What running a pizzeria taught me about entrepreneurship

Why did a restaurant get me thinking more than a tech startup?

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Note: I initially wrote this article for a friend seeking advice on advancing her career. She wanted to switch fields, leave her job, and was considering starting a restaurant. That’s why I created it as a personal entry in my journal to share with her. Later, I chose to make it available to everyone, made some edits to improve clarity, and posted it on my blog.

Lessons learnt

I’ve always thought I learned a lot building all these companies. For some reason, I decided I was going to write something called “lessons learnt” only when I opened my restaurant. But there were lessons learned all the way along.

The restaurant, maybe because it's very tangible, because it's closer to people, and because I think it touches something more fundamental, eating, taught me more. I approached it with a blank state. I'm a software developer, a math-guy, and I ended up trying to make the best pizzas in Medellín. I can’t say I sell the best pizzas¹, but they are as good as I can make them, and people seem to like them. Actually, they are the best in town, but that’s another story.

Also, ultimately, some people, usually slightly younger, asked me for tips because they’re at a breakthrough moment in their life. Or at least they feel like it. I feel extremely flattered, because I think those people are more intelligent than I am. They're smart, they're extroverts, socially very aware and capable, and quite cultivated. That’s nice, though, because they’re younger and asking questions to someone just five years older. Five years is quite close to nothing, but at that age (late 20s) these things matter. Those are the years when freedom, youth, and a nascent self-knowledge cross beautifully, and one knows what they love, and most importantly, what they don’t want in their lives. A few act on it, but again, that’s for another day.

As of now, my restaurant is growing and improving, but there were some lessons I wish I had known earlier. Here are a few.

A restaurant, like any business, should reflect some genuine interest. It should express your soul, your passion, your taste, your way of being, your identity, your authentic self. This is why I never sell a product I wouldn’t consume or buy myself. I strongly believe that’s one of the most important tips. So many people think their restaurants (or any business) as just a money operation: how to extract hard-earned dollars from people without any passion for the product they’re selling. I don’t think this can work. In fact, it never really works.

Even Todd Graves, who sells chicken fingers -the most trivial product one can imagine- is passionate about it. Ray Kroc from McDonald’s was passionate about scaling milkshake production. The In-N-Out founder, Harry Snyder was really into cooking the best burger. I’m really passionate about the best pizza. I love food. I've always loved food. I conquered all my girlfriends, who are much more attractive than I am, also through food, and I have no shame in admitting that.

Most importantly, I’m the first client of my restaurant. I can’t really explain what that matters to me. It just does. I like seeing a clean kitchen while cooking a beautiful Naples-style pizza. I like knowing the Burrata is fresh, the olive oil extra virgin, and basil at best of its flavour. I enjoy seeing people's faces as they bite into that slice and realize they made a good choice entering this place, our place, my place, their place for a short moment. The money is consequential; passion comes first, always. Missionaries always beat mercenaries in the long term and also have more fun and find deeper meaning in the process.

Literally, if I wasn't one of the founder of this restaurant, it would still be the first place I’d think of when looking for somewhere to eat in town or for a date, to bring some friends, to spend time, to listen to music, to talk to the bartender, to flirt with a waitress, and to check on the food. That would be the first place. That’s why we built exactly this place.

I believe in autotelic activities, done for their own sake. You should build your business with that in mind. That means doing things because they’re you. You want the decoration and design that you like, the food you like, the drinks you like. Why? Because when you sell it, you’ll have passion, and passion is contagious. People will buy it because they see you happy and want that kind of happiness.

This is exactly what Phil Knight explained in Shoe Dog: when he sold shoes, he wasn’t really selling, he was transmitting his passion for running in those Japanese shoes. Before that, he couldn't sell jack.

You’re not running a restaurant, you’re running an inventory

On more concrete stuff: a restaurant is an inventory management company and also a sanitary operations company. As soon as you have good inventory and an extremely clean process, things can go well. It does not mean it will go well. It means it’s necessary but non-sufficient.

What makes inventory hard? It's boring and tedious. People don’t know how to do it. It takes time. Also, restaurants usually attract people from other industries who think that cooking something at home is enough to make a good restaurant. Unfortunately, it doesn’t work like that.

Inventory management means knowing exactly what kind of table you're serving and how much money you make from it. You should know the precise margins on every product, whether it's 15%, 20%, 30%, or 70%. You need to know where you’re making money and where you’re losing it. You should also know which items must be sold together -like beers and tapas- if you want to preserve margin across both. Not every item will have the same margin, and that’s fine. Some products have zero margin because they're meant to be consumed with others that carry the profit, like a hamburger paired with liqueur, or a beer with snacks. The key is to keep your inventory clean and your margins clear. Dedicate at least one morning a week to reviewing your inventory, updating the system, and knowing exactly where you stand.

You should know exactly what type of product comes in, what providers to choose for each item, have a list of providers and prices, know the amounts and quantities, and have standard recipes entered into an inventory management system so you can track it.

Even if you’re not in the restaurant yourself, you should do inventory every week. You should know discrepancies -what ran out too fast, what you had to reorder, and what you lost- and how you can negotiate prices if you’re buying more. Always try to find the best product for each item. Inventory is what makes the business work or die. Simply put, when I see a pizza going out, I know exactly how much I make and exactly how much it costs: the waitress bringing it, the electricity and gas, the cook’s labor, the flour, the cheese.

Another thing: strip everything to the bone. Your inventory should be simple, with few products. That will later surprisingly relate to brand strategy. Your inventory should be simple, and so should be your brand. My pizza is flour, water, salt, some cheese, tomato, olive oil, and a few optional condiments like homemade Balsamic reduction or artesanal green Pesto. Fundamentally, everything revolves around that. With those ingredients, I can do everything. Add chickpeas? I get pizza bread with hummus. Add vegetables? Antipasti of Pizza bread with grilled vegetables. Meat? It’s already on a pizza, I can make a meat sandwich with pizza bread. That’s how it works.

Build your inventory clearly with just a few products. Then set good margins and build concentric circles around those core ingredients. Most restaurants fail because they think they’re managing a restaurant, but they’re actually managing five. They have five different identities on the menu with products that don’t work together. Every successful restaurant has a clear identity, and that means tight inventory management.