Restaurant and Bar Operators

Video gaming

The State of Illinois has given a huge gift to Illinois restaurant and bar operators, by allowing them to operate 5 slot machines in establishments with a liquor license. There are currently more than 5,700 establishments, with more than 27,000 slot machines, generating more than $1.2 Billion Dollars per month of play, with a net gaming profit of about $100 Million Dollars per month.

Although the average monthly profit per establishment is around $18,000 Dollars per month, many establishments are seeing profits of $50,000 to $80,000 per month. These profits come from simply placing five slot machines in the establishment, with little other effort. The profits from the five slot machines, in many cases, are far greater than the profits the restaurant and bar can generate from many hours of hard work by their owners and employees.

As a result of these facts, many restaurant and bar owners would like to open more establishments, but their ability to do so is limited by capital.

If you own and operate one or more profitable restaurants with bars and you are interested in opening more, you need to talk to The Italian Café, and the Italian Café wants to talk to you. The only thing you need to open a restaurant more than lots and lots of money is lots and lots of time! The Italian Café helps you with both of those.

Opening a restaurant

In order to open a successful restaurant and bar you need to find the right location. In order to do that, you will spend hours looking for space with the right automobile and foot traffic patterns and the right demographics that are likely to use your style of restaurant and bar. You need to look at the number of residents or workers within 1, 3 and 5 miles of the location and their household income and preferences.

You will have to look at the zoning, parking and other requirements in the city where the site is located to ensure that you can get a business license, liquor license and gaming license at that location.

Once you think you have the right location, you will have to retain an attorney to help you negotiate the purchase or lease of the site. You will have to work with an architect to draw the build out of the space and help you deal with the city building department, planning commission and city council in order to get a business license, liquor license, gaming license, building permits and state licensing.

When you have the building permits, you will have to negotiate a construction contract with a licensed, bonded and insured general contractor, or with several subcontractors if you general the work yourself. More time and money.

When you get the establishment built, decorated and equipped, you have spent lots and lots of time and $150,000.00 or more in money. Congratulations, you now have a built out, equipped and decorated un-open restaurant and bar.

In order to open, you need a security deposit, signage, menus, hired employees and training for the employees, initial advertising, food, liquor and an initial operating budget. More time, and about $50,000.00.

Opening a restaurant with the Italian Café

The Italian Café has its own lawyers, architects, construction company and skill to locate, negotiate the acquisition or lease of the space, deal with the city, planning commission, city council, building department and subcontractors to get the restaurant and bar built out and equipped. This saves you loads of time.

You simply work with The Italian Café to pick the right location and lay-out the restaurant and bar and The Italian Café does the rest. The Italian Café negotiates a lease with the landlord for five years with at least one, and hopefully more, five year options. The lease runs to The Italian Café as tenant. You agree on the plan with The Italian Café and The Italian Café builds out and equips the restaurant and bar at its expense. The Italian Café spends the $150,000.00, or more, to build out and equip the space, and then Sub-leases the space to you.

You still need a security deposit for the Sub-lease, your business, liquor and gaming license, signage, menus, hired employees and training for the help, initial advertising, food, liquor and an initial operating budget. You still incur the $50,000.00, or so, to open, but that’s a lot better than needing $200,000.00 to open.

You can open four restaurants and bars with The Italian Café for the cost you will incur to open one without them and you will spend a whole lot more of your time without The Italian Café.

The sub-lease

You enter into a Sub-lease for the restaurant and bar premises with The Italian Café for the term it negotiates on it’s lease of the premises. The sub-lease restricts you from removing any equipment furnished by The Italian Café and any replacement equipment you provide to the premises during the term of the Sub-Lease.

The Sub-lease requires you to obtain a business license, liquor licenses and gaming licenses and to open and operate the restaurant, bar and the maximum number of video gaming machines allowed by law, currently five, during the term of the Sub-lease.

This Sub-lease structure allows you to operate your business as you see fit, with no interference from the Italian Café, as you would as a tenant under any other lease, as long as you comply with the terms of the Sub-lease.

The rent under the Sub-lease is based upon a 50/50 split of the expected profit from the restaurant, bar and slot machines, even though The Italian Café has provided three quarters or more of the money and time required to open. The expected profit, and the rent under the Sub-lease is determined by you and The Italian Café.

For example, if you and The Italian Cafe agreed that the restaurant and bar will incur 30% of the gross sales for food and beverage costs, 30% of the gross sales for labor costs and 10% of the gross sales for utilities, insurance, marketing and other miscellaneous costs, the profit before rent would be 30% of the gross sales.

In this example we assume The Italian Café leased the premises for $5,000 per month. In this example we assumed that you and The Italian Café determined that the restaurant and bar would generate a minimum of $50,000.00 in gross sales per month and eventually generate $100,000.00 per month.

Given the facts in this example, the monthly Base Rent under the Sub-lease would be $10,000, calculated as the F&B $15,000 net income before rent (30% of $50,000 Gross Sales), less the Café’s $5,000 rent for the premises, divided in half, plus the Café’s $5,000 rent for the premises. After paying the Café’s rent for the premises, the Café would net $5,000 and you would net $5,000 after paying the Base Rent.

In this example the Sub-lease would provide for monthly Percentage Rent of 15% of all gross food and beverage sales in excess of $50,000 per month and 50% of all net slot machine revenues and other income. The Percentage Rent provision ensures that you will not pay more than the Base Rent unless there are F&B gross sales above $50,000 in any month and unless there is net slot machine or other revenue in any month

The table below indicates the results of this example.

Leverage your time and money

If you spend $200,000 and open the restaurant illustrated here without the Italian Café, that restaurant would net $25,000 to $40,000 per month to you, and you would spend lots and lots of time opening it.

With the Italian Café, the same $200,000 could open 4 restaurants that combined would generate $50,000 to $80,000 per month to you ($12,500 to $20,000 per restaurant and bar  x 4), twice as much as without the Italian Café. This is because The Italian Café would invest its time and the other $600,000 ($150,000 per restaurant and bar) needed to locate, lease, build out and equip the four restaurants and bars.

Your time requirement with the Italian Café is limited to your review and approval of the location, your review and approval of the restaurant and bar layout and your time to work out the expected profit, the base rent and the percentage rent under the Sub-lease with the Italian Café.

Your time is valuable and your expertise is in running restaurants and bars, not in law, architecture or construction. Because of your expertise and your successful restaurant and bar operations, you can leverage your time and money with the Italian Café to open more restaurants and bars, while you do what you do best, operate restaurants and bars.

Let’s work together.

Call Morris or Chris at (847) 719-3499 or email Morris@goitaliancafe.com or Chris@goitaliancafe.com to discuss this opportunity.

Thanks,

Morris and Chris