Opening a restaurant is a dicey proposition. Even more so in this shaky economy. You have to be part masochist, part trend rider/creator. A keen intuition for what’s missing in the market, and how to serve it well, at a price people are willing to pay, repeatedly, is a must.
Various models have been tried over the years, including pay what you will and even turning the tables, so to speak, choosing who gets the privilege of eating at the restaurant.
Mission Street Food has taken another route, arguably a smarter one for these times: They borrow another restaurant’s space two nights a week, feature guest chefs and donate the profits to charitable organizations. This minimizes overhead while giving patrons an incentive to eat out that is more than just for their own pleasure, further justifying them spending their money there.
But it’s Mission Street Food’s recent announcement of seeking to create a co-op style full time restaurant that highlights a key advantage to the model:
They’ve had a year to beta test their restaurant, in somebody else’s space, proving that a charitable restaurant can be viable. It’s clear from their blog and Twitter that they have an engaged following who supports what they’re up to and has ideas to refine it.
Now, with a year under their belt, they want to open a full time restaurant based on the model they’ve established. Instead of putting a large amount of their own cash into this, they’ve opened it up to patrons investing, ideally 100 at $500. Smartly, they offer either dividends (predicted to be $70 annually) or the option to cash out, getting $1000 in restaurant gift certificates. To make it completely safe, it’s held in an escrow account, with the escape clause that should the restaurant never open, everybody’s money gets returned in full.
As unusual as it sounds, I’ve seen it succeed before, with Oakland’s sustainability and arts focused Awaken Cafe relying on people investing in them even before opening, giving them more than their investment amount in food. It’s now an award winning cafe, looking to expand in 2010 to become a full restaurant and entertainment venue. This same type of approach is also undertaken–but on a more ambitious scale–at the Black Star Co-op in Austin, Texas.
Readers: Will Mission Street Foods succeed in transitioning from a twice a week treat to a full time endeavor, standing on its own? Is there ways you see it improving the proposed funding model, and effectively moving from an event focused to everyday place? Their patrons already have ideas for them, as seen in the comments here.
Paul Smith is a sustainable business innovator, the founder of GreenSmith Consulting, and has an MBA in Sustainable Management from Presidio Graduate School in San Francisco. He creates interest in, conversations around, and business for green (and greening) companies, via social media.