Follow-up to the small restaurant I opened

[OneMoreFarang]

11 minutes ago, patman30 said:

but the (dumb) competition just puts me off opening anything modest
it is why we see so many open then close.

I think that is the most important point.

If you do the math and know you have to charge 300B for food X but your competition, who are not able to do the math, charge 200B, then you have a problem.

The competition obviously also has a problem, they will go bankrupt, because they don't earn enough. But until they go bankrupt, they ruin the prices for everybody else.

 

I remember many years ago I spoke with my supplier for computer parts in Pantip Plaza. He had already very low margins like i.e. +100B on a hard disk. But competitors sold them for less because they needed the money to pay their debts with the suppliers. That ruined the prices for everybody in Pantip and that ruined many businesses in that place. 

 

[patman30]

3 minutes ago, OneMoreFarang said:

I think that is the most important point.

If you do the math and know you have to charge 300B for food X but your competition, who are not able to do the math, charge 200B, then you have a problem.

The competition obviously also has a problem, they will go bankrupt, because they don't earn enough. But until they go bankrupt, they ruin the prices for everybody else.

 

I remember many years ago I spoke with my supplier for computer parts in Pantip Plaza. He had already very low margins like i.e. +100B on a hard disk. But competitors sold them for less because they needed the money to pay their debts with the suppliers. That ruined the prices for everybody in Pantip and that ruined many businesses in that place. 

 

sadly it is the same for many businesses as you point out.
It is made even worse by businesses founded on credit.

[weelittletimmy]

13 hours ago, bignok said:

Sounds like a 6 month business. 

Good point, it could be that. We'll see how things fare after next high season, when I have made more marketing effort, have food delivery, etc. One thing I feel bad about is, what happens to my staff? I've known most of them since opening. They quit their jobs to join me, and can barely make ends meet. If I had hired them from the get-go agreeing that it was only for 6 months, it would be an easier decision.

 

13 hours ago, OneMoreFarang said:

And when you have to put more of your own time into this to make it profitable, how do you calculate that?

I.e. if you calculate your own time with 1000B per hour, are you then still making money?

And is it then a business or a hobby?

 

Good luck!

 

I actually have put very little time except during the opening weeks, because I am busy with my full-time job.  So it's more of a hobby. I put in maybe 1 hour a day, and sometimes not even that. The only reason this business is open is because any loss is exceeded by the monthly salary of my remote job. If this was going to be my only source of income, then I'd switch to lower-stakes alternative: multiple small juice stands. I'm actually planning to do that if I end up staying in Thailand next year.

[weelittletimmy]

For those asking, I'd rather not say how to find my place, because I prefer to be able to speak my mind freely on this site without it coming back to bite me in the ass one day. It's a survival mechanism from working in the current tech industry where you can lose your job for something you wrote 10 years ago, lol.
 

12 hours ago, Mickeymaus said:

Really great story. Thank you for sharing it with us.

What was your motivation for doing this in Thailand? What are your long term plans? Stay here 'til the end of your days or do you plan to sell it for a profit one day? And then what? 

I was already in Thailand because covid made my job remote-only and I was attracted by the weather, beaches, cost of living, and safety. I found out the rent on a shop near my house was really cheap (10k/month), and gears started turning in my head. I go into this in my original thread, it has always been a desire of mine since I was a student, but I could never afford this in a western country. I haven't decided if I'll stay in Thailand. If I do, I will do other small businesses like this, and hopefully one day can quit my day job and just manage my places. If I don't, I'll sell and leave.

 

7 hours ago, 1FinickyOne said:

You mention opening a 'tiny restaurant' - - how high is the upside? If it is tiny how many customers could you seat at one time? Tiny restaurants would be lucky to have tiny profits - is it unrealistic to have high hopes for a very small venture? 

 

good luck but you may be achieving your mark.. maybe you might shoot higher if you want more money.

"Tiny" was my original plan, for the first place I planned to rent for just a juicebar. The place I ended up renting is bigger, although still on the small side. I can seat 20 people, and I have space outside to add a standing counter like bars have if it ever becomes packed. I've seen good fast-foods blow up and expand, including my favorite restaurant back home. Rent is low IMO so I'm happy.

 

 

3 hours ago, OneMoreFarang said:

@weelittletimmy

It seems you run this business by yourself. Farang boss, a few Thai employees, correct?

Do you have a Thai manager or supervisor? Maybe you wife or girlfriend?

No, I'm alone with the Thai staff. You're right that there's a big cultural difference, and I feel the need for a manager, but I can't afford one right now. One of the staff was hired as half-manager half-assistant cook (because he speaks very good english), but he didn't turn out to be the manager type, he's useless at it, and I don't have the heart to replace him yet.

They lie about the smallest things, it's almost like even after months of nice behavior from me, they're afraid I'm gonna punish them. Just today one of them was late (only the 2nd time since being hired), when I asked her what time she showed up at work she lied and said she came 1 hour earlier than she did. I sat her down and explained "why bother lying about this? Just say the truth, it's not like you're late every day. When I'm late I just tell my boss I'll be late, it's no big deal, it happens. If it happens frequently and it becomes a problem, I'll tell you." I said this (well, Google Translate) in a friendly tone and with a smile to let her know she's not in trouble, but she was guarded the whole time.

There's a few puzzling things like this where I keep having to repeat myself and it makes me think "this must be a Thai culture thing". I'm also worried some of my behavior might be accidentally offensive. Those that frequently ask me for advances, I keep grilling them about what they're spending their money on, ask to see their bank account weekly. I don't care that it wouldn't be proper in a western country to ask your employees how they spend their money, if we're going to be asking for advances then this becomes more of a paternal relationship, and I'm going to want to know why you're still broke after 6 months of employment, when you live with your parents for free and eat at work for free.

 

[scottiejohn]

26 minutes ago, weelittletimmy said:

For those asking, I'd rather not say how to find my place, because I prefer to be able to speak my mind freely on this site without it coming back to bite me in the ass one day. It's a survival mechanism from working in the current tech industry where you can lose your job for something you wrote 10 years ago, lol.

I think you are quite correct.

You cannot take back you have already printed and going by some of the responses you got in your original "setting up thread" it is probably wise to stay below the radar!

[Kenny202]

We have tried a couple of businesses here and its tough. We're up country so will be a different set of dynamics to a tourist area, and our customers were mainly Thai in the restaurant we had. We were doing well for the couple of years leading up to covid.....made money from day one...not a lot but enough to be worth while. Even during Covid we seemed to be still doing ok as that's when the home delivery companies really started kicking in up here. About 18 months into Covid things started to slow down. We had no staff and small overheads so never lost money but we shut the business recently, got tired of waiting for things to come back, which I don't believe it will in the near future. Even when things were going well I couldn't tell you what was our best day / days of the week. it was all so random. No rhyme or reason. I was a business coach back home and involved in business all my life but there never seemed to be any logic to it. Our customers were more middle / middle upper income type people. I couldn't work it out as many were govt workers, teachers etc and their income shouldn't have been greatly effected by covid. But thinking on it a little more even Thai people with a reliable income stream are usually in debt up to their necks....and the small amount of disposable income they would have had would have been eaten up by inflation of the past 2 years. All over the city we live whole streets that had busy restaurants and businesses have shut up shop. It is really dire and I can't believe it isn't more widely reported...unless ours is the only large Isaan city with economic problems. Home deliveries seem to have dwindled away....I can remember when the Grab / Food Panda riders where like swarms of locusts on the road, and by the looks of it with business dropping and the delivery companies squeezing the drivers, many of the drivers I assume have gone back to work in factories or a more reliable income stream. Apart from that money is very seasonal here. We started a little online thing a couple of months before Songkrahn and was going like a house on fire, then just dead in the water a month after. Apparently before Sonkrahn that's when people are getting bonuses etc and by the looks that's long gone. I pity some of the restaurants still hanging on, particularly when they have to prep a certain amount of food everyday, much of which somedays must go in the bin. I have stopped going to some of our favorite Thai restaurants and its quite obvious sometimes the food is old / not fresh....obviously not turning over as it used to. Don't know what the answer is. I pity some of these poor Thai people where if they don't sell they don't eat. Or people put money into businesses / franchises only to sit there looking at each other twiddling their thumbs night after night. So I guess my friend you are not on your own. best of luck but I wouldn't hang on to long paying staff etc waiting for the good times to return. I think there are a few more years pain to go before things get back to anything like they were

[RanongCat]

1 hour ago, Kenny202 said:

We have tried a couple of businesses here and its tough. We're up country so will be a different set of dynamics to a tourist area, and our customers were mainly Thai in the restaurant we had. We were doing well for the couple of years leading up to covid.....made money from day one...not a lot but enough to be worth while. Even during Covid we seemed to be still doing ok as that's when the home delivery companies really started kicking in up here. About 18 months into Covid things started to slow down. We had no staff and small overheads so never lost money but we shut the business recently, got tired of waiting for things to come back, which I don't believe it will in the near future. Even when things were going well I couldn't tell you what was our best day / days of the week. it was all so random. No rhyme or reason. I was a business coach back home and involved in business all my life but there never seemed to be any logic to it. Our customers were more middle / middle upper income type people. I couldn't work it out as many were govt workers, teachers etc and their income shouldn't have been greatly effected by covid. But thinking on it a little more even Thai people with a reliable income stream are usually in debt up to their necks....and the small amount of disposable income they would have had would have been eaten up by inflation of the past 2 years. All over the city we live whole streets that had busy restaurants and businesses have shut up shop. It is really dire and I can't believe it isn't more widely reported...unless ours is the only large Isaan city with economic problems. Home deliveries seem to have dwindled away....I can remember when the Grab / Food Panda riders where like swarms of locusts on the road, and by the looks of it with business dropping and the delivery companies squeezing the drivers, many of the drivers I assume have gone back to work in factories or a more reliable income stream. Apart from that money is very seasonal here. We started a little online thing a couple of months before Songkrahn and was going like a house on fire, then just dead in the water a month after. Apparently before Sonkrahn that's when people are getting bonuses etc and by the looks that's long gone. I pity some of the restaurants still hanging on, particularly when they have to prep a certain amount of food everyday, much of which somedays must go in the bin. I have stopped going to some of our favorite Thai restaurants and its quite obvious sometimes the food is old / not fresh....obviously not turning over as it used to. Don't know what the answer is. I pity some of these poor Thai people where if they don't sell they don't eat. Or people put money into businesses / franchises only to sit there looking at each other twiddling their thumbs night after night. So I guess my friend you are not on your own. best of luck but I wouldn't hang on to long paying staff etc waiting for the good times to return. I think there are a few more years pain to go before things get back to anything like they were

I read  what you say and agree some of it. To be in bisiness only for profit is to think only like peoples who get approve  for 7/11 . But never  your bisiness, only risk manager.

Many bisiness pay to staff more than  can have for self more time than not. In Thailand a bisiness thatcan pay itself even no profit but keep staff is a happy thing.

For n sure now is no easy meat on a bone for  many many. Cities and small province towns so quiet like.

If can keep alive a bisiness that not  every day, week , make owner rich but can keep consistent presence and product then will gain value in a very Thai way.

"Trust is a close relative of Risk" and many run are seen run from both.

 

 

[xtrnuno41]

Im very curious about the coffee, 700 baht for a cup or is it a pint? Or is it kopi luwak?

In my time from november to april had a food shop with very lovely food and coffee. The coffee was 40 baht a cup, but man, like an angel peeing over your tongue. Well they had to serve it 3/4 of cup filled for me, then it was marvelous.

Always had 2 cups. Ate 2 choices of meals. The wife was mostly satisfied with one portion and tea. Bill mostly around 280 baht. 330 baht when they have banana cake, loved it. Cant really say they were over crowded with people.

 

Sometimes i wondered how they could exist. As far as i could see 2 servants and then the cook. Nice place, had a garden with lots of plants/flowers. So even maybe an additional all round worker? 

Visited them quit regular. Even gave them a good review in google. For me to do so, making that effort. IM mostly not like that.

Also made one for Kin exchange in Hatyai, sometimes you are so impressed.

Just checked 10000 people saw it, mmm. Poor girl maybe now she has to work all the time. She really impressed me by actions. Ive met otherwise.

 

Never thought about doing something else in food? Like make macaroni, yha not only macaroni but filled with vegetable and meat, grinded pork chicken.

As for vegetable I mostly use onion and bell pepper

Of course lots of garlic, chili peppers.

Or meatballs with onion on a stick with fried rice or/and with peanut sauce. My wife love my balls, 5555. You can make the sauce anyway which you like it. My ingredients are always garlic, soy sauce, my own sambal paste mixture of badjak with adjuma pepper. I dont understand why they dont have adjuma in Thailand. Or another nice variant madam janet. tried adjuma to grow, but did probably some wrong or seeds werent good. As i red the peppers, i buy are rayed (?), maybe destroyed the seeds by it.

 

I enjoyed reading your story of your enterprise. You dont have problems with too less working Thai in your company? As Thai company has many demands. As for your working permit there should be 3 Thai.? Ever had a check?

[chilli42]

No s that you put the time in to share this.  I am sure it will be helpful.  Best wishes for the prosperity of your business

[Freddy42OZ]

20 hours ago, lom said:

But it isn't. The 200% (100 baht) has to pay rent, salary, etc. Profit is what remains after that.

it's 200% gross profit before deductions.

50 baht meal + 200% markup = 150 THB.  The 200% markup is the gross profit on that meal. 
 

 

[BoganInParasite]

Best wishes for your business. I've had a keen interest in observing new businesses in rural Thailand for more than a decade including the last five years in Nan province. My highly generalised summary is 50% fail inside of 12-18 months, 35% stagger along somehow (lack of maintenance/owners moving into it to live/downsize physical footprint) and less than 20% are obviously successful. In terms of restaurants/coffee shops the main success factor looks like a location with good visibility and road traffic combined with somewhere easy/obvious to park. Duration to failure looks like it is a combination of this and the propensity of family and friends to continue to frequent a business after the initial opening. Of course my observations in Nan province has been during the COVID pandemic that made it much harder for many businesses to survive, let alone thrive. When the wife and I spot a new local business we often give an assessment of success or fail (and duration to close) and much more often than not we are right. At times I admire the resilience and enthusiasm of Thais to have a go but there are many times it is just so clear that it is the wrong business, and/or the wrong locality, and/or wrong product for the market.

[ignore it]

So kinda like a SWOT analysis?

 

 

[OneMoreFarang]

58 minutes ago, BoganInParasite said:

Best wishes for your business. I've had a keen interest in observing new businesses in rural Thailand for more than a decade including the last five years in Nan province. My highly generalised summary is 50% fail inside of 12-18 months, 35% stagger along somehow (lack of maintenance/owners moving into it to live/downsize physical footprint) and less than 20% are obviously successful. In terms of restaurants/coffee shops the main success factor looks like a location with good visibility and road traffic combined with somewhere easy/obvious to park. Duration to failure looks like it is a combination of this and the propensity of family and friends to continue to frequent a business after the initial opening. Of course my observations in Nan province has been during the COVID pandemic that made it much harder for many businesses to survive, let alone thrive. When the wife and I spot a new local business we often give an assessment of success or fail (and duration to close) and much more often than not we are right. At times I admire the resilience and enthusiasm of Thais to have a go but there are many times it is just so clear that it is the wrong business, and/or the wrong locality, and/or wrong product for the market.

This reminds me of a management training long time ago.

The experienced trainer was also a company manager who expanded that company from about 40 people to a successful business with 400 people.

He explained about KPI (key performance indicators) which he set together with all of his managers, salespeople, etc. (I think every year). He asked his employees to suggest how they will improve in the next year. And he said that almost all of them had too high too unrealistic targets. I.e. a sales manager stated he would increase turnover by 50%. And then the top manager had to bring him down to maybe 20% for his KPI expectation. Almost everybody thought they will achieve more than was realistic.

I think the same happens for many businesses. People wish they have 100 visitors per day who spend each 300B. But then maybe they have 70 visitors with an average of 220B. We all like to overestimate. And when the profit only happens with our overestimations, then we have a problem.

And yes, I also made those mistakes often enough. 

[kingstonkid]

On 6/9/2023 at 9:55 PM, weelittletimmy said:

All my Thai staff live paycheck to paycheck. They will get paid on the 31st, and one week later all the money is gone and they are likely to beg for a small advance, which I give out occasionally depending on circumstances (which might be lies for all I know), but I made it a point never to do it in consecutive months. I will soon switch to weekly salary payments because giving them a full month's salary in one go is like handing a 7yo kid a bag of candy and telling him to eat only one per day. I'm sorry if this offends any Thai people reading this, I base my beliefs on my personal experience, not any prejudice, and my belief is that Thai people are financially irresponsible. I realize this probably only applies to working class Thai people.

This is not just a Thai problem look at a lot of Western families these days not only living paycheck to paycheck but room on CC to room on CC

 

Best of luck!

 

Advertising on here for the Phuket(?) crowd might not be a bad idea.  Good food at a great price is not a bad thing and always welcome.

 

Best of luck.

 

Also when I had a business in Canada it was not a case of spot checks I checked every day.  If you have a receipt system then you know what came in and what should be in the til.  Not there then people pay.

[bigt3116]

On 6/10/2023 at 9:47 AM, bignok said:

In the food business your costs should be 1/3 of the price.

Actually the cost of goods sold (COGS) should be about 33% of overall expenditure,(total costs are way more than that), you then have overheads and labour etc, which generally leaves between 3-6% in actual profit.

 

Edited June 11, 2023 by bigt3116
add info

[OneMoreFarang]

1 hour ago, bigt3116 said:

Actually the cost of goods sold (COGS) should be about 33% of overall expenditure,(total costs are way more than that), you then have overheads and labour etc, which generally leaves between 3-6% in actual profit.

 

What is the point of such a graph? Should we pretend this is the same for everywhere? Any county, up country, in the middle of the city? And the same of any kind of food?

It's a rough idea that you can't expect to buy something for 50B, sell it for 100B, and think you made a profit. And that about it.

[bignok]

1 hour ago, bigt3116 said:

Actually the cost of goods sold (COGS) should be about 33% of overall expenditure,(total costs are way more than that), you then have overheads and labour etc, which generally leaves between 3-6% in actual profit.

 

3/1 ratio in the chart. That's what I said.

[bignok]

9 minutes ago, OneMoreFarang said:

What is the point of such a graph? Should we pretend this is the same for everywhere? Any county, up country, in the middle of the city? And the same of any kind of food?

It's a rough idea that you can't expect to buy something for 50B, sell it for 100B, and think you made a profit. And that about it.

Some academic would have produced it.

[bignok]

1 hour ago, bigt3116 said:

33% of overall expenditure

False. 1/3 of revenue not expenditure. If expenditure was 100% of the graph their would be no profit. Be a break even position.

[scottiejohn]

5 minutes ago, bignok said:

Some academic would have produced it.

Here is the link to the article the graph came from;

The Complete Guide to Restaurant Profit Margins | Lightspeed (lightspeedhq.co.uk)

[bignok]

⁸

1 minute ago, scottiejohn said:

Here is the link to the article the graph came from;

The Complete Guide to Restaurant Profit Margins | Lightspeed (lightspeedhq.co.uk)

Not relevant to the farang tourist market in Thailand much at all given it's so seasonal.

[OneMoreFarang]

15 minutes ago, bignok said:

⁸

Not relevant to the farang tourist market in Thailand much at all given it's so seasonal.

At least it wasn't the Dummy's guide how to open a restaurant.

That's something. ???? 

 

[DJ54]

OP it’s good you changed pay to weekly. Vs monthly. Worked at factory mid 70s @ 4,000 people. 
All of us on the floor got paid weekly … eventually went to event two weeks… had to adjust and takes 

awhile… Since moved up in the food chain and paid every 30 days… retired after 53 years of working…

[bignok]

7 hours ago, BoganInParasite said:

Best wishes for your business. I've had a keen interest in observing new businesses in rural Thailand for more than a decade including the last five years in Nan province. My highly generalised summary is 50% fail inside of 12-18 months, 35% stagger along somehow (lack of maintenance/owners moving into it to live/downsize physical footprint) and less than 20% are obviously successful. In terms of restaurants/coffee shops the main success factor looks like a location with good visibility and road traffic combined with somewhere easy/obvious to park. Duration to failure looks like it is a combination of this and the propensity of family and friends to continue to frequent a business after the initial opening. Of course my observations in Nan province has been during the COVID pandemic that made it much harder for many businesses to survive, let alone thrive. When the wife and I spot a new local business we often give an assessment of success or fail (and duration to close) and much more often than not we are right. At times I admire the resilience and enthusiasm of Thais to have a go but there are many times it is just so clear that it is the wrong business, and/or the wrong locality, and/or wrong product for the market.

Hard game. You need to enjoy it.

[ubonr1971]

I dont understand your comment re Social sec cost. Its 2.5% for 1 employee and employer pay the other 2.5%.    Thats the way we do it. Can charge it at the lowest level of 10k salary a month or maybe lower if you want. Have to check with your SS office. 

[Social Media]

Reported post removed.

[scottiejohn]

40 minutes ago, bignok said:

⁸

Not relevant to the farang tourist market in Thailand much at all given it's so seasonal.

I totally disagree having been in this business for some time!

Do you have any experience in this business area?

Are you saying that all Thai restaurant/hotel/food businesses rely only on seasonal footfall and if not/so that they cannot adjust the model quoted to suite their seasonal experiences.?

 

[Sticky Rice Balls]

when I was cooking in CM i used the same math   cost of item x3  ie 50 x 3 =150

 

so would cover all costs in making of item...staff..labor..production..packaging etc

 

can compare to a street vendor selling pad thai to ordering in cafe vs pricing...

[thailand49]

Reading your experience 

" your overhead is too high vs. Product "

 

[wavodavo]

On 6/10/2023 at 2:54 AM, bignok said:

Sounds like a 6 month business. 

OH come on..leave him alone..he is having a lot of fun !