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dbarton02

posts: 2

Jul 14, 2008 3:39 PM ET Quote Report Abuse

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I am new to Startup Nation and thought I would put a few feelers out there for some ideas that I have had for quite some time.

In a general sense, I love being in the kitchen - coming up with new recipes, ideas, concepts, etc.

A close friend of mine and myself, for some time, have always talked about either opening an independent restaurant, or a franchised restaurant in the SW Burbs of Chicago somewhere.

Obviously, the big thing that has prevented us from moving forward (except for menu concepts) is the area involving the green! We`re both in our mid to late 20`s, have steady full-time jobs, and were thinking of the possibilities of outside sources funding the operation, with the two of us, plus a close friend who has years of restaurant management experience running the operation.

Has there ever been a scenario close to this... where the `owners` work the business, taking a small percent while the investor takes the majority of returns - that being the form of repayment - `till the initial debt is paid off?

I welcome your thoughts - and then if I find it is possible, I will ask anyone interested to contact me to review the in-depth plans.

Thank you!

robertj

posts: 1458

Jul 15, 2008 1:28 AM ET Quote Report Abuse

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To your question :

There is some work to do before you approach any capital sources, but adding someone to the team with significant restaurant experience is a great start.

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Business Growth Masters, LLC -
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FastVentures

posts: 306

Jul 15, 2008 11:23 AM ET Quote Report Abuse

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Given that restaurants are still considered to be high-risk investments, what makes you think that your restaurant will last long enough to pay off any debts?

Do you have a background in culinary arts? Did you train or work as a chef? Do you have any management experience in the hospitality industry?

I’m obviously putting out these questions because I want to highlight that running a restaurant will involve much more than your passion for food and the ability to come up with a creative menu.

If you get past that, deals in the restaurant/hospitality industry are typically structured as partnerships where the chef brings all of the above to the table and a financial backer provides the start-up capital.

Check out the Rocco di Spirito saga. Maybe it’s available for download somewhere. Although Rocco’s relationship with financial backer Jeffrey Chodrow was the basis for a TV series, this happens probably much more often then we think.

I hope this helps.

Mark

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Jackson Steiner
http://www.JacksonSteiner.com

Advanced Document Design for entrepreneurs, intermediaries, and the financial services industry.
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dbarton02

posts: 2

Jul 15, 2008 12:08 PM ET Quote Report Abuse

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Thanks Mark - it does help.

To answer your question, yes, I do have background in culinary arts, as well as a close friend that would also join on this venture if it were to take flight.

I understand that running a restaurant is a lot deeper than a passion and a menu. I was just stating that as of right now, thats where the plan stands - as I don`t want to dig and dig and dig only to find out that my proposal wouldn`t be feasible.

One thing I know, and have known, is that restaurants are born and die faster than most businesses - and that is one of the reasons I had a franchise proposal within there as well.

I`m not saying they`re bulletproof, but I know that they have a proven start-up and support model for the owners, making their survival rates significantly greater (though not guaranteed).

I`ll do a bit of reading on your recommendation.

The restaurant / bar idea has been a bug in my mind for years, and I just got around to thinking, "Why am I just speculating about this? Why not actually find out what can be done here?"

And as with anything - if you have a great concept and/or idea, and it looks sound enough to work in the market, someone will buy it!

robertj

posts: 1458

Jul 15, 2008 12:26 PM ET Quote Report Abuse

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dbarton02,

I found an article about Rocco and Jeffrey at http://nymag.com/nymetro/food/features/n_10216/

If your question is - can a well planned restaurant with a quality, proven team acquire funding- the answer is "it can".

Since most franchiser`s supply some financial support - they may offer a more direct path to the capital. Remember that many of these entities are in business to sell franchises - so you need to do your homework before you commit to anything.

nevadascul

posts: 651

Jul 17, 2008 11:38 AM ET Quote Report Abuse

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The two big issues with restaurants are uniqueness and location. Many restaurants fail because there is nothing different about the new restaurant. They sell the same food, at the same price, in the same type of surroundings. A new restaurant opened in my area for instance and had huge crowds when they first opened. After less than three months though, they have cut their staff in half because of dwindling sales. There now struggling to stay open.

The restaurant is also located off the beaten path as it were. They`re to far away from the main shopping and traffic areas to attract customers.

In like manner, a really nice donut shop failed. It too was located away from the main traffic and shopping areas. Customers had to go way out of their way to get to the donut shop. Most customers weren`t willing to do this since they could get the same product in the main shopping areas.

-------------------------

The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

danielcim

posts: 77

Jul 29, 2008 7:51 PM ET Quote Report Abuse

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From personal experience I can tell you that the restaurant business is rather tricky. It is sort of a gamble. No guarantees and that`s why few investors, especially banks are willing to fund it. I admire your sense of entrepreneurship but unless you finance this on your own with the help of family and friends, or find an angel investor who is familiar with the industry, it may be a tough go. Keep in mind that investors are all about the ROI (return on investment), the bigger the better. You will need to convince a potential investor that your business venture will be profitable for them. Draw up a business plan, you will definitely need it once you start looking for seed money.

Good luck to you and remember LOCATION, LOCATION, LOCATION.

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