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post #1 of 16
Thread Starter 
I have been approached by two chefs who want to open a restaurant in my area ...we are three partners...what kind of "agreements" can we enter into so as to minimize friction vis-a-vis creative/business vision. I am a "foodie", already know how to "cook", will begin a stint in the "Garde Manger" of a well known french restaurant in the area, taking culinary lessons and have a passion for the food industry as a whole. any advice??
post #2 of 16
Would all three be equal partners, or is there to be one majority partner? My experience is that partnership is very difficult; that and the more partners, the more difficult it becomes, especially with three partners who all have the same area of the operation that they are passionate about. Passion is difficult to temper with logic in order to reach sound business decisions. Multiply that by three...
Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #3 of 16
Hello Newlife and Cheflayne,

I'm moving this topical post to the Professional Chefs' forum, as that's better for it than the Welcome Forum. We invite you to return to the Welcome forum to offer an introduction.

Welcome!
Mezzaluna
Moderator Emerita, Welcome Forum
***It is better to ask forgiveness than beg permission.***
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Moderator Emerita, Welcome Forum
***It is better to ask forgiveness than beg permission.***
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post #4 of 16
This may be more complicated than creating a pre-nuptual agreement for a menage a trois!

My, off the cuff, suggestion would start with forming an LLC with ownership percentages and management responsibilities clearly delineated, including "conflict resolution", whether by mediation, arbitration, or clearly defined "buy-sell" arrangements.

Anything less, IMHO, is setting the stage for problems downroad.
Chef,
Specialties: MasterCook/RecipeFox; Culinary logistics; Personal Chef; Small restaurant owner; Caterer
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Chef,
Specialties: MasterCook/RecipeFox; Culinary logistics; Personal Chef; Small restaurant owner; Caterer
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post #5 of 16
NON-VOTING SHARES.!

Three partners can work, but three decision-makers cannot. Even the best of friends will disagree on things, sometimes they are as insignificant as what water glasses to use, sometimes, whether or not you should fire the useless FOH manager who can't keep his waiters form stealing wine. Eventually, indecisiveness will cost you money. If you draw up an LLC, have clear language that defines voting shares, non-voting shares and vesting/fully vested shares -just because someone is the majority investor does not mean he/she should be the primary decision maker. You have to decide what will be best for the restaurant,

I'm still a litte bitter, last year I had to walk away from a three partner situation, sell my 20% (-which in the end, costed me money) and cut my losses. My partners were sucsessful in other bussinesses, but they were never around the restaurant, yet somehow felt like they new more about it than the guy who was there 60 hours aweek -and they had the majority shares to back it up.

Just to prove that god likes to kick you while your down, a month after I left the the restauraunt, the Food Network called and wanted to do a little piece on the place. It focused on the menu I developed -their New Chef, that I trained, took all the credit.

so, in short, becarfull and get a good lawyer.
nel maiale, tutto e buono!
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nel maiale, tutto e buono!
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post #6 of 16
Thread Starter 

reality check!

thanks for the brutally honest info - I was already wary and will follow your advice of making sure I have a very good contract (with the help of a lawyer) - which clearly outlines EVERYTHING. For now, I am content with seeing how things progress while still pursuing my training (work and study). The concerned parties have tentatively found a location (very preliminary) - which they suggested I check out - I was excited with the space/area...good potential in an up-and-coming "gentrified" area of town. We'll see!!
thanks again!
post #7 of 16
Protect your own interest and hire your own attorney to read everything. Why? Been their done that. Also did they know one another before you?:lol:
CHEFED
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CHEFED
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post #8 of 16
Lawyers and contracts, yeah sure, it's a must. But something else doesn't sit quite right with me...

Two pro chefs and one serious foodie doesn not a restaurant make.

Who's doing FOH? The booze, the bar? Who's the one with previous opening experience, with dealing with City hall, permits, licensing, dealing with contractors? Who's got the begging bowl-- the one who can get money to open?
...."This whole reality thing is really not what I expected it would be"......
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...."This whole reality thing is really not what I expected it would be"......
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post #9 of 16
Thread Starter 

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one pro chef, one ex-restauranteur/chef and one foodie - the ex-restauranteur has had two successful restaurants and knows all the ins and outs vis-a-vis permits etc. the pro chef has worked at top restaurants in the city and, well, then there's little ole' me...
post #10 of 16
Whew.. that's better.

Assuming the ex-restauranteur adopts FOH, and the Chef BOH, that leaves you with a lot of opportunity to learn pretty much everything you need to in a restaurant.

Before getting charged for a lawyer's time, hash out the boundries. Talk is cheap, and that's what you need alot of right now.
...."This whole reality thing is really not what I expected it would be"......
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...."This whole reality thing is really not what I expected it would be"......
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post #11 of 16
Thread Starter 

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thanks! I hope it works out...
post #12 of 16
Be careful, a "mouse" is at a disadvantage when two "cats" are in the room!
Chef,
Specialties: MasterCook/RecipeFox; Culinary logistics; Personal Chef; Small restaurant owner; Caterer
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Chef,
Specialties: MasterCook/RecipeFox; Culinary logistics; Personal Chef; Small restaurant owner; Caterer
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post #13 of 16
why are they approaching you? (No offense.) Are you the money person? Partnerships are, as already stated, difficult at best. Three way ones are almost impossible as two always seem to wind up ganging up against the third. If they have come to you because you are the one who can finance it and you want to do this, I would say open the place on your own with these people for employees. You could later sell shares if everything works out and you get along. I lost everything I ever had in a deal like this, so I am a little sour on it and I would hate to see the same thing happen to you. One of my partners had credentials, but was an idiot and I didn't realize it until way too late, and the other thought there was some kind of prestige and romance in owning a restaurant and had no idea of the hard work it is. Nothing romantic about it. The ideal trio in my mind would be a strong FOH person, strong BOH person and a strong overall business person. If you do decide to pursue this, I cannot emphasize enough to make sure you are all on the same page. Make sure you all have the same vision for what the place should be, and define that clearly before you do anything. Then stick to it. For instance, if one of you wants to do French, one BBQ and the other a sports bar, this is obviously not going to work. So, say you all have the idea to do a French restaurant. Make sure you have a space in an area that supports this type of establishment. A French restaurant won't work in a blue collar neighborhood or strip mall. This may sound "duh", but I have seen people actually try to do this and then wonder why they failed. You are selling a product, and the product needs to fit the demand of the area. Sounds simple, but I have seen several people try to force their personal taste on people who want something else and then blame the customer when they fail with excuses like "We were ahead of our time", or "They don't get what we're trying to do here" when in fact they didn't listen to what their customers wanted and weren't willing to change their vision to accomodate their clientele.
post #14 of 16
Thread Starter 

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I actually approached them! One is a friend and the other I have yet to meet! As I said, it is in its preliminary stages...I am already wary and I echo all your concerns... that is why I put the question out there! All three of us have the same financial situation...I do however worry that I will be the "third wheel" and I will definately discuss this at our first meeting. I am not interested in getting involved with people who are not serious and I do not want to be taken advantage of either! Actually, it was this friend who insisted I work in a french restaurant in the garde manger first so as to "get my feet a little wet" and see if I really want to pursue this (I guess he wants to make sure for himself as well).
I am now in a position to keep my ears and eyes WIDE open during all this...thanks to all the great advice I have recieved in this forum! Your past situation is exactly what I am trying to avoid and your insight will help tremendously.
post #15 of 16
Well, on the other side of the coin, nothing ventured, nothing gained. You don't necessarily need to be a third wheel in that you can have value as a concept person. I cook. I don't run the FOH, although sometimes I have to step in. I also am not the person to ask about decor, glassware, china etc. The Martha Stewart factor, so to speak. The difference between a good meal and an experience. I don't have that flair and don't pretend to. Would I put high value on someone who does? You bet. It can make all the difference. It was smart of your buddy to have you actually work in a restaurant. Just so you can see the pace and have an idea of the viability of some things you might want to do. I say this because I know people who because they made two dozen hors d'oervres that their friends liked now think they should be a caterer. Then they find out that two dozen and five hundred are very different. I remember reading an article once that I found highly entertaining, but very valid, called "So you want to own a restaurant". They recommended the owner-to-be work at least 6 mo. in a restaurant, preferably in all positions including dish washer. They said most people at that point would have decided they had more sense than to pursue this. Next, they pointed out that based on the fact most new restaurants don't turn a profit for the first 3-5 years, anyone with a brain would put their money elsewhere where it would do more good. They had other very good tips, but I think those are the two big ones. You really need to understand how a restaurant operates because it is very different from any other retail business. You really have to be willing to devote a lot of time and energy, and you really have to love it. Otherwise it just doesn't make sense to even attempt it. Successful restaurant owners are like race car drivers in some respects. It seems like a totally crazy thing to do, but it gets in your blood and you just have to do it. I would like nothing better than to read a post from you that you and your friends pulled it off and have a highly successful operation. And don't undervalue your contribution. I have seen chefs that thought they knew it all fail, and people with literally no experience do well. The difference I believe is the successful people see a need and try to fill it and the failures have an idea of what they want, but refuse to notice that it's not what the market wants. When I lament the money I lost, my mother says "Well, chalk it up as tuition in the school of hard knocks. You learned things, and that's never wasted." She's right. I can say I started a restaurant from ground up that's still operating as I set it up, menu and everything even though it has a different owner, and I'm in the process of a successful turn around at another place. Best of luck whichever you decide. We're always here to help.
post #16 of 16
Thread Starter 

thanks again

thanks for the boost - I am looking forward to my stint in the restaurant and am prepared to be very obserant...experience is a must and I am quite aware that working in restaurants while putting myself through school doesn't quite measure up to an actual professional "french cuisine" inspired kitchen.
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