PBH business venture! looking for an investment partner for a restaurant in Medellin

vicshere says on Dec 3, 2007, 09:16:

too bad I am not in Med. I have a ton of restaurant construction experience

listo

rhydewithdis says on Dec 3, 2007, 09:23:

that's right - an equal partnership would be ideal, since it gives us both equal incentive to make sure this succeeds. if not, other options that I am less interested in (and can very easily obtain) would be one or several debt issues, or silent partnerships.

They said I couldn't play football I was too small / They say I couldn't play basketball I wasn't tall / They say I couldn't play baseball at all / And now everyday of my life I ball.

Waterdawg says on Dec 3, 2007, 10:02:

You are willing to go into Biz. with a total stranger in one of the riskiest Biz. in the world ? You do not mention that your back ground is the Food and Beverage ?????

rhydewithdis says on Dec 3, 2007, 10:36:

Waterdawg,
actually I do have F&B experience, worked in the family business for several years and my family is still involved in it. Risk is a measure of several variables, and I honestly think that present day market economics decrease the amount of risk involved significantly, most namely the lack of any direct competition (currently).

The chef will also bring significant experience to the table, including inventory management and control. At the end of the day, I have to admit a lot of this is not rocket science. Having a partner who is willing to learn the business, keep an eye on the staff, manage expenses, and get out there and promote the place is what is key.

Take for instance a Chinese restaurant -- if there was not one in Medellin, it would be a no brainer that there should be one and as long as they make it affordable enough and make the environment inviting, they have a very high chance of doing well.

They said I couldn't play football I was too small / They say I couldn't play basketball I wasn't tall / They say I couldn't play baseball at all / And now everyday of my life I ball.

Mononoke28 says on Dec 3, 2007, 10:36:

Yeah right... NEXT!

Diana

Diana

rhydewithdis says on Dec 3, 2007, 10:46:

at Diana, thanks for your support and words of encouragement. //sarcasam

They said I couldn't play football I was too small / They say I couldn't play basketball I wasn't tall / They say I couldn't play baseball at all / And now everyday of my life I ball.

morphus says on Dec 3, 2007, 10:52:

Forget restaurants! The best business to open in Colombia is a love motel.

Robert Jorge says on Dec 3, 2007, 11:04:

I wonder how a Hooter's franchise would go over in Colombia?

--"I believe in making the world safe for our children. But not for our children's children, because I don't think that children should be having sex." - Jack Handy

morphus says on Dec 3, 2007, 11:05:

Its Hooters everywhere in Colombia.

rhydewithdis says on Dec 3, 2007, 11:05:

at PepeA, what I was trying to show was a proven model that HAS worked in Colombia. I've met several Asian owners of Chinese/Thai restaurants in both Bogota and Medellin. Without identifying the exact restaurant (this one is in Medellin), one owner was very candid with me when I asked him about specifics about his place when it came to revenues/profits AFTER I told him my intentions of wanting to open a restaurant. He obviously said that it can be tough if you try to compete in a market segment that already has several restaurants existing. But his restaurant, which they started with about USD100k capital, generates annual revenues of $400k with net income around $150k. Not a huge amount by any means, but there are only two owners and they live well (at least as far as I can tell -- they are both at the casino everyday! lol).

They said I couldn't play football I was too small / They say I couldn't play basketball I wasn't tall / They say I couldn't play baseball at all / And now everyday of my life I ball.

usher127 says on Dec 3, 2007, 11:23:

I hope very much we are talking about an INDIAN restaurant. I will personally eat there at least once a week if we are. Though, Colombians are a little funny when it comes to spicy food... but they'll learn.

spigrimace says on Dec 3, 2007, 14:40:

I still think you may be way too high at $150k investment. Where are you putting it and what size are you talking about? Does that include owning the building? Or are you putting in some lavish fixtures? I dont know what Chinese restaurant you are talking about that has $400k usd revenues a year but I would say Ave Maria, one of the most successful restaurants probably sells about $800k usd a year netting $300k a year depending how much IVA they screw around with. I´m also assuming they rent and their rent is probably around 6 millones a month. Hatoviejo up on Las Palmas probably sells more than a million and a half USD a year. In December in the malls like Oveido and San Diego, a food court franchise can sell COP$100 millones/month. other months average $40-60 millones sales a month with a very steep rent in those food courts. Again, lucky if you got a spot. They´re not for sale and even if they´d consider, the primas are rediculous. So you´re talking sales of maybe $600 millones a year or $300k. In San Diego it´s 10 millones monthly rent and probably similar in Oveido (that´s what Hamburguesas Del Oeste pays anyway). I can only imagine what Mondongos on la 70 sells in a year. its been around for like 50 years, maybe more. Go for it and good luck but be careful not to overpay if you´re not in the most prime location.

Medellin Traveler says on Dec 3, 2007, 15:09:

The $150k sounds a bit high to me as well, at least for Colombia.

What type of restaurant would you be interested in opening? I don't know, but is it allowed for chefs, non-citizens, to work inside Colombia? What type of clientle are you looking to cater to? Also, are you aware of any "street tax" that you might have to pay for protection to do business in Colombia?

I'm interested, but the investment seems too high.

Medellin es una chimba! www.medellintraveler.com

gorgonabob says on Dec 3, 2007, 15:52:

no doubt at all that the chinese restaurant at the bottom right (looking up hill) of parque poblado does half a million turnover a year...they are taking an order at least every 2 or 3 minutes... . ive personally rang them about 300 times in the last two years..

as mentioned an indian restaurant is a no brainer... go to guyana and pick up a few indians and you cant go wrong... youll be jam packed every night... if not just with english backpackers looking for some comforts of home

HolandaPaisa says on Dec 3, 2007, 17:05:

To add something GIB. Rollos are at least open for some new kind of food experience. Paisas are well known for their tradition and what do they like the most? Yes Bandeja Paisa...

They even have a famous saying: "Más vale malo por conocido que bueno por conocer". In other words they rather eat something bad they know than something good which they are unfamiliar with.

I have also thought about opening a restaurant but I really think Medellin is an extremely hard market. There were some very good restaurants in "la milla de oro" before. A japanese, Italian and a Mexican restaurant. Everyone I talked to said they served excellent food but they still went bankrupt because they didn't have enough clients.

Be sure to do some very good market research about the tastes of Paisas. Don't think that because there are no other restaurants dedicated to international cuisine, this will be your competitive advantage. There might be a good reason why they are not here (anymore).

Anyway all the best with your venture...

morphus says on Dec 3, 2007, 17:40:

Theres a lot of empty restaurants in Colombia. 75k? What a waste! Thats a lot of booze and chucha.

rhydewithdis says on Dec 3, 2007, 18:27:

at Medellin Traveler and spigrimace
Great comments, thank you! Just to reiterate, the $150k investment is to cover not only initial start-up costs but also float the restaurant including rent, salaries, etc. for up to two years. My family has opened several restaurants in the past and I know full well that it can take upwards of year easily for marketing, promotions, word of mouth, etc. to get out and for a place to get established. The location I am budgeting for at 6 miliones a month would obviously be in a prime location. If I can find a prime location for under, that just fattens the bottom line of initial projections. I'm just working off the data I have from several sources in MDE and from my prospecting of several locations in Medellin last time I was down there. All of which were in the 4-5 milliones a month perspective, for rent I've admittedly budgeted a tad on the higher end just in case, and especially because this is the biggest variable here for me.

at Medellin Traveler
spigrimace and I have talked about this before when I met him several months back -- at that time he was very reassuring that those type of things were not something one had to worry about when operating a normal business. I am sure that if I ventured into prepagos, gambling, etc. that type of trouble would show up at my door in a flash. That being said, maybe spigrimace can shed some additional light on this.

at PepeA
Good comments. Unfortunately, at this time, I think that trying to purchase the location in addition to opening the restaurant would easily double (possibly triple) the cost of this venture. Something definitely worth considering. I plan on spending several months in MDE searching for an ideal location and I will definitely consider it. Based on what you know now, what is your experience with long-term leasing? Is it not possible? I seem to remember spigrimace telling me otherwise when I met him, in that you wouldn't get kicked out if you already had the prima, etc.

They said I couldn't play football I was too small / They say I couldn't play basketball I wasn't tall / They say I couldn't play baseball at all / And now everyday of my life I ball.

rhydewithdis says on Dec 3, 2007, 18:46:

also at Medellin Traveler
I've spoken with both the Camera de Comercio as well as several people that work in Bogota for the embassies and bringing over a chef for a legally established business is a very simple process.

One thing that Colombia, especially Medellin, is very sensitive about encouraging is foreign business that stimulate the local economy, and (most importantly), CREATE JOBS for locals. If you create enough jobs, getting a work visa issued for a foreigner chef who brings an expertise not found locally is very easy to obtain.

They said I couldn't play football I was too small / They say I couldn't play basketball I wasn't tall / They say I couldn't play baseball at all / And now everyday of my life I ball.

vicshere says on Dec 3, 2007, 18:57:

""One thing that Colombia, especially Medellin, is very sensitive about encouraging is foreign business that stimulate the local economy, ""

understaement of the year

listo

john_stark says on Dec 3, 2007, 21:31:

I'll be dying to read the reports of this fiasco, I mean venture, as it progresses.

slguy says on Dec 3, 2007, 21:56:

rhyde,

don't mind john stark- he'd cry if they hung him with a new rope.

good luck on your venture!

Before you throw me out, make sure I pay my bar tab

panthdave says on Dec 4, 2007, 03:33:

Too much money at risk there...for a start up restaurant in Colombia and on top of it all a restaurant is the number 1 business to fail....Love Motel is the way to go via Morphus...at least you have the building as an asset if things go bad..
Be Careful...Maybe Bogota a high end investment for a restaurant but Medellin????Even Bogota no way..Talked to a few guys you have lost in Colombia and have talked to a few who are breaking even and want to get out..The only ones I see happy even Colombians are the motel/hotels...Personally I was thinking of jumping on the bandwagon with Domicilles Food Market or Pizza minimal investment alittle hole in wall with a few drivers on Motos..

Good Luck with the restaurant...

panthdave Miami

morphus says on Dec 4, 2007, 04:48:

GIB is right! The hole in the wall restaurants are more profitable. You can have all the fine cuisines in the world. It does'nt matter. Colombians want to eat their own food on a daily basis. They might try Italian food or Chinese once in a while but Colombian food is number 1 for Colombians.

You might have a chance if you open an all you can eat buffet. They don't exist in Colombia. Colombians I have spoken with were amazed that there are restaurants in the U.S. where you can eat as much as you want. One thing I notice about restaurants, even here in the U.S. is the ones that give you the bigger portions of food are always packed with people. I never go back to restaurants that give me small portions of food. I won't hesitate to tell them how cheap they are on the way out either. Other than an all you can eat buffet, I would recommend opening up a Mcdonald's restaurant. Mcdonald's is always packed in Colombia, day and night.

Chelesupercono says on Dec 4, 2007, 04:55:

Just imagine......$150,000 divided by......????? many many pre-pagos.....hummm much better investment and alot more fun.....Colombia is for fun...not work! Gringos in business? What a joke!!! Bend over Baby.....

never go to bed with someone crazier then you are, you will do it and you will regret it.......

spigrimace says on Dec 4, 2007, 07:09:

I remember a good guy gringo asking me to open a discotech in Bogota with him in an up and coming neighborhood. He wanted to put in USD$100k each and it was to rent! I did not partake, tried to warn him and the poor guy lost his $100k. Look really closely at Mangos. Try to add up all the crappy tables, crappy western memorabilia on the walls, crappy speakers, look hard at the adobe block bars ($700 pesos a block!), etc. and also go to CC La Cascada to see how much (or little) lights, smoke machines, sound systems, etc. cost. You could get an empty warehouse and build a mangos (without regard to cost of the building, prima, marketing or cost for a liquor license) for $100 to $150 millones.

As for a restaurant, go to the GARDEN factory which is very, very close to Medellin to see what deep fryers, stainless steel tables, planchas, etc. cost HERE new. You´d be amazed that it´s not that expensive. Not like USD$6k for a small deep fryer in the states. Then if you want to cut costs see what those things cost used to save. Many ads in el Colombiano about selling used equipment. A "cava" style refrigerator one side/freezer on the other that look like the PILSEN ones you see in bars used are around $450.000 pesos and they work just fine. 2 of those and you may be good to go to start off instead of buying the USD$10k Big Brand Name freezer. Many places sell used shelving for your storage room. Ugly doesn´t matter if the client doesn´t see it. Functionality and spending less matter more.

rhydewithdis says on Dec 4, 2007, 08:44:

at gringoinbogota
thanks for some the very valid and though provoking commentary. you are right in your train of thought -- in that there are two ways to think of a business venture. your go at it is to jump in with a significantly lower risk profile by starting super small and scaling up as growth drives the business. that is definitely in contrast with my thoughts on front-loading lots of the costs to build out a decent size place and hopefully execute a good business plan to bring in the business. something I definitely need to think through.

at spigrimace
deals abound in CO if I look hard enough, got it. that should lower initial cost projects significantly. i ideally would like to spend about three months on the ground, and really getting to the core of where, who, how much, etc to the point where i'm known so i will get the best possible (non-gringo) deals.

at morphus
good though on the all you can eat buffet. i keep hearing everyone say you are the love motel business model master. care to elaborate a little? i.e. locations? potential costs? how many rooms? how much to buy the building, refurbish the rooms? etc.

They said I couldn't play football I was too small / They say I couldn't play basketball I wasn't tall / They say I couldn't play baseball at all / And now everyday of my life I ball.

morphus says on Dec 4, 2007, 09:07:

Love Motel - I'm no master but If you think about it, most Colombians live at home with family. They need a place where they can do the hanky panky in private. Secluded areas are best on the edge of town. The parking lot should be secluded so the car can drive up close to where the room is. I was at one love hotel where each room had its own parking garage. The girl can get out of the car without being ashamed. You can set up a motel where the parking lot is in back of the motel or have it in a hollow core structure of the motel. Inside, the rooms will have water coolers, large tub, mirrors on the ceiling over the bed. Costs will vary depending on location.

vicshere says on Dec 4, 2007, 09:12:

we have a love motel in the next barrio...right inside the city....
it has a big ass tall gate
the taxi pulls up and honks twice and someone come to open the gate...the taxi drives into the court yard...he drops off the couple and drives back out 5 minutes later.....so this place has a big courtyard where there is parking for about 6-8 cars and hotel is in a "U" ...they seam to do pretty good...I think they have working girls inside to cause some guys arrive alone by taxi and stay a while

listo

morphus says on Dec 4, 2007, 09:20:

Better idea: buy some land and have a couple of dozen cabanas built. It can be both love motel and a regular hotel. Envigado is a good location.

Timba says on Dec 4, 2007, 13:00:

Met a person in Colombia that started a business and has been running it for a couple of years. He found out everybody and I mean everybody was stealing from him. Every way you could think of. In the end, he had to spend alot of time in his business. Pretty tough when you are open 15 hours on most days.

Being the cook and running the kitchen is the harderst part of the business. What would you do ? Manage the place ?

Timba says on Dec 4, 2007, 13:06:

Also, five of us had dinner at Restaurante Pajares, supposedly, one of the best restaurants in Bogota. We ate and drank alot. The cost was 508,000 COP.

Did'nt see much being eaten by others. Also was pretty empty for a Thursday evening. Point being that there had better be a whole lot of volume.

Medellin Traveler says on Dec 4, 2007, 14:45:

GIB, great comments. I especially agree with your "start small" comment. I have been looking into the idea of starting a small restuarant out of the attached garage from a small single family home. This is something that many Paisas do in Medellin. I enjoy walking the streets and stopping in to talk to the shop owners, while checking out how creative some of them truly are when setting up shop out of their garage. It's neat'o!

As far as investing a large sum of capital in a restuarant in Parque Llerras is concerned, it's doomed to fail. How many restuarants are there already? I don't know for sure, but I do know that they are all pretty much dead for a better part of the day, week, month. There's only one way they stay open, and it has to do with money laundering. It would be very difficult to survive running an honest business in Parque Llerras, without washing money.

I've been looking into the restuarant business for sometime and have a few Colombian friends in Medellin who both speak English and have lived in the US and have been exposed to the way business is done in the US. These are some of my biggest assests, as of now. I think a smaller type restuarant is the way to go in Medellin.

RHY,
For the $150 you're thinking about investing in Medellin, you should be able to open two or three business with that type of captial. Or one really good love motel.

Medellin es una chimba! www.medellintraveler.com

nueva york bombero says on Dec 4, 2007, 14:55:

Alright, I'm in! How much for the love motel?!

Chelesupercono says on Dec 4, 2007, 14:58:

MT the love motel is a great idea....and really the only one....

never go to bed with someone crazier then you are, you will do it and you will regret it.......

Monpirri says on Dec 4, 2007, 15:04:

Taco Bell Rap

Coming soon to your hotel neighborhood.

Annette Taddeo for US Congress 2008

Tinto (Moderator) says on Dec 4, 2007, 15:08:

There must be a lot of love to go around.

john_stark says on Dec 4, 2007, 17:32:

There are a ton of love motels in Medellin. Along with a ton of whorehouses. They are also starting to make high quality porn as well as offer web cam porn in Medellin as well. There's not much that the Colombianos aren't already doing. I do think that there's a need for some cockfighting arenas in the city. Maybe some dogfighting pits as well.

gringoloid says on Dec 4, 2007, 19:43:

rhy.......i'm doing what you're trying to do. (no thanks, I don't want a partner)

But for whatever it's worth to you, i would investigate a little further before you commit that kind of money.

there are a whole lot more problems than just running the restaurant.

I have a friend that had a restaurant for 14 months in zona g and lost $150,000 usd in that time.

you could buy three apartments for that and rent them out. then you only have 2 problems; the tenant and the administration and maintenance of the place. that instead of 200 problems with a restaurant.

morphus says on Dec 5, 2007, 04:34:

Exactly! Buying a few apartments makes a lot more sense. I think people like the idea of a restaurant or bar because they think it will make them more important. They picture the place filled with people and everybody running up to shake their hand as they walk in the door.

morphus says on Dec 5, 2007, 04:44:

Even in Cartagena with all the tourism, restaurants are struggling. I can go there a year later and they will remember me. One guy who has a restaurant can spot me on the beach a mile away and remember what I ate there the year before. The place is usually empty while he sends somebody to fetch some red snappers. I sit there for an hour getting drunk, waiting for some fish and rice. I don't know why it always takes so long.

rhydewithdis says on Dec 5, 2007, 09:30:

Just out of curiosity, has anyone checked out the news restaurants that opened up on Av. Poblado at La Strada? I walked by and perused their menus -- very pricey, with some places charging an average of 35k pesos an entree. From what I hear, they are all packed on the weekends. Would definitely like to hear some first hand experience if you've been there.

They said I couldn't play football I was too small / They say I couldn't play basketball I wasn't tall / They say I couldn't play baseball at all / And now everyday of my life I ball.

Tomacoma says on Jan 11, 2008, 22:42:

Hah Restaurant Biz. Spent more time in the biz than I care to remember...Running Kitchens...running my life...reseaRCH RESEARCH REsearch. That being said, need a good chef with experience in Latin America? fringe benefits were always great!!! at

I'am livin' easy, eatin' poke chops greasy! "Reality is overated."