Why Invest in Restaurants? Why Not!

You have all heard some variance of the adage, “Nine out of ten restaurants fail within the first year.” I can’t argue that makes it hard to sell restaurants as an investment. Except for one thing—it isn’t true.

Not even close.

In fact, only 17% of restaurants fail within the first year, the lowest number of any service providing business including real estate agents and brokerages. This myth has been debunked over and over, but the data I am using comes from a comprehensive study by two economists. The summary was published in Forbes.

Hmm. How then, given that the facts override the myth does it linger? Well there is one theory, but this isn’t a column about what are facts, do they matter, and can I make up my own facts if I want to? I’ll save that for another time (teaser: you in fact can’t make up your own facts).

Accepting for now that facts are facts, I think this quote from the researchers sums it up:

“Perhaps due to the visibility and volume of restaurant startups, the public perception is that restaurants often fail. However, as shown in this paper, restaurant turnover rates are not very different from startups of many other different industries.”

The fact is, what we do is for all to see. If the price of gas on a big sign is an indicator of the entire energy sector, or the economy for that matter, then the restaurant on the corner of your block, or the turnover in the entire neighborhood, is a sure sign of the risk of the industry, right?

Hardly.

Humans are notoriously terrible at estimating risk (if we were good at it, we would never drive a car), and the fact that our business successes and failures play out literally in the streets for all to see doesn’t help defeat false narratives.

The reality, however, is that many restaurants and bars and other food and drink businesses make it. In fact, many of these businesses scale far beyond their first store, and there are many opportunities for follow on investments and exits.

Don’t believe me? Fair enough. But would you believe Steve Case? The billionaire co-founder of AOL and founder of venture capital fund, Revolution LLC is very bullish on food. To the tune of tens of millions of dollars over several rounds poured into local startup, Sweetgreen (personal favorite: Rad Thai) and other food ventures. From its inception as a tiny salad spot in Georgetown, Sweetgreen has grown exponentially and is now valued at over $500 million. That’s a lot of green.

That’s one example, and a high profile one at that, but I assure you the list goes on. Whether it is Cava Grill raising $60 million (mostly from Revolution), or Spider Kelly’s entering our seventh year with rosy sales forecasts, examples of successful companies in this business abound.

But sure, there is risk. There are no guarantees, and it is a tricky business—customers are fickle and competition is fierce.

So, what is the secret? How do you improve your odds of picking the right opportunity and mitigating the risk? Ahem. Allow me to introduce myself…

By carefully selecting the founders I work with, patiently curating the concepts so they are ready for primetime and balancing out our portfolio to diversify, I am working hard to put our investors in the best possible position. And of course, I am jumping in with them, side by side.

Will that guarantee success? Absolutely not. But I sure as Hell can beat a 90% fail rate. And you shouldn’t need Steve Case to know that.

Reach out if you want to learn more.

Real Change. Right Here.

For many years, I was a Big Brother. Of course, I have been a big brother for all but those first two blissful years of my life (sorry, Ben), but the capitalized version is different. Big Brothers Big Sisters is a one-to-one mentoring organization that provides youth with adult role models—someone to provide guidance and positive examples. It is a great organization, and the reason I did it was that I wanted to be a part of change I could see right in front of me, right here where I live. There is no anonymity in mentoring, and the change you see is immediate and personal.

I have been looking for some time for an organization that can have the same effect, but on the broader community I live in and the industry I work in. I found it in La Cocina VA. After hearing a piece on NPR about the organization, I called the same day. I joined the Board of Directors weeks later.

La Cocina VA is primarily a culinary training center that provides people—primarily recent immigrants—with the skills and certification they need to work in the hospitality industry. “Job creators” are useless if there is no one with training to fill the jobs. La Cocina provides our industry with qualified and eager workers—something that we desperately need.

More than that, however, La Cocina VA offers hope to our most vulnerable community in the DC area. Language training, conflict resolution, counseling and food assistance are all a part of the program. La Cocina VA wants our members to become impactful members of the community beyond their job, and they understand that the ripple effect of that can be far and wide.

I am thrilled to have been asked to serve, and I hope that I can offer help in taking the organization to the next level. We are currently planning an ambitious new center in South Arlington. There will be a café and catering company to serve the Arlington residential and business community as well as an expanded training center and a culinary incubator to help members learn about the possibilities of entrepreneurship—yeah, I am all over that last part…

From the tiny basement of a church two blocks from where I grew up in Arlington, in the next couple years La Cocina VA will grow into a powerful force for change right here where we live. Skeptical? Look no further than the Founder and CEO, Paty Funegra. She quit her job to start La Cocina VA, and in its short existence, they’ve been visited by Senators and Congressmen, and she has been invited to the White House to talk about the mission.

I hope you’ll keep an eye on our progress and come visit us when we open the center—coffee is on me. Wait, foget that. Pay up—it’s for a good cause.

City Paper Feature Article

 

Spring Brings New Deals

I have been dying to write this blog post as all the details were being settled and all the documents signed. There is a long blog post in me about my love-hate relationship with lawyers. One of whom is my partner. Another time.

Nonetheless, as I write this the sun is bright and warm, and the air smells sweet from new blossoms and feels soft on my skin. Spring is here, and it is the time to leap forward with excitement and hope. As the last nails are hammered in for Takoma Beverage Company, they are only a moment from bursting into life. It has been an incredible—and incredibly fast—journey with founders Seth and Chris, and I am thrilled to see the opening just ahead. I hope you will come visit the store sometime to see for yourself what makes it such a great concept.

And more is coming to life in this season of naissance. We have partnered with two incredible concepts, and we are fundraising for both. Take a look below, and feel free to reach out to me if you are interested in hearing more.


 

City-State Brewing Company
The Flavor of the District

Founders James Warner and Kim Carnahan are committed to paying homage to their adopted hometown of Washington, DC, but they know that it will take more than a name to make a mark on the DC beer scene. James quit a promising career in politics to go all in on his hobby. He has worked in every capacity in the business, and all the while with the intent to learn as much as possible about the beer business so that City-State can be as successful as possible. I was sold on the beer at first taste, and it didn’t take much longer for me to be sold on the team. With a solid business plan in place and a significant amount of money already raised, James and Kim are far along in the process. Mothersauce will join with them to get City-State across the finish line and open for business.

The Eleanor
Bowling Lounge, Music, Bar & Grill

Adam Stein is a well-respected Chef and industry veteran who has launched multiple successful concepts over the years, and now he is ready to launch his own. The Eleanor will help to define Ivy City as the District’s next great neighborhood. The 7,000 square foot location will feature four bowling lanes, event/music space, a movie screen, bar and lounge area and an outdoor patio geared for large scale food and drink events like pig roasts and crab boils. Think of it as a cooler, bolder Spider Kelly’s. The Eleanor has the size, the style and the skill to make a huge impact that will go far beyond its neighborhood. With an LOI in hand for the location, the founders are ready to get going.


I hope that you enjoy this season and the hope and excitement it brings. It is great time for our company, and if you are interested in being a part of all that we are doing, feel free to reach out to me anytime at nick@mothersaucepartners.com.

 

Clarendon Metro

Carnage in Clarendon: Restaurant Trends in Arlington’s Hottest Neighborhood

“Define the definition.”

What the Hell is that supposed to mean? Beats me, but I said it. What can I say, it was my first podcast. I was recently a guest at the ARLnow.com offices for their series, “26 Square Miles-An Arlington Podcast.” Given my background and given the popularity of restaurant articles on the site, I was pretty sure that I was going to be asked about the recent spate of closings in Clarendon. It is a topic worth exploring for sure, and I did my best to contribute to the conversation.

If you are up for it, take a listen here. We jump right in, and then pull back to broader industry trends outside of just our neighborhood. At the end, we talk about the inspiration for Mothersauce, and the plans I have for the company.

So just what has been going on in Clarendon? Well…

Tagliatelle, Brixx (6 months), Park Lane (8 months), Ri Ra, Boulevard Woodgrill, Fuego, Spice, Hard Times, American Tap Room , Amsterdam Falafel.

That’s 10 this year, and I have probably left someone out. Rumors swirl about more closures on the way, and many in the neighborhood are seeing their numbers fall.

So what is behind the Carnage in Clarendon? Hyperbole aside, a lot.

Clarendon has come a long way since the days of my youth when we would head there for Vietnamese food and not much else. The Metro’s arrival, and the brilliant planning by County leaders about how to develop around Metro laid the foundation for the success many businesses have been able to enjoy subsequent. That was 40 years ago. The past 10 years the growth has exceeded even the most optimistic forecaster’s dreams, and Clarendon has become the destination nationally for development. It hit all the right metrics and the residents and businesses flocked.

But there is a limit.

Many of us who have been in the neighborhood for some time felt that the saturation point was inevitable, and we feel we hit it a couple years before half of the businesses above even opened. As operators raced to benefit from the exploding customer base in Clarendon, rents skyrocketed to levels that were just ridiculous. Businesses signed on to high rents right as the market became flooded with concepts.

At the same time, external trends worked to shrink the famous customer base. DC exploded. 14th St., Shaw, Navy Yard, Barracks Row, NoMa. Neighborhoods few would venture to five years ago have become sought after hot spots only a short, cheap Uber away. We have certainly felt that at Spider Kelly’s.

Stuck with high rent and fighting with similar concepts for a shrinking customer base doesn’t leave a business with a lot of runway to make it. This is only heightened if the concept offers nothing particularly distinct.

And so here we are.

As the culling continues, what remains to be seen is what comes next? Many of the concepts that close will be replaced by new concepts (Ri Ra, Boulevard Woodgrill, Hard Times). Others are rumored to be switching to retail. Still others remain dark with no signs of what is to come.

Clarendon is still a great place to live, work and do business, and there is still tremendous opportunity for success. What made it so attractive many years ago continues to be what will make it attractive in the future—proximity to the city, access to mass transit, great schools and parks, and of course a vibrant commercial corridor with great businesses.
The difference is that those of us still here need to work harder, be smarter and continue to try to grow our businesses to offer our customers what they want. Why do you think we built a Beer Garden?

I am a native Arlingtonian, and I still live in the County. My daughter goes to Arlington Public Schools and many years ago when the planning was being done to grow Arlington’s commercial centers and preserve our unique neighborhoods, it was my Mom, Judy Freshman, who helped with the plan. I am invested heavily in the County, and in Clarendon, and I am very optimistic about its future.

In the meantime, at Spider Kelly’s, we will continue to focus on getting better at what we do, and watch to see who is still around when the dust settles. Hopefully, we will be.

Full Podcast: http://arlnow.libsyn.com/ep-12-spider-kellys-co-owner-nick-freshman

lunch platter

Cook Like a Pro: Advice from Restaurant Expert Nick Freshman

How can I cook like a pro? How can I make my food taste more like food that I eat in restaurants that I love?

There are certainly some tips you can take home that will improve your cooking, but it is important to note that technique will not replicate that amazing meal you had last week. Nor will the exact recipe, or even the top of the line commercial equipment in your kitchen (though that really helps). The fact is that your meal was made wonderful by much more than the food. Eating out is as contextual as any experience—it is all about the moment. It was the setting, your mood, your companion and many other things that worked together in concert with the food to make the meal special. That is why we go out, and it can’t be copied at home. Home is for different moments.

OK, having got that out of the way, let me also throw this one out to you: I did not go to culinary school, and thus I am not a trained chef. I have spent plenty of time ‘behind the line’ in professional kitchens, but I am not a pro. I know how to cook, however, and I know what to look for in food. I also ran these ideas by the real pros that I work with for their approval before I submitted them. Given those disclaimers, take this advice for what you think it is worth.

These are some simple tips and strategies that should help your cooking at home. The most important tip I have is that the more you can approach cooking without anxiety or fear, the better your food will taste. Many people see recipes as intimidating and hosting as nerve-racking. I can guarantee you it comes out in your food. The more fun you have and the more relaxed you are, the more sumptuous your meal will be. Many chefs and cooks chose this line of work because it is their passion. It isn’t ridiculous to suggest that their passion as much as their expertise is what makes their food taste so good.

More Heat

I cannot walk by the range in my kitchen when my wife is cooking without dialing up the burner. Whatever it is set at, it should always be higher. She used to put in the oil and the vegetables in the cold pan and then turn on the burner. Now she heats the pan, adds the oil and waits until it is hot. I hear it sizzle and pop, and I know dinner will be good.

Many home cooks are too tentative with temperature. Life in a restaurant is always hot; 350 is a minimum, 500 is lots of fun. Of course, there is simmering, slow cooking and baking, but most of your food benefited from a red hot skillet, grill or pot. Heat makes flavor—not only do you get that wonderful texture from a charred steak, but the marking also enhances the flavor tremendously.

Smoke in your kitchen is a good thing. Next time you ‘cook’ a chicken breast, try ‘searing’ it first: Turn the burner up and wait for the oil to almost start smoking. Drop in the chicken and listen to that sound. You’ll never go back. Just turn on the fan or open a window.

More Fat and Salt

No mystery and no secret ingredient here. Fat and salt make food taste good, and restaurants use more of it than anyone. Are you wondering what is missing from that soup you made? Is it close but something you can’t place isn’t there despite your total adherence to the recipe? It’s probably salt. Or bacon. Adding salt shouldn’t make the dish taste salty, and in the right proportion it makes every flavor in the dish taste better. Similarly, fats like butter and olive oil enhance every aspect of a dish including the texture.

There are, of course, drawbacks to overabundances of these two staples–namely, your health. I don’t want to ignore that, and eating at home is a great way to eat healthy, but good food and flavor is all about balance. You can balance out your meal with tons of fresh vegetables, high quality lean proteins, whole grains, and there should still be plenty of room for some bacon to start your stew or a little butter to add some sheen and luxury to your sauce.

Cook With Bones

The best stews and soups are often described as soulful and having a ‘depth of flavor.’ This comes from slowly building the flavors and letting them come together. The best of these start with a deep backbone of flavor that comes from rich stocks. Good restaurants make their own from veal bones, duck bones, fish, pork, you name it. That can be impractical at home—who has day after day to gently simmer bones on the stove?—but basic chicken stock is pretty simple and is a good place to start. Plus, any extra can be frozen and used to start a later dish.

If you’re not interested in making stock, then you should at least starting buying your meat with the bones in them. A bone-in chicken breast will be juicier and more flavorful than the standard boneless, skinless variety. A whole chicken roasted will be even better. The bones contribute a tremendous amount of flavor to your dishes, and they should not be ignored. Once the food is done, bones can easily be removed if you don’t want them on your plate. For instance, if your five-year-old-says, “Oh my gosh, gross!” Ahem.

Also, it is healthier to eat meat cooked this way, as the bones contribute the best nutrients to the food during the cooking process. That’s how I got my wife to start doing it.

Think About the Plate

Most home cooks spend a great deal of time with the recipes. They carefully select them, spend a ton of time assembling the ingredients and then throw their heart into making the dish. Then they toss it on the plate. Have you seen any celebrity chef without that classic image of starched white jacket, furrowed brow, narrowed eyes radiating intensity as they carefully study their dish on a plate? Hyperbole? Yeah, a little, but not entirely. Lots of time goes in to how dishes appear on a plate. What reads as appetizing on a menu should look at least as good on a plate. Think about your favorite dishes and how your face lit up when it was set in front of you. To get your guests—and maybe even your five-year-old—to do that, spend some time thinking about how you want to arrange your food. Line up the asparagus the same direction, tightly packed. Slice the pork and array the medallions around the curve of the plate. Sprinkle some fresh parsley or fresh grated Parmesan around the edges of the plate. Whatever it is, take one minute and think about how to make it look pretty on the plate. Makes all the difference, trust me.

Buy a Squeeze Bottle

Fancy plating 101: tools make the plate. You may not be able to replicate that unbelievable kumquat coulis you had downtown last week, but you can decorate your plate the same way. A simple squeeze bottle allows you to take your dinner to the next level. Even a basic balsamic vinaigrette looks cool when you try your best Jackson Pollack imitation on a bright white plate with some fresh greens.

Sear Then Roast

How did you make it so the chicken didn’t get dried out? I have gotten that question a dozen times. The trick is to use two methods: Cook the meat—and it can be any meat, even fish—in a pan or on a hot grill first, then transfer it to a hot oven. You will nail it every time.

Take the nightly staple chicken breast, for example: Season it well and heat up a stainless steel pan (better still, a cast iron skillet) with some oil. When the oil is rippling from the heat, drop in the chicken breast and leave it alone. Give it a few minutes until you can lift it up without difficulty. Flip it and throw the whole pan in a hot oven. You’ve even got a great base for a pan sauce when you are done. You’ll never go back, I promise. You can do the same with a thick steak on the grill—char it like you’re trying to burn it into coal and then flip it to get the other side. Pull it off and toss it in the oven. No more dried out meat from the grill. Even works great with burgers.

Want some more tips? Next time you have a great dish or a great time at a restaurant, ask for the chef. Then ask your question or present your quandary. If you start with a compliment or two, you will find them almost universally helpful.

Originally published on ARLnow.com