One of the things that a lot of industry folk complain about is the fact that when you work “in the know” the magic of a restaurant is ruined. You find yourself scrutinizing all the little details of the decor, menu and service, and don’t just enjoy the damn experience. I know I do. To make it work, I also analyze the financial feasibility of any restaurant, counting the seats, occupancy and turnover time, determining where or not I think the restaurant is actually making money.

Amidst all the mayhem of “The Menu” (there won’t be any spoilers here, because I’m not a monster), I found myself wondering that exact question. How on earth could a restaurant with five tables on a private island actually be financially feasible?

If you haven’t heard of this movie, and live under a rock like I do, I encourage you to watch it without viewing the trailer, for maximum brain melting effect.

ACQUISITION AND BUILDOUT

Hawthorn is based on a very private island in Georgia and the brutalist architecture of the restaurant and surrounding outbuilding likely cost a staggering amount of money. Throughout the movie, an angel investor Doug Verrick is mentioned frequently. It’s likely that Doug spent way too much money buying and building this restaurant, and his expectations for the revenue it would generate were way too high. A story we’ve heard time and time again. 

REVENUE

12 customers total at $1,250 per head which is $15,000 per night. That's a pretty decent take for a normal restaurant, however, a normal restaurant doesn’t have the type of expenses associated with it. Most restaurants of this caliber are only open 4-5 nights per week, so the restaurant is probably bringing in around $3.1m in revenue a year. This is before other income that is associated with the restaurant, such as book deals, branding associations and sponsorships which can bring in another $500k to $1m. Still, for the overall breath of this restaurant, that seems incredibly small.

EXPENSES

I found myself counting the staff at one point; it was about 25 before I gave up. The valet service is a damn boat, they have a farm, fisherman, and a smokehouse. There is a laundry list of expenses here, and I can’t even imagine what the landscaping must cost to maintain. Assuming the staff are woefully underpaid for the talent they have, I’m guessing that their payroll is around $1.5 before we get into landscaping and farming. That’s nearly 40% labor cost. Mentioning farming, it is worth noting that their food cost is probably excellent. Obviously portion sizes are quite small (this is the type of place where you order a pizza after, and there's nothing wrong with that), and they are sourcing all of the ingredients from the island. This isn’t a gimmick like many restaurants that say they are farm to table, while only ordering the cheese from their burger from a farm on the other side of the state. This place means it, and I have no doubt about it. When a restaurant of this caliber does something like that, it's bad news. With that said, the food cost is essentially the cost of running their farms.

As a “perk,” their staff lives on the island in culty little barracks that the employees likely have to pay for, making their pay even more woefully underpaid. 

OVERHEAD

The island and buildings are owned, so it's likely there isn’t any rent due, and all of the utilities on the island are self generated. This only leaves insurance and professional fees, which are likely significant. This is a sprawling organization with boats, farm equipment, restaurants, so on and so forth. The insurance alone for this business has so be absolutely staggering, and the accounting and human resources costs are probably also mind-boggling.

SO, DOES IT WORK?

HELL F&#$ING NO. This place is probably running at a loss every single second of its existence. It's probably a money pit like you’ve never seen before. Time and time again we see these culinary temples open, and every time we see them shutter, with financial performances that would make Warren Buffet’s veins run cold. If you want to own a successful restaurant, open a Korean taco truck, not a Vatican of Gastronomy.