Successful Restaurant Guaranteed?

[baygo]

It recently came to my attention that an established Lakes Region restaurant is for sale. I speculate that the primary reason is because of the current labor shortage in the region. The reality of this labor shortage is the number one reason I could be certified insane if I were to purchase the restaurant. That being said; after giving it thought, I came up with a strategy that eliminates the need for hired help and intern can fulfill a lifelong desire for eight individuals who wish to one day own a restaurant. I will list all the benefits to this strategy that I can think of and in turn ask the forum to dig deep into the depth of pessimism to point out the negatives.

1. The eight owners would partner with Leslie and I and therefore benefit from our experience in the business.
2. The restaurant requires a team of eight to run it. With a team of 10 this will reduce the time commitment for each and allow for scheduling of vacation time and sick days.
3. Instead of risking 100% of the purchase price ($200,000) each partner is risking only 10% ($20,000) of the purchase price.
4. No employees means no mediocre effort consequently providing a better service and product to the guest. Everybody has a vested interest.
5. No employees means less waste.
6. No employees means that all tips can go into a pool to be shared by the partners.

OK forum, please do what you do best. Bring forward your best armchair restaurateurs and tear it up.

Thank You

[joey2665]

Speaking as someone who at one point had 11 partners and myself in a business I will tell you a few things:

that is a lot of personalities to deal with

There is always the inevitable who is working harder than who

Who is spending more time

Do the chef and dishwasher and bus boy all share equally

And do on

At the end of the day 2 of us ended up buying out the other 10 partners



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[garysanfran]

I like the idea of shared equity and shared responsibility...My concern?

The shared responsibility part. With that many "partners", there is going to be a percentage of non-weight carriers...Do you have a penalty for non performance?]

However, the concept of you own it, and the more you work, and the better you are... the better your life, should be a strong incentive.

[garysanfran]

Originally Posted by joey2665

Speaking as someone who at one point had 11 partners and myself in a business I will tell you a few things:

that is a lot of personalities to deal with

There is always the inevitable who is working harder than who

Who is spending more time

Do the chef and dishwasher and bus boy all share equally

And do on

At the end of the day 2 of us ended up buying out the other 10 partners



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The dishwashers, busboys, etc. would be the equity owners, maybe a minority of hired help?

[WinnisquamZ]

I do like your idea of partners. Silent partners, you maybe on to something here. Excellent run restaurants will always get the help they need. If the place you are thinking about is where I believe it is, operating costs are huge. Taxes alone kill the idea


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[8gv]

Originally Posted by joey2665

Speaking as someone who at one point had 11 partners and myself in a business I will tell you a few things:

that is a lot of personalities to deal with

There is always the inevitable who is working harder than who

Who is spending more time

Do the chef and dishwasher and bus boy all share equally

And do on

At the end of the day 2 of us ended up buying out the other 10 partners



Sent from my iPhone using Winnipesaukee Forum mobile app

I have not done this but have watched it from afar.

The comments here are dead on.

Human beings sometimes (often) do stupid stuff.

What if a partner steals, has an IRS issue or debilitating health issue.

If those things occur, how do you resolve it?

I would never participate in this arrangement.

[TiltonBB]

The risks mentioned above are all valid. However, monetary reward is a huge motivator. You may be better off offering a percentage of the profit to select employees to give them the incentive to be hard working team players.

The management challenges of multiple personalities with different ideas will result in a difficult work environment attempting to keep everyone motivated and happy. Everyone with an ownership stake will feel that their ideas must be considered.

If the ultimate goat is to build and eventually sell a business, and you feel that you are the primary reason for the success, you may resent giving the dishwasher the same check that you get.

This sounds more like a plan someone would come up with if they wanted to buy a business but couldn't afford it.

[baygo]

Originally Posted by WinnisquamZ

I do like your idea of partners. Silent partners, you maybe on to something here. Excellent run restaurants will always get the help they need. If the place you are thinking about is where I believe it is, operating costs are huge. Taxes alone kill the idea


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I wish I could agree with you on your first statement but I rub elbows with a many restaurant owners. Some of whom I assess to run a great place. The past 2 years have created an unprecedented challenge for all when filling positions at every level.

It is not the location you are guessing.

Thank you to others who have chimed in so far. You all prove that there is great value to the knowledge here on our forum. To a couple of points raised:

Who does what job and who gets paid what? I never met a successful restaurant owner who couldn’t/didn’t do every job. Through time every partner will learn and rotate through every job. A restaurant that can operate with a 25% of gross payroll has a chance to survive or better. Therefore we take 25% and add it to the total tip, then divide that number by the total number of hours worked by all partners. That number determines an hourly rate to be distributed based on individual hours in. Profits after that are distributed in the same manner as any LLC.

Profit sharing employee versus equity partner: Ever since the introduction of participation trophies there has been a distorted understanding of how to earn an incentive by a large segment of our population. Skin in the game is essential to success.

Managing multiple personalities: I don’t think it matters whether they are partners or employees managing multiple personalities will always be a challenge however, as partners with a vested interest there should be more drive to get the job done.

Theft: Technology has made it much more difficult to steal and much easier to get caught.

Whose ideas: Vote.

1 or 2 employees: Absolutely not. Workmen’s Comp insurance is a huge expense and one way or another minimum wage will sooner or later rise therefore so will WCI.

[TheTimeTraveler]

Originally Posted by baygo

It recently came to my attention that an established Lakes Region restaurant is for sale. I speculate that the primary reason is because of the current labor shortage in the region. The reality of this labor shortage is the number one reason I could be certified insane if I were to purchase the restaurant. That being said; after giving it thought, I came up with a strategy that eliminates the need for hired help and intern can fulfill a lifelong desire for eight individuals who wish to one day own a restaurant. I will list all the benefits to this strategy that I can think of and in turn ask the forum to dig deep into the depth of pessimism to point out the negatives.

1. The eight owners would partner with Leslie and I and therefore benefit from our experience in the business.
2. The restaurant requires a team of eight to run it. With a team of 10 this will reduce the time commitment for each and allow for scheduling of vacation time and sick days.
3. Instead of risking 100% of the purchase price ($200,000) each partner is risking only 10% ($20,000) of the purchase price.
4. No employees means no mediocre effort consequently providing a better service and product to the guest. Everybody has a vested interest.
5. No employees means less waist.
6. No employees means that all tips can go into a pool to be shared by the partners.

OK forum, please do what you do best. Bring forward your best armchair restaurateurs and tear it up.

Thank You

It's certainly an interesting proposition, but I don't think I would want to put my money in to see whether or not it works. Too many Chiefs.

[thinkxingu]

Another concern would be long-term sustainability. The pool from which you would need to recruit when (not if) people move on would be very small.

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[Reilly]

Originally Posted by thinkxingu

Another concern would be long-term sustainability. The pool from which you would need to recruit when (not if) people move on would be very small.

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Partnership is the only SHIP that will positively SINK

[tis]

I would never, ever do this! We have heard so many horror stories with partners-just one!!!! I am so glad when we started our business we never had any partners.

[Biggd]

I had an uncle that I always went to for advice. I will never forget his words, "partners are for dancing", nuff said!

[joey2665]

Partners can work and work very well. It’s all about personality, compatibility and work ethic.

It this case to me and from my personal experience there are just too many personalities here.


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[Bigstan]

At a 200k purchase price what in your wildest dreams would you envision revenues to be ? And then the bottom line ?

Divide that unattainable fantasy bottom line post-everything # by ten, add tips (again divided by ten) and you get what each persons time is worth.

If one person has a hard time making a restaurant work year round how could ten people recoup enough to make it worth their time ?

[baygo]

Originally Posted by Bigstan

At a 200k purchase price what in your wildest dreams would you envision revenues to be ? And then the bottom line ?

Divide that unattainable fantasy bottom line post-everything # by ten, add tips (again divided by ten) and you get what each persons time is worth.

If one person has a hard time making a restaurant work year round how could ten people recoup enough to make it worth their time ?

I think one of the biggest reasons one person may struggle to make a living in a restaurant is because they have to pay the nine employees. Often those employees are overpaid and cause more damage to the restaurant with their mistakes or lack of concern for the guest experience.

What I envision is not ideal for someone who is relying on it to make a living. This is more of a concept to assist that individuals who dreams of being a restaurant owner during retirement. A point in life where their day-to-day expenses are already met by pension or other retirement income.

The many who pointed out the downsides of partnership are certainly on point. At the same time, the failure rate in the restaurant business is among the highest of any business. A retiree with no restaurant experience who takes their life savings and rolls the dice has a better chance of losing their life savings then living their dreams. This concept would allow that individual to hold onto your life savings but still play in the game.

It would be interesting to find a stat that compared the number of restaurants failures to the number of partnership failures.

[8gv]

Baygo,

I agree with you about the personalities of employees and partners.

The trouble is you can’t fire a partner.

[joey2665]

Baygo I'm confident that since you will be in charge you have an excellent chance in succeeding. I wish you nothing but the best and let us know when you can reveal the location.

[Pineedles]

Great idea, but as others have stated the pitfalls are many. I think restaurant owners in the lakes region need to look towards mor automation to resolve the tight labor market, particularly since it is mostly a seasonal business. If you have been into a McDonalds lately you may of seen several kiosks that allow you to order and pay for your meals. This same concept can be employed with table terminals to allow the same at little expense. Even a Horn & Harvard automate type bank of self serve windows could b employed segregated by table where each window would have a meal, with all meals being ready at the same time. Busboys would still be needed but 1 person could easily take care of 20 tables.

Just because it’s self serve doesn’t mean it can’t be fine cuisine.


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[Descant]

$200K purchase, $200K working capital? Means you need 8-10 people who have $50K, will work 50-60 hours a week with some expectation that they will not draw a paycheck for an extended period. And they have to be compatible, at least on the surface. You don't just get somebody off the internet job sites for those qualifications.
Let's say you have some success. One or two want to get out. Where's the funding for their buyout, or now it costs $100K to buy in? The original contract can be difficult to draft.

Pooling tips is socialism. Waitstaff is the face of the business, as you know. They have their own following, shuffling them around with 7 other people does not necessarily keep the best players in the starting line up. I agree that everybody should know every job, however.
You need one person in charge, not eight.

"In a limited partnership, at the beginning, the general partner has the expertise, and the limited partners have the money. In the end, the limited partners have a lot of experience and the general partner has all the money." (Unknown business pundit)
After all that, there's probably a germ of a good idea here, but you asked for negative input.

In my youth, the lakes region was dotted with small family restaurants and motels open from May to October. With a couple of local young people for the shoulders, the owners hired and trained new staff every year, and most were successful, year after year. Some worked a couple of years in HS and 3-4 years of college. I now have a great deal o respect for those owners who could do it all, including training, and rarely took a day off all summer long.

[Bigstan]

Originally Posted by baygo

What I envision is not ideal for someone who is relying on it to make a living. This is more of a concept to assist that individuals who dreams of being a restaurant owner during retirement. A point in life where their day-to-day expenses are already met by pension or other retirement income.

Ahh, that makes a lot more sense. So you're targeting someone like me for example, a year or so away from retirement but wondering how to fill the next 40 or so years.

That makes things more interesting. If 200k is a real # I would trim the partners down to say 3 or 4, maybe even 1 or 2, and make sure everyone has similar ideas on how things are done. A couple of cooks in the kitchen (hehe) with equal skin in the game is a safer approach than 10 would be.

[Biggd]

Originally Posted by Bigstan

Ahh, that makes a lot more sense. So you're targeting someone like me for example, a year or so away from retirement but wondering how to fill the next 40 or so years.

That makes things more interesting. If 200k is a real # I would trim the partners down to say 3 or 4, maybe even 1 or 2, and make sure everyone has similar ideas on how things are done. A couple of cooks in the kitchen (hehe) with equal skin in the game is a safer approach than 10 would be.

I'm a year away from retirement also. I don't know what would possess someone wanting to do this.
You can go get a part time job with no head aches and no demands on your time and probably make as much money too.
Besides that, with 2 houses and a half dozen toys, I have plenty to keep me busy.
Maybe that's just me? 50 years of hard labor and I'm well done, take me off the grill please!

[baygo]

Originally Posted by Pineedles

Great idea, but as others have stated the pitfalls are many. I think restaurant owners in the lakes region need to look towards mor automation to resolve the tight labor market, particularly since it is mostly a seasonal business. If you have been into a McDonalds lately you may of seen several kiosks that allow you to order and pay for your meals. This same concept can be employed with table terminals to allow the same at little expense. Even a Horn & Harvard automate type bank of self serve windows could b employed segregated by table where each window would have a meal, with all meals being ready at the same time. Busboys would still be needed but 1 person could easily take care of 20 tables.

Just because it’s self serve doesn’t mean it can’t be fine cuisine.


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Seven years ago I went into memorial day weekend with zero front-of-the-house staff. Just me. I frantically wrote a computer program which enabled me to communicate directly with the kitchen via an iPad from each table. This is widespread now. My program was designed to enable the guest to order over the phone and pay. I just haven’t had the need to institute that yet. Only an idiot would make the investment of terminals at a table because every guest has a terminal on their phone. Automation goes beyond a kiosk for McDonald’s. Your french fries are cooked by a robot and their soda is poured by a robot. This is definitely here and will continue to affect the dining experience. At the same time there will always be a need for a dining experience that includes human service. For those of you who are not aware, I was a member of the team responsible for the introduction of the worlds first transaction oriented interactive multimedia marketing and communications network back in 1993.

[thinkxingu]

Do people recruit help at all? I would think a visit to a local high school would result in at least a few juniors/seniors that would be looking for secure jobs?

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[baygo]

Originally Posted by Descant

$200K purchase, $200K working capital? Means you need 8-10 people who have $50K, will work 50-60 hours a week with some expectation that they will not draw a paycheck for an extended period. And they have to be compatible, at least on the surface. You don't just get somebody off the internet job sites for those qualifications.
Let's say you have some success. One or two want to get out. Where's the funding for their buyout, or now it costs $100K to buy in? The original contract can be difficult to draft.

Pooling tips is socialism. Waitstaff is the face of the business, as you know. They have their own following, shuffling them around with 7 other people does not necessarily keep the best players in the starting line up. I agree that everybody should know every job, however.
You need one person in charge, not eight.

"In a limited partnership, at the beginning, the general partner has the expertise, and the limited partners have the money. In the end, the limited partners have a lot of experience and the general partner has all the money." (Unknown business pundit)
After all that, there's probably a germ of a good idea here, but you asked for negative input.

In my youth, the lakes region was dotted with small family restaurants and motels open from May to October. With a couple of local young people for the shoulders, the owners hired and trained new staff every year, and most were successful, year after year. Some worked a couple of years in HS and 3-4 years of college. I now have a great deal o respect for those owners who could do it all, including training, and rarely took a day off all summer long.

The scenario you paint is more a scenario for a start up. This is a restaurant with a positive cash flow. Abundance of hands on deck eliminates the 50 to 60 hour work weeks. By the way 50 to 60 hours is part time based on what my wife and I do.

[baygo]

Originally Posted by thinkxingu

Do people recruit help at all? I would think a visit to a local high school would result in at least a few juniors/seniors that would be looking for secure jobs?

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LOL... parents can’t get kids to clean their room, teachers can’t get kids to do their homework, what are the chances of an employer getting the kids to deliver excellence?

Sometime around 150 years ago Abner Doubleday created a game called baseball. He paid a small group of talented man to play. Time went on and they televise the game. As a young boy I watched and idolize these players and spent a lot of time in the backyard throwing a ball with my brother. We dreamed of one day earning the big salaries that those baseball players were paid to have fun. Neither one of us ever saw that paycheck.

About a week ago 40 million people were playing the game Fortnite. One got a paycheck for $250,000. 39,999,999 of them stayed home with empty pockets. This is the new dream for that younger generation and it is their argument to their parents. ”let me practice this in my room and I can make millions instead of busing tables and make hundreds”

Those who know me well have always labeled me a strong forecaster. I make my plans based on my forecast of the future opposed to my understanding of the past.

[Biggd]

Originally Posted by baygo

LOL... parents can’t get kids to clean their room, teachers can’t get kids to do their homework, what are the chances of an employer getting the kids to deliver excellence?

Sometime around 150 years ago Abner Doubleday created a game called baseball. He paid a small group of talented man to play. Time went on and they televise the game. As a young boy I watched and idolize these players and spent a lot of time in the backyard throwing a ball with my brother. We dreamed of one day earning the big salaries that those baseball players were paid to have fun. Neither one of us ever saw that paycheck.

About a week ago 40 million people were playing the game Fortnite. One got a paycheck for $250,000. 39,999,999 of them stayed home with empty pockets. This is the new dream for that younger generation and it is their argument to their parents. ”let me practice this in my room and I can make millions instead of busing tables and make hundreds”

Those who know me well have always labeled me a strong forecaster. I make my plans based on my forecast of the future opposed to my understanding of the past.

My vision of the future looks bleak but so is my eye sight.

[Hillcountry]

Originally Posted by baygo

LOL... parents can’t get kids to clean their room, teachers can’t get kids to do their homework, what are the chances of an employer getting the kids to deliver excellence?

Sometime around 150 years ago Abner Doubleday created a game called baseball. He paid a small group of talented man to play. Time went on and they televise the game. As a young boy I watched and idolize these players and spent a lot of time in the backyard throwing a ball with my brother. We dreamed of one day earning the big salaries that those baseball players were paid to have fun. Neither one of us ever saw that paycheck.

About a week ago 40 million people were playing the game Fortnite. One got a paycheck for $250,000. 39,999,999 of them stayed home with empty pockets. This is the new dream for that younger generation and it is their argument to their parents. ”let me practice this in my room and I can make millions instead of busing tables and make hundreds”

Those who know me well have always labeled me a strong forecaster. I make my plans based on my forecast of the future opposed to my understanding of the past.

Bingo! And I don’t mean playing professional bingo BTW

[Hillcountry]

Baygo, with your attitude and expertise I believe whatever endeavor you choose to undertake, you will succeed! Good luck!

[thinkxingu]

Originally Posted by baygo

LOL... parents can’t get kids to clean their room, teachers can’t get kids to do their homework, what are the chances of an employer getting the kids to deliver excellence?

Sometime around 150 years ago Abner Doubleday created a game called baseball. He paid a small group of talented man to play. Time went on and they televise the game. As a young boy I watched and idolize these players and spent a lot of time in the backyard throwing a ball with my brother. We dreamed of one day earning the big salaries that those baseball players were paid to have fun. Neither one of us ever saw that paycheck.

About a week ago 40 million people were playing the game Fortnite. One got a paycheck for $250,000. 39,999,999 of them stayed home with empty pockets. This is the new dream for that younger generation and it is their argument to their parents. ”let me practice this in my room and I can make millions instead of busing tables and make hundreds”

Those who know me well have always labeled me a strong forecaster. I make my plans based on my forecast of the future opposed to my understanding of the past.

As a high school teacher, my experience is fundamentally different--perhaps it's a regional thing, but almost all of my students work, and a sizable majority at local restaurants, senior citizen homes (with residents and in the food service), and even hospital food programs (Lahey, in particular, is a score for the kids).

I have very, very few juniors and seniors who don't work or intern on a regular basis. In fact, my guidance department has a bulletin board where they post jobs and there are almost never any that go unfilled for long.

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[Biggd]

Originally Posted by baygo

LOL... parents can’t get kids to clean their room, teachers can’t get kids to do their homework, what are the chances of an employer getting the kids to deliver excellence?

Sometime around 150 years ago Abner Doubleday created a game called baseball. He paid a small group of talented man to play. Time went on and they televise the game. As a young boy I watched and idolize these players and spent a lot of time in the backyard throwing a ball with my brother. We dreamed of one day earning the big salaries that those baseball players were paid to have fun. Neither one of us ever saw that paycheck.

About a week ago 40 million people were playing the game Fortnite. One got a paycheck for $250,000. 39,999,999 of them stayed home with empty pockets. This is the new dream for that younger generation and it is their argument to their parents. ”let me practice this in my room and I can make millions instead of busing tables and make hundreds”

Those who know me well have always labeled me a strong forecaster. I make my plans based on my forecast of the future opposed to my understanding of the past.

By the way, playing video games is a sporting event now. My son tells me that people send them money to watch them play.

[Descant]

Baygo, this is a great thread, if only for the group exercise. Thank you.
I'm missing the ability or desire of newly retired folks to work the necessary hours.. I thought the idea of eight partners was to eliminate the need (or reliance) for hired staff that is so difficult to find.

[joey2665]

Originally Posted by Pineedles

Great idea, but as others have stated the pitfalls are many. I think restaurant owners in the lakes region need to look towards mor automation to resolve the tight labor market, particularly since it is mostly a seasonal business. If you have been into a McDonalds lately you may of seen several kiosks that allow you to order and pay for your meals. This same concept can be employed with table terminals to allow the same at little expense. Even a Horn & Harvard automate type bank of self serve windows could b employed segregated by table where each window would have a meal, with all meals being ready at the same time. Busboys would still be needed but 1 person could easily take care of 20 tables.

Just because it’s self serve doesn’t mean it can’t be fine cuisine.


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It's that what Faro Express is doing on Union Avenue?

[joey2665]

Originally Posted by Biggd

By the way, playing video games is a sporting event now. My son tells me that people send them money to watch them play.

Yes if you broadcast on YouTube they pay to when you attain over 1 million viewers and place ads on your videos.

Also just to correct Baygo the Fortnite winners grand prize was 3,000,000.00 (and he did and interview on ESPN) 20k people watched the finals live at Arthur Ashe Stadium in Queens NY where they play the US Open finals

[baygo]

Originally Posted by joey2665

Yes if you broadcast on YouTube they pay to when you attain over 1 million viewers and place ads on your videos.

Also just to correct Baygo the Fortnite winners grand prize was 3,000,000.00 (and he did and interview on ESPN) 20k people watched the finals live at Arthur Ashe Stadium in Queens NY where they play the US Open finals

The event I was referencing was during a qualifying process. Thanks for updating me on the results of the finals. Nonetheless it now becomes every young individuals dream.

[baygo]

Originally Posted by Descant

Baygo, this is a great thread, if only for the group exercise. Thank you.
I'm missing the ability or desire of newly retired folks to work the necessary hours.. I thought the idea of eight partners was to eliminate the need (or reliance) for hired staff that is so difficult to find.

Yes... thank you... this has been good conversation but know FLL and the Walmart solution.

[fatlazyless]

Originally Posted by baygo

Yes... thank you... this has been good conversation but know FLL and the Walmart solution.

Doesn't Walmart operate basically like a consignment store, with little to no investment in their inventory, because their 100's of different Walmart suppliers get paid maybe 30-days after an item gets scanned and sold.

Sysco restaurant food supply and NH Liquor Store commission would probably say 'no way' to a restaurant asking for a payment plan like that. A restaurant probably has to pay for its food/liquor at time of delivery so it has a big payout investment before it gets resold to a restaurant patron.

[Mr. V]

Baygo, I think you're on the right track.

Given the difficulty hiring good, motivated employees, restaurateurs will need to "think outside the box" and adjust as the times require.

I'd suggest some form of corporate entity instead of a partnership.

Sounds like a good opportunity for a retiree to get back in the game .

Best of luck.