Business Model Advice

woodburner, thats some shaky ground your standing on. too many variables could come back and bite you. if it were me, i would negotiate a gross percentage contract. start low, but settle under 15. make things clear and binding. cover your butt on topics like longevity and repairs and inventory. you dont wna to put yourself in a liable situation for something you never thought would happen. be careful... even his insurance might frown on such a venture.

tell me more about how it seems shaky to you, coffeebluff...

basically, it is a very low risk approach for me, I would think. I invest in nothing more than the smoker (the 250), which I could remove if things don't work out. We split the investment in the food, and the labor. If we don't make money, we split the pain. If we don't agree on business issues, we part ways. But we don't get slammed with rent, insurance, etc., since the business is already running and making money for him. I would think that the insurance issues would be negligible, since he is simply operating for dinner, as well as bfast and lunch. Tell me more....

Woodburner,

I'm inclined to agree with Coffeebluff. I think you are talking about one of two options. The first would be that you would subleasing space from the owner of the existing restaurant. The second would be that you an outside contractor. I would consider speaking with an attorney before taking on a venture like this. I'm not saying that this is a bad deal, in fact, it would allow you to open a new avenue of business with very little initial costs.

The thing is that this shouldn't be a "handshake" sort of deal btween you and the current operator. You should have a contract drawn up between you and and your partner that spells out the details of the agreement. I personally would carry my own insurance for this sort of proposition, and if you do that what happens when... A customer slips and falls. The injuries don't seem that bad, but then this faller gets to talking to a personal injury attorney? Who is there to represent your interests? Worse yet, due to no fault of your own, someone get sick after eating your food. Who gets the bill for that?

One other thing you should be mindful of is some sort of exit strategy. If your partners' business fails, where does that leave you? And any equipment you may have stored on the premises? Many time landlords will secures liens against the contents of a property to recoup some of their costs in the case of a delinquent tenant. Would these liens, if they exist, apply to your equipment? Also, if your end is struggling, and you can't pay your share, what recourse would the owner have to collect from you?

All of these issues can be dealt with by consulting with a qualified attorney. What the consulting costs you now could save your financial future down the road.

An issue that's not so easy to decipher is the marketability of this idea. I don't know, because I don't live in or know your market. You said that this place already does a good breakfast and lunch business. Are they known for being a "breakfast and lunch" place? If so, will your consumers ever be able to get that breakfast and lunch only mentality out of their head? If you think they can, what marketing steps will you take to promote the evening business and break the breakfast/lunch only mindset? I should also note that I think changing consumer habits is easier in a small town than a large city. A small town has fewer dining options, and guests are more willing to try a place that doesn't fit in their minds as a breakfast/lunch place. Incidentally, my questions would be the same if you were trying to put a breakfast/lunch place into a business that was already running a successful evening only trade.

I love the low cost of entry to this idea, but the above issues are worth thinking about. If it were me, the one thing I would absolutely NOT do is venture into this without making sure my A** is covered from a liability standpoint. If, after taking these matters into consideration, you think its a good idea to move ahead, I wish you the best of luck for success and prosperity!

Thanks for your detailed input, Matt. I agree with your points. I will indeed talk to an attorney about this arrangement before I go any further. I'm most curious about the requirements to structure the deal. Employee... contractor... sublessor...? Must I have my own incorporated business to do this? If he just went out and hired a cook to do the BBQ business in the evening, then it would all be covered under his insurance. Of course, I don't want to collect a cook's paycheck...



In terms of marketing< i would want to promote my "brand" at his restaurant... I'm thinking about direct mailings to homes, print and radio spots. As well as word of mouth, given I've been in this town for 16 years. Plus, his existing client base... many of which hopefully would give the Q a try. While it is indeed a breakfast and lunch place, I think the added Q concept could fit in nicely.

we'll see....

woodburner...
on one hand, i would have reservations, but on the other, excited about a new concept. yu might be starting a new trend all over the world, if all goes well. just make sure you cross your t's and dot your i's. you dont wnat to come in one day and be hit with a repair bill of some kind cause the other guy says you broke something of his..i would have a stipulation that your donated percentage covers all liabilities.
yea, i think it would work.... definitely, have a layer draw up papers on your behalf...

I remember, in the early 1960s, Kentucky Fried Chicken, when they were getting started, ran some if not all of their franchises through various restaurants. It would be interesting to know the specifics of that marketing plan. It wasn�t long before the Colonel started marketing his product through his own storefronts.

HT

There's also a local bar that is rarely open and does not serve food, far as I know. My lawyer told me about a restaurant that lost its lease... he hooked up with a similar bar... the drinkers started eating and the diners started drinking, and they both did real well. So I think I'll call the bar owner on Monday, as well ...

Happy trails,

You can never predict "what would have happened", but chances are that I am in the food biz today due to Col. Sanders and his franchising efforts to existing businesses. Some of my relatives owned a restaurant, and when Sanders came through town selling his franchise, my rels bought. They were very succesful with the Kentucky Fried Chicken, and they hired family members to run their new restaurants as they expanded.

30 or so years later, many of those same people have made a living from the restaurant biz. My Father got a job managing one of those original KFCs, and parlayed that into being a managing partner of two 50 store plus chains of restaurants. Some family members are still involved in the KFC system, while others have expanded into Applebee's, Jason's Deli, and other concepts along the way.

What I really find amazing is that the guy that got this family really up and running in the restaurant biz was Sanders. They made a good living before, but it took a guy driving aroung in his white Caddy selling his chicken recipe to really kick it up. Only in America!