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What exactly is the point of a Gordon Ramsay Kitchen Nightmare where the restaurateur does not get flayed alive? When Ramsay came to Brighton to visit Momma Cherri's Soul Food Shack, she presented him with a plate full of soul food and waited nervously for the reaction. He loved it, ate every mouthful and left nothing but four chicken bones on the plate. "It's like going home to my mum's," he said.
All very heartwarming, but, as part of a series that sorts out failing restaurants, perhaps not the cue for great TV. But this episode steers Gordon's x-ray vision away from marinades and microwaves, and focuses on a greater problem for the UK restaurant industry: the organisational and financial problems that has had the Shack on the verge of shutting down almost from the day it opened, and that cause three out of five restaurants to shut down in their first three years, according to the Small Business Federation.
"The day that the letter from Gordon Ramsay's film company plopped on to our doorstep, we had just met with some commercial agents to find out what we could expect to get for the business," says Phil, husband of Charita Jones, the eponymous Momma Cherri. "We were right on the point of giving in and giving up."
The Soul Food Shack does not look like a failure: it is a small, independent restaurant with 45 covers, tucked away behind Brighton town hall in a street that doesn't even appear on the tourist maps. The food - soul food has its roots in the cooking of the slaves of the Deep South - is great, the service idiosyncratically personal - the owner's daughter once carried my baby off so that I could concentrate on my lunch - and most importantly, there are always a few people around, even on the rainiest Monday night. As any restaurateur will tell you, no one likes to eat in an empty restaurant.
But Momma Cherri's has been on the verge of financial disaster since it opened, and it has only been sheer bloody-mindedness that has kept the restaurant going up till now. The Jones family have all put their own money in, or not paid themselves - Phil works full time as a librarian and does most of the paperwork unpaid in his spare time - and they have worked round the clock, after a series of mistakes in the first two years that tipped them into a debt which they have not been able to clear since.
"We were very naive about everything," says Charita. "The guy who sold us the lease for the building showed us around, told us some equipment would be included, and then went out and replaced the catering stuff that we assumed we would get with cheap microwaves. And I had to learn the hard way that the cheap Ikea plates I bought weren't made for catering: they chip and break really easily, so after a while I had to replace them again with proper catering equipment. It's much more expensive, but in the long run it doesn't break. Unless you try very hard."
They paid £8,000 VAT, unnecessarily, on the purchase of the lease, and they had also spent too much money on marketing. But the worst mistake came in the second year, when high numbers of customers and general fatigue persuaded them to take on more staff and the wage bill leapt from £65,000 to £97,000, wiping out any profit.
"This was at the same time as the kitchen finally fell apart. The debt that we got into that year ... basically we've been trying to recover from that ever since. We're still only paying off the interest."
It sounds all too familiar to staff at Christie and Co, the leading business agent in the UK specialising in catering, where they handle hundreds of restaurant sales every year. "For too many people, opening a restaurant is a dream, it's a lifelong fantasy, and a lot of people get very badly burned by the restaurant industry," says Steven Bagatti, one of Christie and Co's agents. "Sometimes when I'm coming in to sell a restaurant, it will be a retirement, or move abroad, but most of the time it's very personal and painful, people who have sweated blood to make something work and lost everything."
There seem to be five main pitfalls. Location is always a crucial factor in a restaurant's success - you would want to avoid one of those spooky jinxed sites that go through the Christie offices over and over again. But lack of initial planning is an equal problem - people launch themselves off into their daydream without really understanding the realities and hardships of the catering industry. Spending more money than anticipated on the start-up is a standard mistake. Getting the prices right causes restaurateurs at all levels great agony: the optimum profit margin on your food is 65%, and the actual ingredients should account for no more than 10% of the price. Any higher than that and you will start losing money immediately, but any lower and you will of course lose customers.
But the sword-edge on which many restaurateurs fall is staffing. Didier Philipot's La Toque d'Or in Birmingham won much praise, but during his second year Philipot realised that unless he cut the staff he would have to shut immediately. The resultant 18-hour days in the kitchen led, within a couple of years of opening, to the end of his marriage, and a few years further on he is selling the restaurant.
"If you refuse to compromise with ingredients then it is very very hard to make money; there are no places to cut corners," he says. "Even though we are regularly fully booked, at the moment we are balancing the books, rather than making a profit."
Carol Godsmark, author of the recently published How to Start and Run your Own Restaurant, is crisp in her condemnation of the lackadaisical attitude of the British waiting industry. "In the UK, part of the problem is that you need two members of staff where on the continent you would need one. Half the time they don't seem to want to be there. It is an expensive and perpetual problem."
And this is why the success of any restaurant is so often no more than a mirage. Gordon Ramsay's own Amaryllis in Glasgow had waiting lists for weekend tables, but closed down after just three years and a loss of £480,000. He has said that the problem there was "price-pointing" - the expensive ingredients on which his food depends meant the prices were just too high for most Glaswegians - and the fact that people were only coming to eat at weekends. "I don't know any chef who can run a business on two nights alone."
The restaurateur needs to be performing an extraordinarily concentrated balancing act: one personal disaster, or competitor opening across the road, or hike in a supplier's rates, or failure of equipment, and just like that, everything goes up in the air.
Back at the Shack, despite Gordon's lectures on nannying the staff, the wage bill is creeping back up again since his departure. Their head chef Brian Moyo is about to go off for a major operation, and they are in a quandary: can they afford to get someone in full time while they are still paying his wages as well?
"We've had problems with lateness," says Charita, "with staff helping themselves to drinks or letting their friends have meals for free. We only found out from Gordon that there are some restaurants which charge their staff for the meal: we always let everyone eat as much as they want. But we're toughening up now. You can't be soft and gentle and motherly towards everyone, you can't run a restaurant like it's family instead of a business. Because in the end what we've realised is, that ain't gonna pay the bills."
Momma Cherri's Soul Food Shack The bill
Year 1
Incoming ...
Turnover £196,000
Phil and Charita's stake £38,000
Bank loan £30,000
Outgoing ...
Ten-year lease£45,000 (plus VAT, another £8,000)
Refurbishments £8,000
Staff£67,000
Food and drink £55,000
Advertising £16,000
Loan repayments £2,500
Rent £15,000
Rates £5,000
Utilities £4,080
Private rubbish collection £1,000
Accountant bill £2,500
VAT £22,000
And sundries ...
Total: Less than £13,000 in the black
Year 2
Incoming ...
Turnover £199,000
Bank loan top-up£20,000
Outgoing ...
Staff£97,000
Food and drink £67,000
Kitchen refurbishment £8,000
Advertising £9,000
Loan repayments £4,200
Rent, rates, utilities, rubbish collection, accountant bill and VAT same as before
Total: £15,500 in the red
Year 3
Incoming ...
Turnover £177,000
Outgoing ...
Staff £75,000
Food and drink£48,000
Advertising £5,600
Loan repayments £9,600
Rent, rates, utilities, rubbish collection, accountant bill and VAT same as before
Total: £11,000 in the red despite cutting back on costs everywhere. Bank loan now stands at £56,000
Year 4 (provisional figures)
Incoming ...
Turnover £210,000
Outgoing ...
Staff£80,000
Food and drink£51,000
Advertising£3,000
Loan repayments£12,000
Rent, rates, utilities, rubbish collection, accountant bill and VAT same as before
Total: £14,000 in the black (including period after Ramsey's visit)
· Ramsay's Kitchen Nightmares in on Channel 4 on Tuesdays at 9pm. Momma Cherri's Soul Food Shack features on June 7.
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