Risks, rewards, riches? Restaurant industry leaders talk about the ins and outs of investing in their world
“To be honest, I actively tell my friends not to invest in restaurants,” says Syed Asim Hussain, one of the two co-founders of Black Sheep Restaurants hospitality group, which runs Hong Kong institutions such as Ho Lee Fook, Carbone and Chôm Chôm.
“It’s a grind. Even with the best-run operations, margins are razor-thin so it’s hard to consistently deliver good financial results. But the restaurant business is still attractive to a lot of people, so you have to ask yourself why you are investing.”
Hussain isn’t the only one who is reticent when it comes to encouraging investors. While Manuel Palacio, co-founder of Pirata Group (The Optimist, TokyoLima and Pici are among its F&B offerings), says he wouldn’t change anything about starting a restaurant group—and, given the opportunity to do it all again, he most definitely would—he’s nevertheless not sure he would advocate for it.
“You must love working in a restaurant and be willing to sacrifice 80 to 100 hours each week to work hard,” he says. “Hospitality is an industry where you put on 14 shows each week—seven for lunch and seven for dinner. Unfortunately, you are only as good as your last show, because consistency is everything. In order to maintain consistency in an industry where everything can go wrong, you must be engaged 24/7.”
See also: Three Things With The Duo Behind Black Sheep Restaurants
Connects People From All Walks Of Life
Even if you are not the one on the restaurant floor, it’s not necessarily an easy ride. “If you are looking for handsome financial returns and consistent dividends, then there are definitely better investment options out there,” says Hussain. “I view [investing in restaurants] as more in line with supporting the arts—if it’s about backing a chef you really believe in, someone you feel passionate about, then it makes sense.”
But there are certainly returns to be had—as well as a host of other benefits, and that’s why, despite the risks and the challenges, investors keep returning to the table.
“It provides a very good network investor base, as the F&B industry attracts people from such a wide range of industries. It’s also fun, fast-paced and sociable,” says Malcolm Wood, co-founder and culinary director of Maximal Concepts, the restaurant group behind Mott 32, Brick House, Limewood and John Anthony, among others. “Put it this way, the F&B industry has never been short of finding investors.”
“There are very few industries where you can see your creation come to life,” adds Palacio. “You will be able to see how guests interact with your vision and you can make adjustments in real-time. F&B is a very glamorous industry from the outside—although there is nothing glamorous about it from the inside—and it gives you the opportunity to meet wonderful people from all sorts of industries. It allows personal growth and is a very fulfilling industry.”
