Running a Restaurant/Advice

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Question
Hi Jeremy.

I am a Mexican chef that will partner up with one person in Boston.
I want to know how much % of profits will be fair for both of us.
He will invest arround 100K for a small takeout place, I won't invest a dime. The concept, dishes, menu, logo, slogan, etc. is very original and is 100% mine. He tried my food in Mexico with some of his relatives and they said ...let's do it. We all think that this is going next homerun in US once all concept is unique.

Should I ask for salary plus % of profits? I will be working on the BOH and he will be doing the FOH but as you may know my job will be more time cosuming than his...by far.

And what if we get very succesfull and are able to franchise? How much to split on franchising?

I really apreciate your advise.

Best regards.

Luis

Answer
You don't get what you deserve, you get what you negotiate. Fair has nothing to do with it. Time has nothing to do with it. Value has everything to do with it. What value do you bring/create to the business? What value does he bring/create? Will that change over time and as you grow - absolutely.

No concept is successful on food alone. Your product is the guest experience - not your food. Food facilitates the creation of the experience - as does the level of hospitality. The experience is a culmination of several pieces. Fail to understand this critical point and you will end up like the other 72% of businesses that go out of business by year three.

There is also a lot of missing information here. Who owns the concept? Recipes? Physical plant?
Debts? How is his investment structured? What are the payback terms? Reinvested? How is the business structured? How will all partners get paid? Salary or equity? Personal guarantees? And many more...

This is a much more complex question than you think. I would start working through all the business issues first and that will usually tell you what an equitable split will look like now and as the business becomes successful.  

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Jeffrey Summers

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I am the Founder & Owner of Summers Hospitality Group. We have over 300 years of successful experience in operating and consulting with chain, franchise and independent restaurant & hotel operators around the world. Check us out on the web for more information at http://SummersHospitality.Group or call us toll free at 888-998-8744.

Experience

We have experience on any topic related to the restaurant & hospitality industry - from Menu R&D, Menu Engineering, Marketing Strategies, New Store Openings, P&L Analysis, Lease Negotiations, Staffing, Policies & Procedures, Building & Design, Site Location, Branding, PR & Promotions, Multi-Unit Development, and any other area effecting the operation of your business.

Organizations
The National Restaurant Association. The Society of Hospitality Management. The Gerson Lehrman Leisure & Lodging Council The Professional Business Coaches Alliance The International Council on Hotel, Restaurant and Institutional Education Several state restaurant & hotel associations.

Publications
My articles and opinion pieces have been featured on several industry websites, magazines, blogs and forums including: Money Magazine Wall Street Journal USA Today RestaurantOwner.com RestaurantEdge.com FoodService.com Ezinearticles.com Restaurant Startup & Growth Magazine American Express' Briefing Newsletter Nation's Restaurant News and tons more!

Education/Credentials
I hold degrees in Economics, English, Culinary Arts and industry certifications in Hospitality Management and Restaurant & Catering Management.

Past/Present Clients
Here's a list of some of the brands we have worked with: Hardee's, Marriott, Hilton, Connie's Pizza, Burger King, Chili's, Long John Silver's, Bar Louie's, The Purple Sage Bistro, Applebee's, Shoney's, T.G.I. Friday's, La Dolce Vita Pastries & Catering, 5 Seasons Sports Clubs..and many more.

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