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| Restaurants |
Gastronomic Proportions
Stewart Kampel
07/01/2004
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That elicits smiles
from investors such as Will Montero, who took a liking to Mills when he worked
in bars in Boston 10 years ago. Montero, who had professional restaurant
training at Johnson and Wales College, asked early on to see Mills’ business
plan for the Biltmore Room. “There’s something about Jeff,” Montero explains. “I
normally wouldn’t have done it, but I gave him $35,000. I keep an eye on the
books. Typically I’d expect a return in a year and a half. I think my return
will be triple what I thought it would be.”
Yet another lesson for would-be
restaurateurs: each deal is unique. As Nieporent forged his success, De Niro, a
Montrachet fan who owned property in Tribeca, came to him with an idea for the
Tribeca Grill. But Nieporent and his group had to raise $2 million and agree
to a deal that called for a portion of the investment to be returned before
profits. Nieporent went in for sweat equity plus salary. “We projected a return
in five years,” he recalls. “Actually, we returned the money in two years.” The
largest investment came in units of $200,000 from investors such as Bill Murray
and Sean Penn.
An investor with the capital and the patience must also pass a
credit assessment and an ethics check. In states such as New York, every
investor must be listed on an application for a liquor license and be
fingerprinted to rule out a criminal background. (The government can bar an
investor.)
Strategy, of course, is crucial. When Himmel was flush with the
success of his Grill 23 & Bar in Boston in 1983, he sought to capitalize on
his winning formula and carry high-end food to the suburbs. He failed. “We
didn’t belong there,” he says. “There was too much competition, and people
didn’t want that kind of a check.”
In 2003, however, the well-seasoned Himmel
opened the Excelsior restaurant with the grand duchess of Boston chefs, Lydia
Shire, in the kitchen. It was designed by the much-lauded Adam Tihany and had a budget of $2.25 million. Finding
investors proved easy. “I had a list of 10 investors to go to,” he says. Among
them were friends of his neighbor in Marblehead, Mass., Peter Lynch. “The first
three put up $750,000 each, and I put up an equal share.” That was it. Excelsior
was lauded from Burbank to the Back Bay as Boston’s best new restaurant in
2003.
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