The fast-casual dining space was the subject of the latest competition on CNBC’s RESTAURANT STARTUP.
We were introduced to the show’s new investor, Elizabeth Blau, who sat beside Chef Tim Love in place of mainstay Joe Bastianich. Joe’s been so feisty this season, it was a nice change of pace.
But, if you thought Ms. Blau was going to hang back as a newbie, you were in for a rude awakening. Catch her and Tim talk about their choice of concept to fund, in the video clip posted below.
Business and life partners Lara Whittington and Jennifer Bonner have a successful restaurant, Full Circle Tavern and wanted to create a small-plate approach to their new venture, by recreating some of their most popular dishes as sliders. It would be called Full Circle Sliders and they asked the investors for money to fund the fast-casual entity, separate and apart from their Full Circle Tavern.
Their aim is to take it and roll it out across the country and they got an enthusiastic response from Blau. Both she and Tim Love enjoyed the food samples, but Love was concerned about whether sliders are still a “thing” to roll out on a large scale. Ultimately Elizabeth Blau agreed.
Their ask: $200,000 for 15% equity in the new venture.
Peli Peli Kitchen
Instead, they chose to give a chance to the three equal partners in Peli Peli. Like Jennifer and Lara, they want to create a separate entity that would take their fine-dining South African cuisine into the fast-casual market under the name Peli Peli Kitchen.
Chef Paul Friedman, Michael Tran, and Thomas Nguyen already own and operate two successful locations of Peli Peli in the Houston area, but understand that fast-casual requires more up-front familiarity with the kind of food on the menu.
Education is easily provided in a fine-dining atmosphere with staff that can spend the time with diners, but this will be a big challenge in a different food space. If they could pull it off it would be unique and have tremendous upside as a new cuisine in the fast-casual space.
Their ask was 350,000 for 35% of the new venture.
Tran and Nguyen are Vietnamese. Tran was five years-old when he came to the U.S. via boat with his parents. Nguyen’s parents arrived the same way, but he was born in Chicago. He grew emotional on numerous occasions when he spoke of making his family proud of his career choice. They wanted him to be a lawyer and his switch to restaurateur has yet to be totally accepted.
Chef Friedman is South African and came to the U.S. in 1980 due to the political climate in his native country. He wants nothing more than to take America by storm, making his native cuisine the next “big thing”.
Blau and Love enjoyed the immigrants stories of the three men, and how they found each other, then formed a business relationship that is successful. The two also loved the food and saw big risk, but big reward if they could pull it off.
The Pop-Up Restaurant
Elizabeth and Tim both stressed the point about a printed menu being key to help the pop-up restaurant diners understand the food choices as they lined up to order. Antonia LoFaso reemphasized that with the men when they were in the process of creating the decor, menu and signage.
Chef Friedman decided to take a pro-active marketing approach and the guys all dressed up and hit the streets of Los Angeles to see who knew anything at all about South African food. When I say dressed up, I mean that two of them were in costumes, and Chef Friedman had a megaphone, trying to attract attention.
Understanding that they would have to start from scratch with their diners, the men set about doing what they could. They hit a home run on the restaurant’s design, decor and signage but the printed menu was pathetic. Even a second try at making the food choices understandable missed the mark.
In a misguided attempt to help, Friedman decided to stay out of the kitchen, importing members of his restaurant staff to cook as he greeted diners and engaged them in a tutorial while they read the menus.
He was needed in the kitchen and as the service began to turn disastrous, he had to run back to right the ship.
One particular snafu was discovered by Tim Love and it wasn’t pretty. Chicken was being stored at a temperature significantly below what is recommended and it had to be discarded. We’ve yet to see food poisoning on the show, and he wasn’t about to start now/.
When all was said and done, however, both Elizabeth and Tim wanted in on the venture, because 100% of the diners loved the food and the concept. They also agreed that they weren’t comfortable investing in the fast-casual venture as a standalone entity. When Friedman, Tom and Michael agreed to that approach the bidding began.
Then the battle began.
Tran asked for $2 million if Blau or Love wanted in 25% the business as a whole. Both rejected that valuation and made offers.
Elizabeth offered $1 million for a quarter of the entire business. Tim upped it, putting $1.2 million on the table. Elizabeth sweetened it by offering $1.25 million. The men decided to shake hands with Blau and it became the largest investment offer in the show’s history.
When Blau wanted modifications to the deal structure after taping ended, she lost the deal. The three men of Peli Peli found investments elsewhere and are about to open their new Peli Peli Kitchen sometime this year.
It’s the second time in two week’s that an agreement on-camera went belly-up when the show ended. Hmmm….
CNBC airs new episodes of RESTAURANT STARTUP Wednesday nights at 10 p.m. ET/PT. Image credit: CNBC, used with permission