PARTNERSHIP OR HOURLY WITH INCENTIVE?

I have a friend of nearly 20 years that has a very successful dessert bakery business. He knows I have a passion for pizza. I have never worked in a pizza shop or restaurant business. He has approached me about helping to set up a pizza operation in his bakeries. I was hoping to treat the pizza side of the business as a separate entity within his business. I wanted to operate as partners with my payback being a small percentage of the pizza sales. I have no interest in the other side of the business. He has the idea of paying me hourly with incentives to buy stock in the larger company at a fixed price. While I have no experience in the pizza industry I have developed a good simple sauce and dough that is easily reproduced. Does a dough, sauce recipe combined with a passion bring any real value to this partnership? Should I be happy with an hourly wage based on my lack of experience? What incentives should I expect if this is a successful venture? He currently has a large commissary combined with 10 bakery locations there is potential for real success.

My first question is are you planning on just one location? Who is fronting the startup costs here? Yes he has some of the needed items, but pizza and baked goods do not cook side by side. You are still going to invest a lot of money and time into this venture. I think paying you hourly with stock options is not the best way too go since you really are not interested in his business. Pizza is a hard business for anyone to get started in, and although the idea of opening in successful bakery locations sounds good, it might not work in the long run. Is it a delco only? It is a lot of work and hours to get one location up…and I am not saying this wouldn’t work, just a very unique situation, as all are. I guess rent would be affordable. To get back to more of your question, it sounds like you want to OWN your own pizza shop and he wants to hire you to inject pizza into his business plan. If he is willing to cover all of the startup expense, it doesn’t sound that bad. The biggest issue I see is this person has 10 bakeries. That is impressive in itself in the dying age of bakeries. If they are going strong I would ask why add something so “different” to the mix? The other thing is, and no offense to you, but you said it yourself you have a passion for pizza but zero first hand pizza or restaurant experience. Sorry, but passion or not, I would not hire a person with no experience to try something this unique in a successful business. I would say if you want to open a pizza shop…and many will agree… go get some real world hands on experience first and make sure it is what you want. Best of luck too ya!

We would start in one location. Currently stores offer desserts, full service ice cream counter and a less successful lunch deli. He is wanting to replace the lunch deli with pizza. Our original idea was to purchase a pizza oven and try to offer several types of pizza. We have experimented with the existing ovens and discovered small individual deep dish pizza’s were cooked very well in the existing ovens. Results were very good, so good in fact we changed direction and decided that it may make more sense to go individual size pizza rather than competing head to head with the other by the slice guys in the area. It offers a fresher pie and we think the neighborhood would embrace the freshness aspect while seperating us from the pack. He is trying to inject life into his stores during the early afternoon. Typically most of his business is done in the evening when families come in for ice cream and desserts.
While there would still be some investment it would not be to the degree of a start up. If we use the existing ovens that would eliminate oven cost. He already has all other equipment required including dough presses if we choose to go that route. He is already buying enormous amounts of flour and other ingredients and has well established relationships with suppliers. To help me better understand the investmetn can you tell me what else he may need to purchase. We have location, oven, mixers, tables chairs, plates. We would need pizza specific items such as pans pizza cutters etc. What else?

If he is putting up the money and providing the location he is the owner and you are an employee. If he is offering a chance to buy in if you want to that is a generous offer but your decision should be based on the wage he is offering. BTW, I would MUCH rather have a chance to buy into the main business as long as the pricing and structure were right)

I am sure your sauce and dough recipe are very good, but good sauce and dough is not rocket science and does not justify a partnership.

Good luck with your decision making!