Running a Restaurant/INVESTORS' SHARE
QUESTION: Hello Jason,
I have a question for you , even though I am not sure if you are the right guy to ask.
If you are not - please transfer my question to someone who is an expert in restaurant field.
I need a restaurant business expert.
A very good friend of mine wants to open a launch bar in Los Angeles.He does not want to take a loan from any bank institution, but from a...sponsor.Some of his grandfather's friends are willing to invest in his idea.
So my questions for you:
1: How much(percentage-wise) of his business would be a good deal to give to the sponsor if my friend invests in that project no money, but just ideas, labor, efforts, time, energy.... ?
2: How many percentage he should give to the sponsor if my friend invests 50% of the money in the project and the investor 50% too ?
3: What is an Angel investor? Which one is better for my friend's business?
Jason, I am counting on your professional opinion in the restaurant business.
I am considered about my friend. I don't want him to sign a bad agreement or to make him a "slave" on that contract.
Thank you very much.
ANSWER: Hi - can you tell me a bit more about the concept of the launch bar?
Feel free to email me privately
---------- FOLLOW-UP ----------
QUESTION: To be honest I don't know much about the concept of that launch bar.
My friend John is a good DJ and a good bartender.
Based on that I guess that venue would be a launch bar with a DJ.
As much as I know John I can guess it would be a place with a not a full kitchen menu(avoiding high-paid chefs). Mostly tapas and finger appetizers.
A full bar , a nice cocktail menu, handsome bartenders, attractive waitresses...
On a busy street somewhere in West LA.
I guess he might need about $ 250 K(buying an existing business , full remodeling and buying kitchen and bar equipment...).
My main question is how many percentages John should give to his sponsor with:
A:Putting no own money down;
B:Putting 50/50 with his sponsor.
Jason, if you have more questions - please don't hesitate and ask me.
What would be the role of the sponsor if John put his own money down? I.e. Why would he need a sponsor?
As for a 50/50, always keep at least 51% of the business to yourself. If not, you will lose control of the decision making, and would almost never come to an agreement on anything.
Also on, make sure that the zoning allows a "bar", which has a low foot to alcohol ratio. Many areas only permit certain food to alcohol ratios.
As for the concept, be careful in yor strategy. I have designed many of these places around the world, and the budget seems low for what you're proposing, unless it's under 1000 sq. ft.
Your success will rely 90% on customer service, as there are a million DJs who will play for $100 a night, and thousands of great looking people where you are located. What will set you apart from all the other similar bars? Music policy? A specific food? Low drink prices? Celebrity sightings? Find a niche in that particular market, and focus on that.
In the club/ bar world, do NOT focus on expensive decoration and furniture. Get a cook, not a chef, who is fast and can handle food costs properly. Get a great ice machine and fridges, the best (powerful), smallest sound and light system you can afford (a couple of intelligent lights, a good smoke machine, and strong bass bins will do wonders). We built some of the world's largest super clubs, and the ratio was sound 60%, light 35%, decor 5%