or Connect
ChefTalk.com › ChefTalk Cooking Forums › Professional Food Service › Professional Chefs › is anyone a Chef/Partner? looking for advice
New Posts  All Forums:Forum Nav:

is anyone a Chef/Partner? looking for advice

post #1 of 8
Thread Starter 

Hi everyone, I was wondering if anyone is a chef/partner. 

 

I'm entering a relationship with 2 investors for a new restaurant, they are contributing 40% each, and I'm am providing the remaining 20% for startup/investment funds. They will be not involved in the day to day. I will be doing all the menus/cooking/ordering/BOH/employee training etc.

 

I will take a salary, they will not. I will be the one working the 80 hours per week, they will not.

 

Just wondering if anyone has some experience and could provide some examples of how the equity is split between working partner and investors. I can't find many relevant examples of partnership agreements on the web. 

 

Would it be simply me getting 20% profit share plus the salary? Or would it wise to ask for more equity since the restaurant is my concept and will be doing most all work.   

 

I know this a rather vague, but wondering if you can share your experiences. For instance, is it common to calculate sweat equity into a deal? What is your percentage as a working partner?

 

Any advice is appreciated! 

Thanks!

post #2 of 8

@Dave S

There is a pretty good reason why there is not to much information about partnerships online. You'll understand better in the coming months.

There will be plenty of posts to your question both positive and negative. The only thing I can tell you at this time is to have every little detail in writing. I personally feel the most important item in your contract, above all, is how will the partnership dissolve if the time comes. I should probably say when it comes.

PS. This is just me. If you are investing your labor and taking on all the day to day responsibilities, I would use that to calculate the evaluation of your investment. Keep your money.

FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
FOR YEARS I LIVED TO WORK! NOW I WORK TO LIVE!
Reply
post #3 of 8
Thread Starter 

@panini Good point regarding keeping my money. That was an option for me as well, to just have sweat equity as part of my deal. This investment is very low, we are not building a new brick and mortar or anything. We just basically buying equipment because the kitchen will be part of a new brewery complex, operated as a separate entity. 

I wanted to contribute some money, to get more equity as we may transition into catering, events, retail products and things like that. I think there is more upside and profit potential above selling burgers. 

Also, very good point about having all the details worked out regarding dissolution. 

 

Thanks for the response!

post #4 of 8

I would imagine your partners might view your salary as being your sweat equity. Partnerships are very difficult, no matter how much you think you know the people. Reality always somehow turns out differently than expected down the road a ways. Ditto on the advice from @panini especially this part

Quote:

Originally Posted by panini View Post

 

The only thing I can tell you at this time is to have every little detail in writing. I personally feel the most important item in your contract, above all, is how will the partnership dissolve if the time comes. I should probably say when it comes.

 

Wisdom comes with age, but sometimes age comes alone.
Reply
Wisdom comes with age, but sometimes age comes alone.
Reply
post #5 of 8

     I suspect a good lawyer who specializes in this area can explain the details and standard arrangements. Depending on your area, I'd also check the grapevine to see if there are any former partners of any business you could have a chat with.  And of course, Barnes and Noble would most likely have a good book on the subject. 

   I do think that you may be getting the better end of things, as odd as that may sound. Although you may be the one working 80 hours a week, you are also drawing a salary. So in the event of a partnership dissolution, business failure or other unfortunate occurrence, you will have been taking money out of the business from inception. Your partners, in the event there is little profit, will get little. 

     With that in mind, your salary could be seen as an advance on profits. As Panini has suggested, writing everything down is paramount. 

I suspect also that you should not rely solely on "standard" partnerships. Most important are the communications and stated expectations between you and your partners as individuals. 

   So does your salary as accrued, in the event of a soured business, count against your losses in investment? You agree to this? If you don't agree, that needs to be clarified. 

Salary in my opinion should be for the hours and sweat equity, not as a counter to the loss of your investment or a balance to the loss of your partners investment, if that makes any sense.

 As I have suggested in other posts, a clear and open discussion with your partners about what each sees as "obvious" is required.

Any standard agreement is by its' very nature going to be general. An agreement written to the specific needs of you and your partners will clarify beforehand what the individual expectations are and be much stronger as a result.  

     Too often partnerships are written in the same spirit as the investment idea is conceived, full of hope, promise and high expectations, more an administrative hurdle to overcome than the reality defining document it should be. When the future arrives, everyone finds what has been overlooked. So again as Panini suggests, I would look ahead to the possible dissolution of the partnership, either all at once in the worst case, or individually as each partner decides they have had enough. What will each partner be expecting during that time? 

     As a last thought, I'll throw this in. You're doing the work, they are the silent partners. 

Are they silent while drinking for free at the bar every night? Are they expecting to have all the meals they want for free? Are you? 

When do they get the chance to inform you that there are issues you are not addressing? If they see something, when can they say something? 

     What will be the measurement marks for the evaluation of the business and whether it is succeeding or not? How will your success be measured against your partners expectations? 

     Standard agreements will provide some basis for understanding the basics of any agreement. That's a really good thing to explore. But there is also that huge bugaboo called human nature.  You and your partners are all individuals with different needs, wants, flaws and expectations. The agreement should reflect that as well. 

post #6 of 8
Thread Starter 

thanks so much @cheflayne @panini @chefwriter these are great points, just the reason I joined the site after stalking for a while. I sincerely appreciate it. 

I would like to respond more fully this weekend or early next week. Just had a few minutes online to say thank you again. Lot of great questions and concerns brought up. 

post #7 of 8

Just in general accounting terms the standard arrangement would be your salary, then profits assigned by points based on percentage of your investment stake.  Obviously you should have a lawyer draw up a formal contract/arrangement which can be whatever you all are comfortable with.  But the things pointed out need to be hammered out ahead of time:  How much will everyone make?  Will everyone expect freebies?  Who will be tasked with what responsibilities?  What authority is to be assigned to whom?

 

Sadly lots of partnerships that start out as friendships blow up when business enters the mix.  A good buddy of mine started a business with his best friend.  It went well for a few years but eventually they began to disagree, and eventually his friend forced him out and they no longer speak.  Having a solid written agreement can go a long ways towards preventing this.

 

Best of luck to you, Dave S!

"Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act but a habit." - Aristotle
Reply
"Excellence is an art won by training and habituation. We do not act rightly because we have virtue or excellence, but we rather have those because we have acted rightly. We are what we repeatedly do. Excellence, then, is not an act but a habit." - Aristotle
Reply
post #8 of 8

Hi, I am /will be doing something similar to you in the near future. I am working at the moment for a guy who has 12 investors in the business. He has put everything together, found all the key staff, sorted out the lease, the lawyers, licences and everything else in order for us to open...He has put 20% of price tag on this involvement and than he bought some more equity for himself. He is a very experienced man and has done this before. So 20% of the profits to make everything possible, all of 12 other investors are silent but one of other people commenting is right, they all like to come and expect this and that and can be quite a pain in the @!#?. I know that every investor and they party have 25% off food and drink only. we are a large music venue 400 capacity/200 seats so it might be different to you but I think the principle is the same. If you are getting it all together, and will be holding it all together in the future make sure to get paid for it, I know I will as what I am doing at the moment is tremendous amount of work. Get a lawyer and negotiate yourself the best deal in detail, this will be money well spent I am not a big fan of spending on legal issues but I had a experience a few years back which taught me to have everything on paper.

As far as I am concerned when this venture I am involved in has broken even the owner has agreed to help me with my project. Now I will get everything together and for this I will have a 20% share in the business. I will have a wage when I work there, but in case of me leaving I will loose the wage but retain my 20% of profits. I don't want to be shackled to it for life although all I want to do in life is cook in my place. Good luck

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: Professional Chefs
ChefTalk.com › ChefTalk Cooking Forums › Professional Food Service › Professional Chefs › is anyone a Chef/Partner? looking for advice