Would-be restaurateurs are fighting just to open their doors 

It’s been three years since Andy Harris first embarked on what has become the seemingly impossible: opening a restaurant in San Francisco, a Mecca for foodies.

He had hoped to have Rancho Parnassus, a hip downtown café, open in November 2008, but years later and with hundreds of thousands of dollars spent, Harris has yet to open his new business.

What started out as an enthusiastic dream has evolved into a money-sucking venture, frustrated by The City’s system to get new restaurants open for business.

Like Harris, many restaurateurs find themselves shelling out money for rent and other expenses while they wait months and sometimes years to get permits approved and city departments to sign off on pending projects. 

“It’s very difficult to do,” Harris said. “The slightest hiccup and now everything stopped and that’s the problem. Then you start having cash-flow issues.”

Like most businesses, restaurants are already working against a bad economy with little access to capital and declining sales. But even in good economic times, it can take a basic restaurant as long as 18 months to open for business, said Regina Dick-Endrizzi, director of The City’s Office of Small Business.

Restaurant owners then get tangled up in cumbersome city zoning rules that can stall a project and add an extra $15,000 to the startup costs. Delays become even longer when a restaurant plans to takeover a building that’s deemed historic.

Meanwhile, restaurateurs are paying for rent and startup costs while making no income, said Kevin Westlye, executive director with the Golden Gate Restaurant Association, which represents more than 4,000 restaurants in San Francisco.

“The difference is that some cities lay down the red carpet with incentives to build and open your restaurant,” Westlye  said. “I think The City is recognizing the problem and is trying to do something about it.”

Jeff Jordan, owner of Giordano Bros. All-In-One Sandwiches, a popular North Beach restaurant, walked away from his plans to open a second location in Cow Hollow.

After seven months of jumping through “so many hoops” with city departments, Jordan finally got the Planning Commission to approve his project. But then neighbors threatened to appeal the planned sandwich shop, which would have delayed the project even longer, Jordan said.

After spending $30,000 on designs and permits, Jordan withdrew his application last week.

“We are spitting angry, beyond disappointed and frustrated,” said Jordan, who opened his first sandwich shop in 2004.

It took Chi Vo about 10 months to open up his restaurant, Miss Saigon, located in the heart of downtown. Once the construction was complete, inspections from city departments kept getting rescheduled, Vo said. Meanwhile, he was paying $3,000 a month in rent while making no income and had employees lined up waiting to work, he said.

“It’s very frustrating,” Vo said. “One small mistake and it’s delayed another week and then another week.”

The need to undo delays and scale back skyrocketing fees is weighing on San Francisco’s policymakers. The City relies heavily on restaurants to generate both jobs and sales tax money. The food industry accounts for 33 percent of all sales tax revenues generated Citywide. Each restaurant generates between 10 and 50 jobs, according to the Office of Small Business.


Mayor’s task force hopes to ease burdens

Last year, government regulation and increasing costs were among the top three concerns of restaurant owners in San Francisco.

This is one of the reasons Mayor Gavin Newsom appointed a restaurant task force in January — to cut the red tape and reduce unnecessary fees that are burdening restaurants.

“The restaurant industry has been hit hard because of minimum wage and the no-tip credit, because of the paid sick leave ordinance and because of the health care,” Newsom said. “Disproportionately, restaurants have paid a heavy price for the advancements of our social principles and values that define The City, and that’s why we felt it was appropriate to see if there were some things we could do to relieve some of that.”

This task force, which includes the Golden Gate Restaurant Association and Office of Small Business as well as other city departments, is putting together recommendations expected to be released in the next few months.

The recommendations are meant to make it easier and cheaper for restaurants to open in San Francisco, said Regina Dick-Endrizzi, director of the Office of Small Business.

Of all businesses, restaurants are required to interface with the most city departments; they have the highest amount of permitting fees, from health and food inspections to signs permits, and even fees for table candle lighting, said Dick-Endrizzi.

“What we heard from many restaurants is that the delays are costing more than the fees,” Dick-Endrizzi said. “There needs to be some improvement made in terms of reducing the amount of time for a restaurant to get open.”

The food service industry is the second-highest revenue generator in San Francisco, accounting for 33 percent of the sales tax collected citywide, according to the Office of Small Business.

The mayor plans to scrutinize business fees and eliminate unnecessary costs where he can, even in the face of a $483 million budget deficit, said Tony Winnicker, spokesman for Newsom.

As one example, Winnicker questioned whether restaurants should have to pay a fee to the fire department if they want to have candles on the tables.

“There are a lot of fees, when we take a closer look, that are questionable,” Winnicker said. “We have to look at how we can streamline and eliminate fees that aren’t critical.”

Meanwhile, the number of businesses that have opened continues to decline, according to the tax collector.

— Erin Sherbert

The restaurant game

The City is known for its restaurants, but opening one can take you through a yearslong, costly and confusing maze of bureaucracy.

Aside from acquiring or starting the business, you must hire employees; rent or buy a location and equipment; and plan for marketing, supplies and financing. And here are just a few of the city-required steps you’ll take — remember to do your research, apply for the permit, do what needs to be done, get an inspection and approval and be ready to pay fees all along the way.

Zoning verification: Can you have a restaurant here?

Apply for a building permit: You may need five sets of plans

Get your plans approved: Don’t forget disabled access upgrades

Conditional use permit: You may need one of these

Schedule and get approvals: Electrical, plumbing, fire, health

Get your alcohol license

Power permits from PG&E

Live entertainment permit

Extended hours permit

Public assembly permit

Candle permit

Outdoor table permit

Valet parking approval

A colored curb request from Parking and Traffic: Can take up to four months

Public Health operating permit

Treasurer & Tax Collector

All pictures AP and Getty Images file photos

Restaurant fees, permits

A sampling of required fees and permits for restaurants:

  • Permit to operate food handling facilities
  • Café table and chairs
  • Weighs and measures
  • Open flames
  • Candles on tables
  • High piled storage
  • Compressed gas storage
  • Oven/baking
  • Vending machine
  • Entertainment permit
  • Extended hours permit
  • Plumbing and electrical permits
  • Sign permit
  • Valet parking
  • Menu fees
  • Portable containers
  • Sidewalk displays
  • Phone booth
  • Commercial composting
  • Water

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