6 Key Steps to a Successful Restaurant PartnershipSeptember 21, 2015
Looking to partner with a relative or friend to furnish your dream for a new restaurant? There are a number of preemptive measures to ensure success for both partners.
It is quite common for family members and friends to venture into the restaurant business together. Buying and operating a restaurant can, in many instances, be much more successful if you’re involved in a partnership venture. Joining forces does have its difficulties, though, and it is important for both partners to agree on a variety of issues that come along with owning and operating a restaurant before jumping into a partnership.
What do successful partnerships depend on?
There are a few things you need to do right at the beginning of the partnership to ensure restaurant success. It is crucial to:
- Make sure that you select the right partner. Partner selection is the single most crucial component of joining forces with someone else. Even if you are partnering with a close friend or relative, you will want to be sure that he/she has the skills and resources to be a good business partner. It is crucial that you look beyond your personal relationships and judge a potential partner by his/her dependability, expertise, and skillset.
- Come to an agreement on the restaurant’s goals. Decide with your partner what type of restaurant you’re interested in purchasing and what long and short term goals you have for the business. Are you looking to resell in a few years or keep it for the long term? You will inevitably run into issues if you and your partner’s goals are not aligned, or if one of you has growth or franchising plans that he/she has not communicated to the other.
- Make sure you have outlined each partner’s role. For smooth business, make sure that each partner has a defined role and there isn’t confusion or overlap. It is best to work off the skills of each individual partner. One partner might be better at managing the kitchen, while one is more cut out for managing the staff, for example.
- Agree on ownership stakes. Ownership stakes, voting stakes, and financial commitments are things you and your partner need to agree on upfront. Partnering with others is common if you have the skills and desire to start the business, yet lack the financial resources necessary in the purchase process. It is imperative that you agree on these issues up front especially in instances where the partners are not contributing equally to the finances, or if one partner is a “silent partner”- meaning his/her only role in the partnership is providing capital to the business.
- Draft a written partnership agreement. Your attorney or broker should assist you in drafting a written partnership agreement that provides details on ownership stakes, decision making roles, financial contributions, exit plans, and any other issues you might foresee. It is crucial to have everything in writing to prevent any issues down the line. With the agreement in writing, there is no way that one partner can remember a stipulation of the agreement differently and make an issue out of it.
- Have regular meetings with your partner. Be sure to communicate regularly about how the goals of the restaurant are playing out and how the divisions of responsibilities are working out for you and your partner. It is far better to discuss issues early, before they get to a point where they damage your partnership, working relationship, or personal relationship. The importance of communication cannot be stressed enough!
If you follow these steps and keep up the regular conversations with your partner, your partnership will have a strong foundation for future growth and success.
Questions? Contact any member of our Hospitality Services Group.