we'll talk about it later in the program. right now, my