Own your own restaurant. It’s closer than you think.
THINGS WE’LL ANSWER BELOW:
How do I open a restaurant from Lowbrow?
How much does it cost to start one?
How long before I make my money back?
What are the next steps?
Owning a restaurant is a dream to many, but the reality is that it’s a perilous path often ending up in disaster for the majority of those who jump in unprepared.
But to the few who make it out alive, it’s incredibly fulfilling and rewarding. We wouldn’t trade the restaurant life for anything else.
If you’re anything like us and would love to own your own restaurant, then maybe we can do it together.
HOW TO INVEST IN YOUR OWN LOWBROW RESTAURANT
You’re probably familiar with franchising, but that’s not exactly what we do. We do not simply franchise out out restaurants because investors are often unequipped to run a restaurant—it’s not that easy.
The model that we use is what we call a “managed franchise,” which basically works almost like a franchise, where the franchisee owns the physical assets but the mother company owns the licenses, except we do everything for you for a very small fee every month. That means you don’t need to worry about anything and you will still have plenty of time to do other things.
So the process is really simple: once we reach an agreement and raise the capital, we’ll do everything for you and you only have to wait and watch.
WHAT IF I WANT TO BE MORE INVOLVED WITH THE DIRECTION?
If you’re the creative or tinkering type and you want to have your voice in the restaurant, there’s another way.
As a rule of thumb, we always clearly define which party owns the direction of a project to prevent conflict. If it’s going to be a Lowbrow restaurant, then we need to be clear about who makes final decisions about the restaurant.
However, if you want to own your own restaurant and shape it according to your vision, we can just consult for you to build your own restaurant for a fee. Just let us know what you need then we can discuss it.
HOW MUCH DOES IT COST TO OPEN A RESTAURANT?
The rule of thumb is: the bigger and more upscale a restaurant is, the more it will cost. Having it in a top-tier mall (SM, Ayala, Rockwell, etc.) will also cost significantly more due to the security deposits. The reverse is true.
But just to give you a picture of the entire investment, let’s assume you’re building a 50-seat mid-priced restaurant (about 120sqm) in SM Megamall. The entire investment would cost somewhere around P12-15 Million.
Here’s a rough breakdown of that cost:
Construction, Mechanical, Lighting: 4.5M
Smallware, POS, & Tools: 1M
Furniture & Decor: 1.5M
Security Deposits: 2.5M
Professional Fees: 1M
Operating Capital: 2M
The truth is, if you’re going to be extremely frugal, you can probably bring down the entire cost by about 2-3M but that will lead to a subpar experience that we don’t want to give to our customers. (Unless we’re building a deliberately low cost concept such as a 7-11 competitor, then we can work around that budget.)
FEATURES OF A LOWBROW INVESTMENT
NO FRANCHISE FEE
We still consider ourselves a startup so we want to be as fair as possible to our investors. That means we don’t charge a franchise fee (which usually goes above P1M). Instead, we simply charge a small startup fee of P300K to cover our operating expenses while building the project.
Most franchise models get a percentage of gross sales regardless of whether the restaurant is profitable or not. This ensures that the mother company profits no matter what the outcome. We don’t do this. In Lowbrow, our profits will always depend on the restaurant’s performance so we don’t make money if our investors don’t. (We do charge small fees to cover our costs, but we don’t profit off of it.)
Since we’ll be managing the franchise for you, you’ll have all the time in the world to still do other things. There’s nothing you need to worry about.
WHAT IF I CAN’T AFFORD THE ENTIRE AMOUNT?
The best way to mitigate the risk is to divide the investment into smaller chunks among friends and family. You can act as a fund manager and collect the money and serve as the group’s representative.
If that will be difficult for you to do, we can also look for other investors who are willing to invest a smaller amount and gather everyone in the same situation for a single fund.
WHAT’S THE PAYBACK PERIOD?
You’ll get your money back in…it depends.
We’ve seen standout situations where the entire investment was recovered in just 1–2 years. This is not impossible and we’ve had a few places that have achieved this. A lot of the restaurants with endless lines at the malls have done this too. A scenario like this means that the restaurant easily makes more than a million every month in profit for a P12–15M investment.
A more average scenario would be a plus/minus 5-year return on investment. This means that a restaurant makes a profit of about P200–300k every month.
If this seems long to you, consider that we think of the restaurant business as a 20-year plan. (Which is why we only open in spaces that we think will still exist in 20 years.) It should make money for more than a decade after you recover your investment.
HOW RISKY IS THE RESTAURANT BUSINESS?
While there’s no official data in Manila’s restaurant scene, people usually throw around the line, “90% of restaurants die within the first 3 years.” It’s probably true if you’ll just base it on observation.
Always understand what you’re getting into and don’t invest all your life savings in a restaurant.
IF IT’S SO RISKY, WHAT ARE THE UPSIDES THEN?
We’ve made the financial upsides very clear. If you build a standout store, you can get your money back in 1–2 years. If it’s less than that, 5 years or so.
But beyond that are the intangibles. Employing hardworking people, making customers happy, serving great food, designing beautiful spaces: if these things sound meaningful and rewarding for you, then you might be someone who should be part of the restaurant business.
WHAT’S IT LIKE WORKING WITH LOWBROW?
We’re very easy to work with as long as all parties respect the agreements. We’re extremely, radically transparent (we’ve shared so much confidential information above) and we want to enter every relationship with plenty of trust and respect.
It’d be great if you can hop in and read our About so you can learn more about us and figure out if our values and goals are aligned.
I’M INTERESTED, WHAT PROJECTS ARE UP FOR INVESTMENT?
At this point, we’re looking for home runs and standouts. Most of our restaurants right now are doing well, but they’re not yet the kind of groundbreaking success that we’re looking for. We want more.
We’re in the process of developing new concepts that can possibly accomplish the following:
Achieve a return in less than 3 years
Can scale up to at least 50 stores
Unique in position that it does not resemble anything in the market
Given the higher risk in new concepts, pioneering investments in new concepts will not only buy ownership in the restaurant’s physical assets, but also minor equity in the intellectual property giving you an ownership in all future branches. (This is up for negotiation/deliberation.) The only time we will offer this is at the very start of the concept’s development, which is at its seed investment.
We can’t divulge the projects here, but we can discuss it if you’d like to meet.
WE’D LOVE TO MEET YOU
If you’re interested in (a) investing in a new concept, or (b) consulting for your own restaurant, and would like to sit down and discuss, you can send an email to email@example.com. We’ll respond within 24–48 hours.
We’re looking forward to meeting you!