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The payback part of this is interesting to me. Even though I said I don't think I could do it this way, can you give more detail on how you see that paying out?What kind of dollar volume and reasonable profit margins would you have to clear for the first 3 years in order to double their money like this?Thanks.J'Abraham said:
I'll do you one better - I'll send you all the legal paperwork you would need for a structure like I suggested (LLC formation, by-laws, LP agreement, accreditation memo, subscription agreement) in exchange for a free meal if I ever make it to McClure's.
Agree completely on building up a name via catering and a pop-up. But my guess was that with a $150k budget then he was starting to look at a permanent space. The "sell it out of a trailer for a while" option is a GREAT way to be cash-flow positive in a hurry and would reduce the investment need substantially.
It started off as something I was incredibly sure of, but the fault was ultimately mine for getting in to a sector I didn't have much domain knowledge of (software). We brought on a third partner who was the developer but he didn't bring in any of the investors, so when things went sour it was easiest for him to just pack it in leaving my other partner and I explaining to our friends what had happened.The most important lesson I've learned from that experience and all of my activities since then is that you HAVE to have a reasonable path to profitability before taking/spending a dime of other people's money. I see some of these tech investments made daily and simply can not imagine how its going to work out well for the investors. 20 million for a company that helps you find the best pizza in town....10 million for a company that helps you search your Twitter feed better...I simply don't see how they will ever make money. I value my few friends very highly. There is no feeling worse in business then deciding to stop fundraising because you no longer think you can succeed...then having to go to the people who believed in you and having to tell them that things have gone awry. I have a pipe-dream that if I'm ever unbelievably wealthy I'll send all of those people a check for their investment, no note, no explanation. Just the money. It's heart-wrenching to go through which is why I tell people trying to start a business that if you have even the SLIGHTEST doubt then you should take a step back and slow down.
One of the restaurants I worked with raised 250,000 for their first location via 100 shares at 2500 a piece (5 share min). The two partners had already bought the building in their own names smack dab in the middle of 6th Street. So even though the restaurant paid them a lease, they didn't have to lay out a ton of company money for a prime location. They were able to pay investors enough money in the first 24 months that the same investor pool helped fund a second location (where they did in fact build the building). Two years later they bought an existing restaurant at the lake, a year later they opened a location in San Antonio, a year later in Dallas. The group now has 5 restaurants. The General Manager in during the early years left 5 years ago to start his own thing and how has 3 locations around Austin of a popular hangout.I certainly don't have visibility to the actual numbers but in the first year of the second location, we were grossing 10k - 20k a night on Thursday, Friday, Saturday with about a 50/50 split between dining and the bar. Considerably les during the week as the lunch crowd was steady but hardly fantastic. It has slowed down considerably since then but is still a viable place and led to the next locations I mentioned above.My business that used this model (and failed to ever earn a dime) had projetions showing a full payback in 28 months (the first year deferred, 6 quarters of payments to get to the 125k we raised) and then 9 more quarters to double everyone's money.The restaurant business has the advantage of being cash/credit so there is not much juggling of net terms with customers, etc. The longer runway that can be negotiated, the better. If Tipsy can negotiate a way to only make payouts when the extra funds exceed X$ then that's better then being obligated to pay out after a year or whatever.
Thanks. And to be clear, I wasn't being critical of you there. I'm saying I felt bad to hear that you'd lost friends over it. That's rough as I know you agree.J
Most BBQ places would rather not maintain a fryer for a single side item that requires a certain freshness in its cooking. Cole Slaw, Tater Salad, Beans can all be made in bulk early in the day and last all day. Fries not only have to be prepped but cooked all day to insure freshness. Too much trouble.
Fries are a headache to do right, Acer. Dealing with oil and fryer and such. But done right, they're an awewsome BBQ side. Arthur Bryant's in Kansas City is a BBQ Icon and they are famous for the fresh cut fries. http://www.southernliving.com/travel/south-west/behind-scenes-arthur-bryants-barbeque-in-kansas-city-00400000005742/J
Thanks.What would this look like with much more modest sales?Say you're serving 100 plates a day with an average ticket of $10 per plate? That's obviously way more modest than a business that's pulling down 10k a day. But in your opinion, what might the investment numbers and payback to investors look like for something like that? Also understanding the goal of money to raise might be less too. J
How much money was lost in the failed venture? Just curious.
LEt's assume that sales are consistent and/or you quickly figure out how to get the most out of your food and labor without wasting much of either. Let's presume that after overhead (including labor and location) you are netting $4 a plate. For BBQ in a pop-up environment, this is probably a conservative number, but you and Tipsy would know better then I.So you are netting $400 a day. Not accounting for taxes (which is sort of important) you have a business making $145,000/year ( round number, assume you are closed on Christmas, Thanksgiving, Easter)Has the owner taken a salary for working there? If so, how much? Let's say the owner takes $45k for running the place. So there is 100k left over. Payout of 90/10 would mean the LPs are getting 90k and the owner gets an additional 10k. In an 18 month initial payback projection, the owner could conceivably raise 135k and IN THE SCENARIO ABOVE have everyone paid back their initial amount by month 18 (or month 28 if they built in a no-payment period to get going). Let's say the pop-up doesn't need to keep a ton of cash on hand and we'll do away with the 12 month wait. So, 18 months in everyone has their money back, the owner has a business, and somewhere in there is 135k of assets/cash/etc. So the owner has a viable business, happy investors, 135k in stuff, and made $55k in salary his first year. That is a pretty stinking good new business!Assuming sales stay flat for a while, it would take just shy of two years to double everyone's money. But in this time the owner has maintained his assets, drew 90k in salary (2 years x 45k) and has received 135k additionally from dividend payouts. So three years in the owner has earned almost 240k and has a viable, profitable business. In fact, maybe the owner turns over management at 45k a year to someone else and just takes in dividends or opens another location. After everyone's money has been doubled and assuming sales are flat, the owner is making basically 130k a year not including the manager's salary that may or may not still be theirs.
In the eventual b&m place.....chili cheese tater tots will be on menu.
Investors (including parents, aunts, and friends): 125kPersonal funds: 15kPersonal credit rating smashed.
First thing I thought of too.Love pork. Love beans. Dubious about ordering any foodstuffs referencing an 'explosion'.'CRay said:I think I'm a little scared to try the Pork "explosion" Beans, though
Maybe just "Pork & Pork & Beans & then some more pork " then?First thing I thought of too.Love pork. Love beans. Dubious about ordering any foodstuffs referencing an 'explosion'.'CRay said:I think I'm a little scared to try the Pork "explosion" Beans, though
BBQ joints here in NC have fries as a side in most places. Hushpuppies are generally always offered too.
There is another way, and one that has gained a lot traction in recent years for people trying to start businesses but who do not have access to a lot of cash: Give half your business away.In your case, the most likely partner would be the owners of Dante's. They know you are a good worker and good at what you do. And they might be interested in "riding your coattails" to expand in to the BBQ sector. They put up $X and you are 50/50 partners. Why 50/50? Because that makes them have a vested interest in the success of McClure's. If they bought in for 10k for 10% (for example) and it didn't work, well they probably wouldn't be too heartbroken. But get them on board to invest $75k now and 75k in six months if you need it and all of a sudden they are really interested in making McClure's successful. Their reputation in the restaurant community might get you a review in the big Nola paper, their call to a radio station might get you some free airtime, their money would help you not have to sweat every dollar early on. And the investment would be more comfortable for everyone since you already know what it's like to work together.This is what James Altucher did with Stockpickr. He partnered with The Street.com at 50/50. They posted ads for Stockpickr on all of their site properties and bought him out two years later for a boatload of money.You may be thinking "I haven't even started and I'm giving up 50%!" Yes. You are. But if you are wildly successful then everyone benefits. It's also possible/probably that if you are successful they will try to buy you out, which could provide the financial ability to take all you have learned at Dante's and McClure's and make a run at it again using your own money.Abraham & Joe: Thanks for the ongoing discussion yall are having. I am very nervous about putting friendships on the line for something that I do realize could fail. I'm not scared of failure...I really don't value possessions very much except my bed & ac in the summer. But putting friends and loved ones on the line..
Another route is http://ideavillage.org/ although it seems like they like more techy-sizzle type stuff. I don't know how good they are at linking you to money. It's more of an incubator. I just sent you a request on Facebook (I'm pretty sure that was you). We'll come by the restaurant soon to talk about it, but if it's more urgent, let me know.'tipsy mcstagger said:
I like the idea, but the owner of Dante's won't be an investor.There is another way, and one that has gained a lot traction in recent years for people trying to start businesses but who do not have access to a lot of cash: Give half your business away.In your case, the most likely partner would be the owners of Dante's. They know you are a good worker and good at what you do. And they might be interested in "riding your coattails" to expand in to the BBQ sector. They put up $X and you are 50/50 partners. Why 50/50? Because that makes them have a vested interest in the success of McClure's. If they bought in for 10k for 10% (for example) and it didn't work, well they probably wouldn't be too heartbroken. But get them on board to invest $75k now and 75k in six months if you need it and all of a sudden they are really interested in making McClure's successful. Their reputation in the restaurant community might get you a review in the big Nola paper, their call to a radio station might get you some free airtime, their money would help you not have to sweat every dollar early on. And the investment would be more comfortable for everyone since you already know what it's like to work together.This is what James Altucher did with Stockpickr. He partnered with The Street.com at 50/50. They posted ads for Stockpickr on all of their site properties and bought him out two years later for a boatload of money.You may be thinking "I haven't even started and I'm giving up 50%!" Yes. You are. But if you are wildly successful then everyone benefits. It's also possible/probably that if you are successful they will try to buy you out, which could provide the financial ability to take all you have learned at Dante's and McClure's and make a run at it again using your own money.Abraham & Joe: Thanks for the ongoing discussion yall are having. I am very nervous about putting friendships on the line for something that I do realize could fail. I'm not scared of failure...I really don't value possessions very much except my bed & ac in the summer. But putting friends and loved ones on the line..
Place here in Tampa does fresh cut fries and pork fritters...hush puppies jammed with pork bits.
And their BBQ is fantastic!
but reserve your domain when you're certain of the name.
actually Joe every BBQ joint in KC offers fries. They aren't necessarily all good, and Bryants are probably the best, but they all have them. in fact i don't have enough bbq experience nationwide, but i've yet to see a place without fries.
Good Luck!But I would re-think the whole KC, Memphis, Caribbean and Texas deal. A lot of different brands to live up to imo.
That was my thought too, but you have to remember where he is. New Orleans doesn't really have a BBQ identity. I don't think playing up the different styles would ever work in a hardcore BBQ area like Kansas City, Texas, Alabama or Tennessee. People in Texas firmly believe their BBQ is best and want nothing to do with Kansas City style. But for New Orleans, it could work.J
I cannot imagine any side being more anti-bbq than fries. Fries go with a burger. Beans, slaw, potato salad, white bread, and iced tea. Those go with bbq. Luling City Market, Kreuz, nor any other bbq place of legend/lore would ever sell fries. (Please don't ask them.)
To his defense, the BBQ market in New Orelans is extremely bare and while there are many people who worship food; I don't think they're going to be too particular about KC vs. Memphis vs. Texas, etc. They just want good food to eat.ETA: looks like Joe covered that above
if you need a tester, let me know!
i agree here, I don't want fries with my BBQ, i want something else entirely! But for what it's worth KC is a pretty major BBQ town and in every joint here there are fries, and like Joe said, at Arthur Bryant's (arguably one of the most famous BBQ joints of them all) they are kind of a "thing".
Fries being anti-bbq? Maybe you should travel to other BBQ regions and see that fries are a staple at many legend/lore BBQ joints.
This. We have a small chain around here called City BBQ and they have fresh cut fries.
Certainly been the case in my experience.
well North Carolinians really shouldn't talk about what is and isn't proper bbq.
There are two kinds of BBQ. Western Carolina and Eastern Carolina.
Ahhh.
I wish I had the balls to do this, best of luck
