Paying Your Investors Back in the Restaurant World
Restaurants are insanely hard businesses. The rents fluctuate, food costs change, some chefs are better than others on food usage to create a high margin, the turnover on staff is high, customers come and go and peoples taste change.
I met with a restaurateur the other day to do a podcast and she shared with me something she does for her investors. It is extremely smart. As an investor in the restaurant space, although very very few, I know how difficult it is to get a return on our investment. I am not looking for huge returns but hopefully capital back because I am investing in the community.
What she does is give each of her investors, based on how much they put in, a tab with a cap every year that gives them the ability to come in and dine for free. That goes to paying them back for their investment. It makes it easier on her to return the capital in payouts because it is just about less being made that evening. It also gives her investors the desire to bring in friends to dine on them which turns into new customers.
Such a great idea. Certainly, every investor of a restaurant wants a seat at the bar or a table and knowing that there is an open tab up to a certain amount each year makes you want to come in even more. So if you are starting a restaurant and talking to investors, think about this idea. It is super smart.