Interview with Chef Michael Kornick and Adam Block of mk Restaurant – Chicago, IL

May 19

Is there an art to culinary deal-making?
Michael Kornick: Deals are individual, real estate is more valuable than chefs, and crafting a deal depends on creating an awareness of your personal value to someone's development combined with a concept that has a potential for profit and increased traffic.

How do you find investors? Do investors approach you with ideas?
MK: The best place is your existing customers who know you and your cuisine. The most important advice i give chefs who are aspiring owners, is to get in the dining room every night and meet your guests, get to know them, they are your future.

What are the long and short term goals a chef should set before entering into a business partnership?
MK: Short term – work with that person as long as possible before you enter into an operating agreement. Have a clear expectation of the duties each person is to perform. Know your limitations. Long term have one person in charge, your first deal it may not be you. Have a comfortable exit strategy – lawsuits are expensive time consuming and emotionally draining.

Are there any tactics that can better-enable chefs to manage their investors’ expectations?
MK: I prefer all the deals I work with to provide quarterly outside accounting compilations following the uniform system of accounts for restaurants, and distributing those reports with a summery letter of explanation on a quarterly basis. Keep your projections moderate and hope to over-deliver. mk budgeted 3.2million in sales its first year and did 4.6 million. Over-delivering always works with investors.

How can a chef ensure that his vision is respected?
MK: Investors legally are silent, however every limited partnership I have been involved with has investors who want to share ideas and be influential. On the upside most of these folks are successful and can be helpful, but sometimes the timing is not great, and it may be conflicting with some of your artistic principles or business vision. In the end I have found that treating the money with respect and treating individual investors as friends has allowed me to operate free of intrusion or conflict. My investors created my opportunity and my family and I are forever grateful.

Is there an art to culinary deal-making?
Adam Block: I’m not sure if I would call it an art but more a level of understanding or education that can come through both experience and sensibilities. When negotiating a deal, whether a lease or partnership, all parties need to be aware of the risks and economics inherent to a project. In some situations, risks are offset by the other party’s objective or motivation for making a deal; you need to be aware of all these factors before you can sit and negotiate.

How can a chef organize himself financially before meeting with investors? What steps should he take to prepare?
AB: Chefs commonly lack strong business and financial skills; it is very rare to find a chef that can read a financial statement. Therefore, a chef should surround himself with partner or advisor that is competent and can be trusted. Having that person handle the financial matters will create credibility with potential investors as well as build investors’ confidence long term.

What are the long and short term goals a chef should set before entering into a business partnership?
AB: Both long and short term goals should be to take care of your investors. No matter what the outcome of the business may be, a Chef/Operator will greatly improve their ability to go back to investors/partners for future opportunities or additional capital.

What do you consider the number one risk for chefs who enter into a business partnership with investors?
AB: The number one risk is inherent in the business itself; the restaurant business is capital intensive and has small profit margins. Do everything possible to make sure your estimates for capitalization are sufficient.

Are there any tactics that can better-enable chefs to manage their investors’ expectations?
AB: Under-promise and over-deliver. No one ever reads their operating agreements after they sign them until there are problems.

Is there a single trait that you see in the most successful chefs you have worked with?
AB: Honesty.