Recipes for success

It's no coincidence that many of the most successful and well-established chef/proprietors own their own properties. It helps, of course, that they also happen to be inspired chefs who have helped educate the Irish palate, thus creating a public hungry for more inventive food. But the reality is that profit margins are so low in the restaurant business - averaging 5 to 8 per cent - that a chef needs more than his reputation to bank on. Property investments provide a glamorous venue, as well as an in-built retirement fund.

"A number of my colleagues in the business, who are in their 50s, are cashing in their chips," says Terry McCoy, chef-proprietor of The Red Bank restaurant and guesthouse in Skerries and president of the Restaurants Association of Ireland.

"These would be people who own their properties with restaurants in them. You don't need an expensive property to run a restaurant. I could sell my first-class property on a corner on the main street in Skerries and operate in a converted garage and do just as well. The most successful restaurants are dependent not on the location, but on the chef."

A different view is taken by Derry Clarke, chef/owner of L'Ecrivain, in Baggot Street, Dublin, and also the commissioner general of Eurotoque (the European standards authority for gourmet food). Mr Clarke sees his customers as demanding ever more elegance and sophistication. He is spending £1 million on demolishing and rebuilding his restaurant. Five years ago, such a lavish investment in a restaurant would have been unheard of. But in today's atmosphere of a dining culture and higher expectations of style and design - when restaurants such as the Cruzzo in Malahide are costing £3 million to set up - spending a million seems a judicious means of confronting the competition.

Mr Clarke, with his business partner and wife, Sallyanne, wanted to develop his restaurant business. They owned the freehold of L'Ecrivain, but needed more space. So, the couple took on a business partner - Bill Bottriel, a British computer entrepreneur. His financial clout enabled them to buy the freehold of the building next door to L'Ecrivain for £400,000 and to develop both properties as one. Another £600,000 was spent on rebuilding, new kitchens and the interiors. The end result will be technically streamlined - enabling existing staff to serve 100 people where before they served 60. Staff costs are an essential consideration.

Labour costs consume 30-35 per cent of Mr Clarke's turnover, one of the factors that keep his profit margin at between 5 per cent and 7 per cent. "If I was 20 years younger, I would be working for someone else," he confides. "It's easier to start off in business if you don't have to buy a property. You are better off working for a company as a chef, where you can earn £50,000 to £60,000 per year."

Younger chefs should go for a franchise in a hotel or a pub that wants to serve good food, he advises. But Terry McCoy warns that such an arrangement may be "a fur-lined mouse-trap". In his bleak scenario, a developer has room for several restaurants in a major new office/shopping complex. He looks for young people willing to rent restaurant premises. At the five-year rent review, the developer capitalises on the young chefs' successes by raising the rent. The weary chefs realise that they are working on treadmills.

Mr McCoy believes that there is a lot of false bravado in the business, which is not as successful as it looks. "The restaurant business is an easy industry to get into. In a new restaurant, you may see all the signs of success: high turnover, tables full, staff under pressure, good reviews, a high profile - it seems to be profitable. But after six to 12 months, the accountant gets to grips with the situation and sees that the owner owes VAT, PAYE and PRSI, and that there's a bank overdraft, and that the owner has gone on a nice holiday because he appears to have done so well. Next, the owner realises that he has to cut back, so he starts short-changing the customer, and the public go to the new fella."

Part of the restaurant renaissance has been the fact that Ireland has so many excellent chefs, but they in turn were nurtured by a favourable economy. How long can the new generation of ambitious young chefs last if, like Terry McCoy says, they have to contend with an ultimately hostile business environment? We may yet see a downturn in the quality of food, with plenty of restaurants, but fewer good places to eat.