Posted on: AUGUST 19, 2020
For decades, the restaurant industry has been a business of sliver-thin margins and intense competition. You need a dining room, a kitchen, a robust staff, an ambitious cocktail program, premium ingredients. After all that overhead, many restaurants barely make enough profit to keep their doors open. Before the pandemic, we started to see more and more micro-restaurants: intimate six-to-12-seat dining concepts in bare-bones locations often spearheaded by well-known chefs. In Toronto, there was Ten, a 10-seat space where diners watched chef Julian Bentivegna and one assistant chef prepare elaborate meals counterside, and Matt Cowan ran the Heather, a snug six-seater in Hamilton serving up a seasonally inspired tasting menu. These chefs realized that you didn’t need a fancy room or formal service to deliver an incredible dining experience. In the age of Covid, as many restaurants close down for good, this model presents an alternate future for exciting and experimental dining in Toronto.
Most large restaurants make big money on Friday and Saturday nights, but much of that revenue goes toward paying all the expenses to keep the lights on the rest of the week: rents, utilities, insurance, food costs and staff. And, as many larger operators have discovered the hard way, when a crisis hits, the burden of those expenses is entirely on them. Even smaller shocks to a restaurant—high food prices, electrical damage, rainy patio seasons—can quickly wreak havoc on a restaurant’s profits.
The micro-restaurant offers all the benefits of running a dining establishment with few of the risks and responsibilities. These types of operations are incredibly appealing for chefs, both financially and creatively—operational costs are low, execution is easy and creative control is all theirs. The owner-operator only needs a couple of staff, perhaps one sous chef and one server; in some of the smaller operations, chefs execute everything themselves, from cocktail to dessert. There are usually two or three seatings per night, and since each one only serves 12 people at most, the space requirements are minimal, as are the rent, utilities and insurance.
The economics make sense, too. Because only a dozen or so people are dining at once, owners can charge much higher prices for the exclusive experience, creating healthy profit margins for a restaurant open five nights a week. (The dining cost at these establishments can be upwards of $200 per person.) When the holidays roll around, the owner can simply close for a week. And if a crisis hits and the restaurant is forced to temporarily shut down, these operations will barely feel the brunt: the carrying costs for a micro-restaurant during a shutdown could easily be less than $3,000 per month, compared to upwards of $20,000 per month for an 80-seat restaurant.
And while guests will likely be paying more money for their evening, they’ll also get a more special, customizable dining experience. Every meal will be bespoke, crafted with attention to diners’ preferences and dietary restrictions. They’ll be able to chat with chefs, watch them work, try the chef’s newest recipes. From what we’ve seen in the industry, customers will pay a premium for this kind of special experience. It’s a win-win.
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