Finding funding to open a restaurant used to be a simple matter. Either you'd write up a business plan and account for every penny to be earned and spent and head to the bank hoping for a sympathetic loan officer, or you'd rustle up a few of your richest acquaintances to back you, all the while hoping they wouldn't decide to get lippy at the first sign of rough seas. But small business loans have gotten tougher to land and everyone these days thinks they know how to run a restaurant, so finding silent partners who won't mess with your vision can be tricky. Enter crowdfunding, where risk is spread among hundreds of small-time investors (or donators, in many cases). And two budding restaurateurs in the Denver area are now taking slightly different approaches to amassing the capital needed to bring their ideas to life while defraying risk — and hopefully adding a little reward — to anyone kicking in a few bucks.
Jeff Cornelius is aiming to open Globe Hall, a Texas barbecue joint and live music venue, this fall in Globeville. He's taken over the former home of the Sidewinder and, to help fund the effort, is offering "beer for life" to anyone willing to pony up $500. Investors, or "Founding Lodge Members" (part of Globe Hall was originally the Saint Jacob's Lodge Hall built in 1903), will in fact receive free beer, but only in doses of two non-premium drafts and cans per visit — which could still add up to a lot of beers in a lifetime. Members will also get an invitation to the pre-opening barbecue banquet and an annual members-only banquet as well as other perks like a Lodge Member T-shirt and lapel pin, a membership photo ID, and having their names placed on both a Lodge Member plaque and a priority e-mail list for event notification. More information is available on Globe Hall's Facebook page.
Another startup across town is taking advantage of a new Colorado law to help raise funds. David Sevcik and his partners are hoping to raise funds through equity crowdfunding, which just became legal in August under House Bill 1246. Equity crowdfunding differs slightly from other crowdfunding models like Kickstarter and Indiegogo, where potential business owners offer gifts of varying value to people who essentially donate money to projects of their choice. Once you give your money and get your gift, you're out. But equity crowdfunding allows startups to actually offer a small piece of ownership in the company, similar to offering securities with a potential rate of return.
Sevcik, along with Iowa State University pals Tony Fischels and Daniel Ducharme, is using new website EquityEats.com to try to raise $225,000 to start Mac 'N Noodles, a fast-casual macaroni-and-cheese eatery they hope to open in Lakewood. The campaign is divided into two phases: In the first, EquityEats requires the startup to raise $10,000 (in amounts ranging from $100 to $2,500) to prove interest. After that, they can go after bigger fish ($5,000 — larger amounts must adhere to specific SEC regulations) to raise the remaining funds. For smaller investors, return comes in the form of annual store credit (meaning food), but investors who put up larger amounts can have actual equity in the restaurant with a share of the profits. Sevcik says that Mac 'N Noodles will be the first equity crowdfunded restaurant in Colorado if the campaign is successful.
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Sounds simple enough: You give Mac 'N Noodles money, and the founders give you food — a small amount every year for as long as the company remains in business. "It's definitely different than Kickstarter because it offers you a piece of the pie," explains Sevcik. Or a bowl of the noodles, as is the case here. The food will come in the form of eight different kinds of macaroni and cheese — from a basic version to mash-up styles like Philly cheese steak or Buffalo chicken — cooked to order in front of the customer.
Sevcik earned his bachelor of science degree from Iowa State's hotel, restaurant and institution management program; he has experience in the kitchen as well as in restaurant management. All of the recipes for Mac 'N Noodles are his and he will be the day-to-day operations manager at the restaurant if the EquityEats campaign is successful. The team is eyeing a location on West Colfax Avenue but the pace of the campaign will determine how quickly the partners can get a lease signed. Once the money's in place, Sevcik says everything else is lined up so that the eatery can open in another three months.
Part of his vision is to be a community-focused business that will give back to local organizations; he says the funding model will help cement the restaurant's place in the community. "It's not just ours," he notes. "Our customers have a vested interest, too."