Baret Lepejian – Never Go Into the Restaurant Business Alone

BIO: Baret Lepejian started his business career at 14 years old, working in his mom and dad’s family business that they started in 1971. Together with his brother, they went on to expand the business to 9 locations and 150 employees.STORY: When Baret and his brother agreed to sell their photo lab business, Baret took his share of the money and invested it all in a second restaurant. Baret thought that he had what it took to run a chain of restaurants on his own, but it became too overwhelming and he had to close shop after a long struggle.LEARNING: Never go into the restaurant business alone; make sure you have the right people beside you. Have good contracts in place and do proper calculations before opening a restaurant. “Don’t let one thing consume you.”Baret Lepejian Guest profileBaret Lepejian started his business career at 14 years old, working in his mom and dad’s family business that they started in 1971, called Isgo (Is go) Lepejian Photo Lab. Baret was a black and white darkroom printer for photographers from many fields, including rock & roll, celebrity, bodybuilding, architecture, fashion, fine art, and much more. He and his brother Vic expanded the business to 9 locations and 150 employees at its peak. Then, in 2004 a western saloon that Baret frequented with family, clients, and employees became available just across the street from the Burbank headquarters of Isgo, and that’s how he got into the restaurant industry. From there, he ended up owning four restaurants from 2004 until now. Today he will share his story about opening one of those four restaurants, Tinhorn Flats–Hollywood, from scratch in 2013.Worst investment everIn 2012 Baret and his brother sold the photo lab business, and sales had started decreasing as people moved to digital cameras and smartphones.Investing everything in a second restaurantAt the time, Baret had a restaurant that was doing pretty well. So he decided to take the money from the sale and invest in another restaurant.Baret came across this one listing in Hollywood that was wonderful. It was right across the street from the Grom Gelateria and Chinese Theater and all these tourist attractions. It was the perfect space for a restaurant.The listing was a building shell, and Baret had to put a ton of money into it to turn it into a restaurant. The construction process was an absolute nightmare for him, but he hoped it would be a good business.Opening the doorsA year later, Baret opened the doors of his second restaurant with his own menu, super quality, and reasonable prices. The initial reception was excellent. People really loved it.At this point, Baret had four restaurants. He decided to hire an executive chef because it was overwhelming for him to deal with all the different cooks. So this guy was going to overlook all four kitchens, make a menu adjustment, and whatever else needed to happen, and report back to Baret.Dupped by his chefAbout three or four months in, all of a sudden, all of Baret’s credit cards started declining. He had 25 American Express credit cards for all the businesses, including the photo lab and employee cards. In one day, everything stopped.The executive chef had a catering business, and he put like $120,000 on the cards in one month. This put a massive blow on his business because he had to pay that debt.The scorned competitorThe second blow came from a competitor across the street in Hollywood. Baret’s restaurant started taking away some of their big parties, and they were not happy. The competitor began a smear campaign against Baret’s restaurant, and this caused his sales to dip.Things started getting bad as the restaurant wasn’t making enough sales to run itself. The debt started piling up.Letting go of his beloved second restaurantAfter five years of struggling to keep the restaurant running, Baret’s girlfriend at the time made him see there was no more sense in trying to keep the restaurant open. He had been putting in a lot of his money into the business, and he was bleeding financially. Eventually, he got over himself and agreed to quit the business and sold the restaurant.Lessons learnedDon’t go into the restaurant business aloneYou may have the drive and charisma to run a restaurant, but you can’t do it all by yourself. There are other key people that you need for your restaurant to succeed. One is an accountant, the second is a lawyer, and the third is a chef. The chef need not be a high-end one but someone who understands a commercial kitchen. So find a way to partner with these three essential people.Have contracts in placeWhen you partner with the key people, make sure that you have contracts in place describing each person’s position.Andrew’s takeawaysDo your calculations well before opening a restaurantThe restaurant business may seem lucrative, but it is just a trap. You may be able to make a restaurant successful, but the revenue possibility is limited.Actionable adviceIf you want to get into the restaurant business, don’t put everything you have into it. Treat it like any other investment. Usually, when someone buys a stock or any investment, they don’t take everything they have and put it in that one stock. So diversify here too. Secondly, make sure you have key people in place before you open your restaurant.No. 1 goal for the next 12 monthsBaret’s number one goal for the next 12 months is just to wait it out right now and not do anything crazy until the pandemic subsides. [spp-transcript] Connect with Baret LepejianLinkedInAndrew’s booksHow to Start Building Your Wealth Investing in the Stock MarketMy Worst Investment Ever9 Valuation Mistakes and How to Avoid ThemTransform Your Business with Dr.Deming’s 14 PointsAndrew’s online programsValuation Master ClassHow to Start Building Your Wealth Investing in the Stock MarketFinance Made Ridiculously SimpleBecome a Great Presenter and Increase Your InfluenceTransform Your Business with Dr. Deming’s 14 PointsConnect with Andrew Stotz:astotz.comLinkedInFacebookInstagramTwitterYouTubeMy Worst Investment Ever Podcast