A Lesson Learned the Hard Way: The Importance in Picking the Right Business Partners

Partnerships–they enliven us, inspire us, drive us crazy and, in some instances, destroy us. Last year, several restaurants learned this lesson the hard way–just what can occur when we pick the wrong partners. Partnerships gone awry in businesses often lead to closures. In fact, it is estimated that 70 percent of business partnerships ultimately fail. It appears it’s harder to stay in business together than it is to stay married.

Of course, many will arise again from the ashes and set their course for another restaurant having learned a few vital lessons along the way. Here, then, are a few of the restaurants finding their doors closed after disgruntled good-byes.

 

Falling From Grace

Close to home, one of the two 3-star Michelin restaurants in Chicago–Grace–closed in early December of 2017 after negotiations between the founders: head chef Curtis Duffy and GM Michael Muser fell through with owner, Michael Olszewski.

For those of you who watched the documentary based on the restaurant, For Grace, it’s hard to imagine such passion coming to an end, and many in Chicago seemed to agree. Twitter erupted following the announcement with shock, disbelief and heartfelt sentiment. So, just what went wrong?

While no one but the involved party’s closest of friends and family will ever know the whole story, there were a few key developments that transpired before the fateful fallout. It was rumored that Muser and Olszewski had been at odds for about a year before he was fired on December 1st. Part of his termination was based on “chronic absenteeism” and failure to perform his duties. According to Duffy and Muser, their “evolving goals and aspirations were no longer aligned with the restaurant” and Chef Duffy followed up with his own departure on December 18. The doors closed on December 20.

 

Century’s Old Restaurant Under Fire

On October 19, 2017, a lawsuit was filed in San Francisco Superior Court against the Buich family, owners of the Tadich Grill. The plaintiffs are Icon, Inc, the operators and partners of their Washington, D.C. location who alleged breach of contract, concealment, and negligent misrepresentation. They are asking for more than $2.5 million in damages. Ouch.  

The original Tadich Grill opened its doors over 166 years ago in the City by the Bay: San Francisco. Icon, Inc partnered with the family in order to establish their brand across the country. The first opening occurred in Washington, DC in 2015 and, unfortunately, made national headlines 17 days later when it was reported that the Buich family had ostracized one of their own family members, Terri Buich (now Upshaw), for almost 32 years.

The story goes that any form of communication ended when she chose to marry an African-American man 15 years her senior, Gene Upshaw, an Oakland Raiders Hall of Famer. According to Icon, Inc, the bad press took hold, spread through social media, and has cost the restaurant net losses in the millions. Of course, their “partners” place blame on poor management practices. Like a Hollywood marriage gone bad, this choice in partners could be very costly.

 

Partnerships

For many, partnerships make restaurant ownership possible. The lesson here is not to avoid all partnerships, but to choose your partner well. Here are a few pointers some in the industry considered vital to successful associations in this often stressful environment.

  • Formalize your individual roles right from the start.
  • Analyze each other’s strengths and what you can each bring to the table before signing on the dotted line.
  • Remove your emotions and separate business from personal interaction.
  • Accept that if you are partnering with a close family member or friend that your relationship could be in jeopardy if the business goes south, or the business could be in jeopardy if the relationship dissolves.
  • Understand each other’s levels of contribution.
  • Develop a mission statement and get long-term objectives in writing.
  • If this is a new relationship, do your homework and thoroughly scrutinize before getting involved. It’s easy to put on rose-colored glasses when someone is offering capital that will help you fulfill your dream.

 

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