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Investment/consulting new restaurant

post #1 of 3
Thread Starter 

My husband and I (both long term restaurant professionals- Executive Chefs & GMs) are looking to go into business with a couple of partners who already have an established successful restaurant that I work at. 

 

We would be investing about $15-20K upfront and are looking to define sweat equity and consulting services.  Since we won't just be investors, we will be involved in the day to day operations of getting this place launched, we want to know what $ amount to put on our services.  Menu design, costing, recipe books, SOPs, the list goes on and on.  We would also be doing staff training, POS programming and ongoing support with operations including marketing, specials, on going training, hiring and other human resource types of things once the business is open.  

 

The sweat equity we are thinking of is me taking a pay cut at my current job (about $20K cut) and putting that money towards this new location.  How would that type of investment be tracked?  How are investors paid out?  Any thoughts would be great appreciated.  BTW the company would be an S corp, so any feelings on that vs an LLC would be great as well.  Thanks!     

post #2 of 3

I suggest you do not try and value this cap and trade stuff and consult a lawyer.  In general, I would favor a buy in agreement of some kind just like the kind used when companies take on a new partner. 

 

http://www.mattdickstein.com/Files/1Business%20Law/Bring%20in%20new%20partner%20-%20long.htm

post #3 of 3

You and your partners both need to view your actual work in/on the concept separate from your investment. The money that you put in buys you equity. Your actual work should be paid based on the fair market value of the job you are performing. Agree on the pay for someone who is performing that work (what would you have to pay someone else to do it?) before you try and negotiate trading some or all of that pay for further equity.

Brandon O'Dell

 

Friend That Cooks Home Chef Service

www.friendthatcooks.com

O'Dell Restaurant Consulting

www.bodellconsulting.com

 

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Brandon O'Dell

 

Friend That Cooks Home Chef Service

www.friendthatcooks.com

O'Dell Restaurant Consulting

www.bodellconsulting.com

 

Reply
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