Why Andrew Yuan closed his restaurant Knock Knock
It is written by Julian Nazar at New York Business Journal
After opening Asian fusion restaurant Knock Knock in Long Island City in April of last year, Andrew Yuan first began having doubts about his business following its first month of operation.
“The new opening vibe cooled down in the second month, and we didn’t see a lot of repeat customers,” Yuan told the New York Business Journal. “By the end of the second month, restaurant traffic was quite slow. We had to try something else because we could already see the ending of the restaurant.”
Despite changing the concept from Asian fusion to dim sum and seeing sales numbers improve, it still wasn’t enough for Knock Knock to break even on a monthly basis.
Ultimately, he made the tough decision to close the restaurant in mid-January.
The National Restaurant Association estimates that around 60% of restaurants fail within their first year of operation. Knock Knock is part of this statistic.
This was Yuan's second restaurant in New York City. His first was Ikebana Zen, which opened in March of 2020. A few years later, the concept changed to a coffee shop that is run by one of his friends.
After spending the last couple of months reflecting, Yuan shared with the New York Business Journal what contributed to Knock Knock's demise as well as the lessons he learned from this experience.
Knock Knock restaurateur shares the mistakes he made
Early on, Knock Knock didn’t appeal to the demographic in Long Island City, Yuan found.
“Long Island City is a young Chinese concentrated neighborhood,” he said. “They want authentic Chinese food that makes them feel at home. We didn’t really have an identity for the restaurant with Asian fusion.”
Yuan said Knock Knock would have been a dim sum restaurant from the start had he been able to find a dim sum chef. He pivoted to doing an Asian fusion restaurant when a friend connected him with a chef who specialized in Asian fusion-style food.
“That’s the mistake we made,” Yuan said. “We didn’t really have any second thought on if the Asian fusion concept would work in Long Island City.”
Underwhelming foot traffic also didn’t help. Yuan said there were many slow days for Knock Knock.
And to make up for the loss of revenue that accompanied those days, he kept as few staff as possible to lower overhead costs. At one point, Knock Knock had only one bartender, one waiter, one runner, one manager, one dishwasher and three cooks.
“If you don’t have enough staff scheduled, then customers won’t have a good experience because you don’t have enough people to serve them,” Yuan said. “If I want people to have a good experience, I need to schedule X amount of staff on the floor every day regardless of the revenue.”
When it came to funding the restaurant, Andrew was forced to turn to his friends and family for the money.
Initially, he was planning to open a speakeasy in the Knock Knock space with a friend of his wife. They had agreed to do an equity split to fund the business.
However, after Yuan signed the lease, he didn’t hear anything from his partner for four months. Yuan later found that this individual had lied about having the money to fund this venture.
“The decision I made was to take over 100% project and switch the concept from a speakeasy to an Asian restaurant,” Yuan said.
As a result of all of these factors, Yuan lost confidence in his ability to turn his business around and ended up pulling the plug on Knock Knock in mid-January.
Lessons learned in Long Island City
Now, having spent the past couple of months reflecting on his experience, Yuan acknowledges that if he could go back in time, he would do a couple of things differently.
He wishes that he would have hired a reputable architecture firm to do the interior design of his restaurant. Instead, he hired a young architect fresh out of college to do the interior design, and fired him after three months on the job because he lacked experience.
Yuan ended up having to take over the interior design job and had to teach himself how to design a coffee bar, cocktail bar and the kitchen. As a result, the opening was delayed, and the cost to finish the build-out of his restaurant became more expensive than it needed to be.
If he had hired a good architecture firm in the first place, Yuan said he would have had a much better idea of how much he would spend on renovations in the space, and it would have been easier to stay on budget.
“A lot of mom-and-pop restaurant operators want to save money on the architect fee,” Yuan said. “My advice is do not. That will cost you more during that construction period.”
In addition, Yuan believes his restaurant would have been more set up for success if he had found a good chef partner.
“You need a good manager to run the dining floor and you also need a great chef to run the kitchen,” Yuan said. “If you only have a good manager and don’t have someone good running the kitchen, it's like riding a bicycle with one wheel.”
Lastly, Yuan admits that he had an overly optimistic outlook on the neighborhood and the area surrounding Knock Knock.
Long Island City is still an emerging New York City neighborhood that is growing. Since 2016, the number of residential units in the neighborhood has tripled, according to a recent retail report from Marcus & Millichap.
“I saw a lot of construction sites and figured all of these buildings would finish soon and more people would move in,” Yuan said. “That process took way longer than I thought.”
To get a better idea of the lunch and dinner foot traffic in the neighborhood, he said that he would have picked a weekday and a weekend day to spend the entire day counting the number of people who walked by Knock Knock’s space.
“This is how you will know what the good days are and what time of day has the most traffic,” Yuan said. “You also get to see the demographic that walks around there.”
'We did something right'
Although Knock Knock’s time in Long Island City may have been brief, it did resonate with members of the community.
“I still receive messages from people checking in and sharing that they miss Knock Knock,” Yuan said. “I appreciate that. It means we did something right for the community.”
Looking ahead, Yuan’s first priority is to find someone to take over the Knock Knock space so he can get out of his 10-year lease.
Once that is taken care of, he is planning to work on a real estate private equity project with alumni from the Columbia Business School.