Beware of the Minimal Restaurant Investor
Labor Day weekend always triggers memories and flashbacks of days when I was knee deep in the stuff that goes along with day to day restaurant operations. Today, hillside, overlooking a wine country valley, I smirk while pondering those moments. Many of them are missed. Others make me shiver, quiver, quake and shake as though a child being held hostage by demons of the mind. Like any experience, restaurateuring has it's moments to long over and others to run from.
Let's visit the minimal investor man moment for a moment. That's one of those scary moments. Anyone who has raised money for the purposes of financing a restaurant knows the guy. I met him twice. Once he wasn't too bad or overbearing. The second guy was a mega-monster who had to be put in his place.
One character flow of many minimal investor guys: They think they made a major investment. While you were talking macro, they were talking micro and their investment – the lowest possible share available – occasionally split with someone else reflects their ignorance. They are always the night-marsh kind of guy who walks the floor, shaking hands, introducing himself as "one of the owners" at first and then progressing to "the owner".
Usually these types come to the table late, just when you need the final influx of cash to open the doors. And since they sometimes look at themselves as project savers, they often take liberties that normal, full share investors would never take. Simply, it's the half-share or quarter-share hustle that an investor wanna-be springs on an owner who needs to find just a bit more capital to feel comfortable about opening.
It seldom fails the smallest investor makes his presence known he most by boisterously telling friends, family and customers "He is an owner" , while they enjoy the excitement of walking through the dining room with a "just checking on things" stride
At one point in my career I made the mistake of taking a miniscule amount of capital – less than what a party of eight would spend at The French Laundry on a Saturday night – from a neighbor who pleaded his case while chugging beer in the bar. Unfortunately, I accepted the offer, drew up the paperwork and proceeded to welcome him to the investor's group. Now I always made my investor's feel special, welcome and part of a "club" atmosphere. They all had signing privileges at the restaurant and would be billed monthly, if they so chose. They would receive special invitations to parties and events and would also receive complimentary wine, appetizers and discounts on their food if the mood was right.
Minimal investment guy took advantage of all of these. His favorite act of ownership was to introduce me as "the manager" to the tables of business associates he would bring to the restaurant. I might add, he was lawyer who had worked in the Nixon administration.
He also let his two annoying children know he was an investor for whenever they came to the restaurant they informed me their "daddy was the owner."
The last straw came one evening when he introduced me as "the manager" to a group of eight lawyers and told them what a wonderful job I was doing. I proceeded to look him straight in the eye – I contemplated grabbing him – and assertively explained that if he introduced me as "the manager" one more time I would let everyone know how minimal his investment was.
I proceeded to present the bill, without discount, and inform him that he had to pay as his house account was overdue.
He got the message. He stopped prancing the dining room. His kids seldom came into the restaurant and he never again mentioned the word "manager" in my presence.
Beware of minimal investors. They are in the game for something other than enjoyment, profitability or success. And usually, the aggravation they cause is never worth the dollar amount they ponied up to get the invitation to the New Year's Eve party.
