With high failure rates, there's little question that the restaurant business is tough. But the secret to success may lie in the old adage: Failing to plan is planning to fail.

Patricia Cox, program head of Hotel Restaurant Administration at the Saskatchewan Institute of Applied Science and Technology (SIAST) Kelsey Campus in Saskatoon, says pinning down a precise failure rate is difficult.

"It's hard to tell because some (new restaurants) go so fast," she says. "The last figure I heard was 72 per cent of new restaurants fail within two years."

But that doesn't seem to be a deterrent. Saskatoon, a city of roughly 200,000 people, has 431 restaurants, according to superpages.ca, which makes its restaurant-per-capita ratio one of the highest in the country.

Patricia Cox

Cox credits the availability of space and low capital requirements as two reasons so many entrepreneurs try their hand at the business in her city. "If you're going to try and open a restaurant in downtown Toronto, I mean, the real estate alone is prohibitive ... There's no way people are going to be able to do it. Whereas in this type of a community, there's space available, and the rents are reasonable."

Martin Chicilo, community development manager at the Saskatoon Credit Union, says tools such as the "micro loan program" that the Credit Union developed in co-operation with Western Economic Diversification, mean a restaurant can be started for as little as $7,000.

He admits, "you may require $450,000 for a particular franchise for a restaurant, (but) you may be able to start one for as low as seven (thousand) if you're independent."

The overall number of restaurants in Saskatchewan has remained constant at about 1,830 for the last five years, but it's not the same restaurants making up the count each year, and even Saskatoon has seen its share of failures. In fact, many have opened and closed on the very site where restaurants have opened and failed before.

According to Business Infosource, a website for the Canada-Saskatchewan Business Service Centre, which gives advice to new entrepreneurs: "Choosing a location (for a restaurant) may be your single most important decision."

Population trends, traffic counts, community characteristics and demographics all play a role in the viability of a restaurant's location.

"Yet, there are certain spots that a restaurant goes in, and it (becomes) six different restaurants, and they all fail in that location," says Cox, citing an example at Circle Drive East and Venture Crescent in north Saskatoon. "It was a Cracker Barrel (Restaurant), it was a Wooden Barrel (Bar and Eatery), it was Pasta La Vista, it was a number of things. I mean, it's a great location, there's a lot of traffic. There's lots of parking. So why doesn't it go?" She speculates that, at that particular location, building design may have played a role. Without baffling, noise plagued the restaurants. "All these businesses kept going in there, but they never addressed the sound issue. Now I'm not saying that's the reason that they failed, but it's the reason I didn't go back."

One site on 8th Street has also seen multiple restaurants come and go. The location has housed Ponderosa Steakhouse, Geno's Pizza, East Side Sids, Taster's Whole Earth, and Just Buffets, to name a few.

Boston Pizza seems to have finally broken the curse and is heading into its 10th year of operations.

When first-time franchisee Danny Demchenko was asked if the ghosts of the failed restaurants at that site worried him at all, he scoffed: "Goodness no. It's 8th Street in Saskatoon - sort of 'Restaurant Row'. It's the location to be."

Some Saskatoon residents joke that Demchenko bulldozing 80 per cent of the original building might have helped exorcise the site, but Demchenko credits his restaurant's success to the Boston Pizza brand.

"The Boston Pizza concept is a fabulous concept - a proven winner franchise. Of all the franchise restaurants in Canada, Boston Pizza is the one that has shown the most solid growth on core stores as well as new stores."

Cox agrees that only a strong franchise could compete in that location.

"If you look at what I call a food alley - which 8th Street certainly is, you know - you've got your fast foods, Kelsey's, Montana's ... you've got The Cave, you've got The Granary, you've got Moxies, you've got The Keg. So there's a whole lot of options right in that area - from fast food to even the higher-end foods."

Cox says Boston Pizza delivers what its predecessors didn't. "What is going to make someone choose (that restaurant) over someone else? Well, if I go to Boston Pizza, I can get chicken, I can get pizza, I can get steak, I can get seafood."

But the ones that failed?

"They were just like family-style, and it was exactly the same thing (as many other restaurants). So why would I choose them?" Demchenko says keeping up with changing tastes is also crucial. With (Boston Pizza mandated) renovations every five years, "you keep up with the newest trends, you keep up with the newest look, you keep up with the forever changing and evolving chase of people."

Cox has seen increasing interest in the restaurant business, and she points to reality TV as the reason.

"You see Rocco's The Restaurant series, and then you see Restaurant Makeover, and you see all of these different shows, and people say: 'Gee, you know, I'd really like to do that.' ... 'That'd be so exciting, flying by the seat of your pants.' " But she says her students analyse the shows in class and they catch things such as: "He's changing the menu on the fly ... . There's no standardization, there's no menu cost. He's not looking at a budget. He doesn't have a plan," and they learn what may look exciting actually requires a lot of hard work.

Cox says successful ownership all comes down to one vital element: planning. She says just because people think they can cook at home, doesn't mean they can run a restaurant - they may have no idea what it takes to run a business. She says she frequently asks prospective owners: "What's your business plan? ... What's your demographic? What's your target market? Who are you trying to reach? Why would I choose your restaurant over somebody else's?" She says the typical response - after a period of dead silence - is: 'I should have answers to these questions, right?' Cox warns that successful restaurateurs don't just jump into the ocean without learning to swim.

"Now I look at some of our past grads who are very successful at running businesses and restaurants, and ... they took the course (at SIAST), but then they went to work for other people first before they opened their own restaurants. They basically practised with someone else's money."

Demchenko says he, too, paid his dues before taking over the reins. "I was a cook, a dishwasher, a waiter, a busser, a bartender, a manager, a custodian - all of the above."

Cox says: "There has to be training. There has to be a commitment to having a well-organized, well-established operation.”

Otherwise a person's dream may become just another statistic.

(Nicole Strandlund can be reached at nicole@businessedge.ca)