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THE SOUTHERN CALIFORNIA JOB MARKET: LOOKING FOR LIGHT : Hey, Everybody Has to Eat! : Many Newly Unemployed Try Their Hand as Restaurateurs

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TIMES STAFF WRITER

Ron Lancaster jumped out of the fire and into the frying pan last year.

A 24-year employee of Hughes Aircraft, Lancaster saw his job disappear in November. So Lancaster did what many of the freshly jobless have done: He opened his own restaurant, the Storyteller Bookstore & Cafe in Canoga Park.

The road from the end of the unemployment line to the front of the hash line is well traveled these days as more and more of the newly unemployed are creating their own jobs as entrepreneurs. Unable to find comparable jobs to the ones they lost, many of these refugees from aerospace, banking and other industries are opting for the field of restaurant ownership.

These are people who yearn for the chance to be their own boss and get a good lunch in the process. But running a restaurant is a venture fraught with peril.

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“As times get harder and jobs become scarcer, people who have been able to set aside some money look at entrepreneurial ventures, and one of those ventures is restaurants,” said Gerald Breitbart, a consultant to the California Restaurant Assn.

“There are a lot of people coming into the industry. There also are an awful lot of failures out there, which may result from inexperience, bad location and not having enough money to go out in the first place,” Breitbart said.

Statistics are difficult to come by because of a lag in the release of data, but preliminary numbers suggest a jump in restaurant openings in California during the recession, according to the CRA. And the International Franchise Assn. reports that many of the trade group’s large restaurant chain members are getting more franchise ownership applications from workers displaced by shrinking industries.

“We’re seeing more and more former aerospace employees getting into the restaurant business,” said restaurant broker Dick Carter, a senior sales associate for Los Angeles-based Beitler Commercial Realty Services.

“Some think all you have to do is make a good meatloaf to be successful. But it’s a difficult business. When they approach me, I say to myself, ‘Here comes another candidate for bankruptcy.’ ”

Of course, some make a successful transition from other fields into the restaurant business.

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Among them are Larry Flax and Rick Rosenfield, co-owners of the California Pizza Kitchen chain of restaurants. Flax and Rosenfield are lawyers who traded in their law practice to open their first restaurant in 1985.

“People entering the restaurant business from other fields don’t realize the importance of adequate capital and the value of a good, high-traffic location,” said Rosenfield.

“People assume that you can operate a restaurant if you’re a good cook,” said Flax. “More and more people are getting into the business, but about 95% of the new restaurants nationwide fail within the first two years. Good food is not enough to ensure success.”

For anyone thinking of opening a restaurant, experts suggest:

* Develop a detailed business plan. You’ll need it before you can apply for a loan or select a site.

* Do some market analysis to determine if a demand exists for your type of restaurant and if the community can afford it.

* Make sure you have enough money to outlast the slow times.

* Don’t underestimate the importance of location. Just because you make the best tofu burgers in the world, don’t assume that people will brave a lousy site and poor parking to visit you. If the building you choose previously housed a restaurant, find out why it failed.

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* Devote plenty of time to hiring and training your staff.

* Have fun, because the other rewards can be slow in coming.

The Los Angeles-based California Restaurant Assn. publishes a special booklet titled “So You Want to Open a Restaurant,” which takes a detailed look at what a potential restaurateur faces and provides forms to help you figure out how much money you will need for the first six months, among other things.

Lancaster, who was a financial administrator at Hughes, had heard the warnings. Friends and relatives tried to dissuade him from putting about $100,000 from a personal retirement fund and loans into the restaurant last April.

However, Lancaster, who prepared budgets for satellite manufacturing at Hughes, said he decided not to look for comparable employment when he lost that job.

“Lots of other financial administrators are out of work and there are no available jobs in that field,” Lancaster said. “I rolled the dice and opened an enterprise that’s a combination bookstore-cafe, something I had dreamed of doing. I decided that I could be successful if I offered diners entertainment.”

Besides selling books and food, Lancaster’s restaurant presents storytellers each Wednesday evening. Business is improving, but Lancaster is still losing money.

The red ink totaled $10,000 in June, $6,700 in July and $2,000 in August.

Some aspiring restaurateurs consider the difficult odds and try to improve their chances for success by acquiring a franchise eatery, said Andy Trintia, a spokesman for the Washington-based International Franchise Assn.

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Franchise start-up expenses are often lower than the cost of establishing a solo establishment, Trintia said. Fees and start-up costs for franchises can range from as low as $10,000 to as high as $700,000, depending on the type of chain selected.

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