Why are we funding our restaurant’s evolution with Kickstarter?
Tags: Restaurant Business, Independent Restaurants, One Fair Wage, Open Book Management, Kickstarter

There are many reasons, here is one:

We are working toward a mission of changing industry standard assumptions about restaurant finance.

The Juliet team is endeavoring to make our initial experiment a permanent way of work. We are a mission based restaurant organization that puts the creation of great jobs, the development of careers with purpose, and direct and impactful community engagement on equal footing with excellent products and successful business operations (read: money).

We opened Juliet in March of 2015 (technically February 29th, but that’s just one day of that month, and it only comes around once every four years), challenging the status quo in a number of ways. Our top priority was paying all staff members full wages instead of relying on alternative minimum wages for tipped workers (then $3/hour), or the industry standard practice of lower wages for kitchen workers in non management positions and support staff (typically jobs with titles like “food runner” “back server”), even though these are not tipped positions.

To work toward this ideal, we engaged with two main strategies:

eliminating tip lines from the guest experience, and paying all staff the full wage learning to practice open book finance for the dual purpose of developing financial literacy among the staff — a step toward meaningful career development — as well as making financial incentive possible for all (read: staff kept a portion of the restaurants profits).

These strategies directly impact two lines of the profit and loss statement: Direct Labor, and Net Operating Profit.

If anyone reads this post and seems to want more, I’ll start at the beginning and unpack the restaurant P+L, or profit and loss statement, in a future post.

If you are dying for a rundown on how restaurant finance works, you could listen to this Copper & Heat podcast episode featuring our dear friend, Irene Li — someone I consider a superhero, but she probably prefers more modest titles.

For now, suffice it to say that traditional restaurant investors are not typically excited to hear any business owner seeking funding — especially an unproven one — present a plan that both intentionally (and aggressively) increases DL — direct labor, and gives away some of the potential NOP — net operating profit.

When Katrina and I were first dreaming up Juliet, we were looking at spaces about three times the size, between 2,800 and 3,400 square feet. We had our initial conversations with a number of those investors. They did not like what we had to say.

Now, careful, this doesn’t make them bad, wrong, or anything like that — at least not automatically. Some of them were, some of them weren’t…in my opinion. But seeking standard returns, in a vacuum, is actually a perfectly reasonable expectation. It is a reasonable request of an investor that the business owner reduce costs and increase profits.

Reducing overall costs, and increasing profits was actually our intention, but we didn’t have a proven approach to how we were going to get there. The model for what we were trying to do did not exist; at least not readily in the history of restaurants. We believed that we would get there through better training, longer tenure, and increasing wages among a well empowered staff. Somewhere along the way we got the four-part term in our vernacular: super empowered helpful individuals. And…it worked. But that’s a story for another day.

Anyway, an aspiration for 3,400 square feet shrank to a reality of 998 and Juliet was brought to life on paper (read: we signed a lease). It was funded by ourselves, some friends and family of the closest variety, and a community of 318 individuals through Kickstarter. This tradeoff in size and scale meant that we were always going to have to reckon with what was possible someday in the future. That day is now.

Kickstarter funding allows us to reward our supporters with future value. The majority of our supporters will pre pay for food and service in the space. A handful will take advantage of some pretty unique experiences, like the opportunity to present their own menus in the Juliet kitchen, to the public, or get 10–20 of their closest friends together and have an online murder mystery theatre experience (starring us, and them).

These supporters will be well served for their early support, but they aren’t concerned with five years of cost controls and profit distribution, leaving us free to work our very challenging but absolutely successful business model with our team as our top priority.

Kickstarter is not our only source of funding, and again…if anyone is reading this, I suppose I’ll eventually get to that. Kickstarter, though, is our first method of fundraising. In addition to the community outreach it provides, and the full seats it allows for early upon opening (or re-opening in this case), it is finance that comes with one string and one string only: the requirement to do our best work for individuals who are excited to experience it. That is the kind of obligation we are great at fulfilling.

A successful round of crowdfunding in this manner is an incredibly important piece of our overall funding puzzle. Juliet is growing. Not quite into the aspirational 3,400 square feet, but pretty close to the 2,800 mark. We aren’t compromising on space again (well, I suppose we still are a little bit). That’s a nice evolution. But we are exiting the hardest year of our history, with an uncertain immediate future, and a need to grow and evolve now.

Kickstarter will keep us free to weather the dynamic response that the year ahead will require, as we put the pieces of the world together, and rebuild it the way we want to see it for years and years to come.

So, more to come. For now, Juliet is crowdfunding its evolution, as a continuation of our revolution. Full wages are difficult to budget for and achieve through industry standard practices. We believe that means the industry standards should change. That starts with the foundations of finance. Kickstarter is our first, but far from our only tactic to achieve the larger strategy that is essential to our mission. It is the most important one today.