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GoFundMe Saves a Restaurant – $300k Debt on $1m Sales

May 26, 2017

What if I told you that a fancy restaurant just opened up in an urban neighborhood populated mainly by immigrants and low priced ethnic food – would you think they are gentrifiers?

 

And this new restaurant… it serves third wave coffee and has a menu featuring ‘new American’ cuisine.  It has an ownership team of a fine dining chef and a business operations manager.. backed by angel investors.

 

What’s the mental image that pops into your head – how you feel about the owners of this place?  Do you think they’re in touch with the community?

 

 

Now what if I told you that one of the business partners was an immigrant herself – who came over at the age of 15 and went to public high school in America, taught herself English, and lives in a rent-controlled apartment.  That she lives with her husband – who is the fine dining chef and co-owner.  And that they both scratched and saved every penny they had (plus many that they didn’t have!) to open the doors to this place.

 

Does it change your opinion?  

 

As much love as Yuka and her husband Kris have received since they opened … they have received a good amount of hate along with it.  And a lot of it from people who didn’t even know their story.

 

Listen to the full story in her words on Working Sunday - the show about small businesses and the people who run them

 

Gentrifier Number One

 

When people talk about entrepreneurship, they talk about having courage.  But what does that really mean?

 

Well, one critical piece of it is simply being willing to put yourself out there and embrace the hate.  Which is not an easy thing to do.  There is not a single person or idea that has become popular without picking up haters along the way.  

 

But then you have financial risk.  Most of us who have been in small business at some point have looked off the edge of that cliff like damn … this might be it for me.  And this certainly happened for Yuka and Kris – five years into building their dream, as they passed the million dollar mark in annual sales, an unexpected slow season backed up their debt repayment schedule until they were looking right over the edge of that cliff... with one foot off.

 

And then it just hit me - oh my god, I have no other way…. I had to tell Kris – “baby, I don’t think I can get us out this time.  I have no way to borrow any money”

- Yuka Ioroi, quoted from the podcast

 

On today’s episode we have an internal debt crisis that turned into a community wide discussion, when Yuka launched a GoFundMe campaign to save their restaurant … attracting haters, supporters, and gaining the attention of the most important restaurant critic in San Francisco.

 

 

Listen to the full story in her words on Working Sunday - the show about small businesses and the people who run them

 

This Week's Show

 

Hey folks, so this show is in three sections.  First, there’s the interesting path that led Yuka from teenage immigrant to strip club bartender, to restaurateur.  Then, we learn from her about the scarcity of food service employees in San Francisco.

 

Minimum wage is set to rise to $15 an hour next year – which really means $20 an hour for employers after you consider payroll tax and unemployment insurance.  So restaurants like Cassava are hurting.  And on the other side of the stick workers are scarce because even with a few bucks more workers can’t afford to live in the City.  We find out how Yuka is using a new app – Pared – that calls itself the Uber of the restaurant industry to schedule workers on a contract basis for entry level jobs.

 

And finally, we get to their debt crisis.

 

Now, when you run a restaurant you’re open to public opinion.  And fortunately for Kris and Yuka, for as much as some of the locals in their area have resisted their presence and the change that it represents … others love them.

 

The reason for the love is simple.  They have really really good food.

 

Kris brings his fine dining experience to bear on the nightly 4-course tasting menu, which includes dishes such as Seared Chinook Salmon, and Blueberry Bergamot Panna Cotta.

 

And in my own tastebuds opinion, their brunch features the best waffle I’ve ever eaten in my life.  Hands down.  Crispy and light.  Mmm..

 

Their brunch also features practically the only Japanese thing on their menu – a Japanese Breakfast.  Yuka wrote a blog post about this breakfast, which I think kind of epitomizes their experience in the fishbowl of human perception.

 

Yuka's Path

 

Yuka had dreams of opening her own music label, and pursued it throughout her twenties.  She also got a job at a small insurance agency to pay the bills, but soon got tired of the unethical practices of the owners.

 

After learning bartending at a strip club, a country club was her way out.  She worked her way up through that full service bar, and finally landed a job managing the bar at a new restaurant in the Los Feliz district of LA.  Kris, her future husband was also working there, in the kitchen, and they hit it off.  In 2008 they decided to move to San Francisco together, and found a nice rent controlled apartment in the Marina district, and solid corporate food service jobs – him as a chef, and her as a bartender.

 

They had just begun to develop a bit of a savings account, when Kris – a guy who had literally never called in sick to any school or work shift EVER – in his life – quietly told her that he was tired of his job.  That he thought he only had about 6 months left at that place.  

 

She had never heard that from him before.  And although she was reluctant to give up their newly found stable incomes, and their growing savings account – she figured she better take this seriously.  

 

So they began looking for a place to open their dream restaurant.  After all of her experiences seeing what worked and didn’t work at various restaurants, she had developed a criteria for their perfect location – a small place with a big window on a two lane street with parking meters.

 

Kris came in the door a few months later, excited – he had found it.  A cafe owner on an aging, tiny commercial strip on Balboa street was retiring and selling his business.  

 

Big window.  Small place.  Two lane street.  Parking meters.

 

Also, the way the building and the situation was – they were able to buy into the existing coffee shop which was a pretty small space with a good rent – then, if things went well, the lease for the person next door was expiring within the year, so they had room to expand.

 

It was perfect.  They negotiated a buy-out with the retiring owner of the coffee shop.  People told them they were crazy, but they respected his price of $30,000 – and after he agreed to let them pay him monthly, over the course of five years, they struck the bargain.

 

One catch though.  In her usual, matter-of-fact way, Yuka told Kris that before opening a restaurant with him, they would need to get married first.

 

I robbed his opportunity to propose to me

-Yuka, from the podcast

 

Culture of Racism

 

It is interesting how Yuka and Kris set up their set up of the restaurant’s operating principles and culture, modeled after that of fine dining in Japan and France.

 

They start everyone (everyone) as a dishwasher, and then promote from there.  So, the front of the house workers know what it's like to work in the kitchen.  Also - they split tips evenly among all staff.

 

They both have an extreme distaste for the entrenched racial and economic segregation of restaurant industry workers. 

 

 

We’ve always thought that the urban American restaurant industry is so racially segregated.  It’s like modern day slavery – almost – because one person will never go up in ladder.

-Yuka, from the podcast

 

 

It is great that Cassava has built a culture where every person is considered an equal.  But like all utopian projects, this egalitarian model faces many challenges.  In fact, even Yuka admits, a small one location restaurant may be the only place where they could realistically do it.  And even there, they are beginning to have issues.  The cost of living in San Francisco is simply creating a Very..  Limited..  labor pool..

 

Pared

 

When Yuka told me about this service, I thought this was fascinating.  An uber for the restaurant industry.  So I looked it up.  And sure enough, founded in 2015 by a couple tecchies and restaurant industry vets with $3mm in seed funding, Pared is providing labor not only to Cassava, but to a who’s who list of the top restaurants in San Francisco including WaterBar, Aina, Lazy Bear and Lolo.

 

As of February 2017, 150 restaurants in total used the app in San Francisco, hiring from a pool of 500 registered workers.

 

The concept is simple and on the surface it seems pretty good.  As Yuka mentioned, for general prep and dishwashing, rates start at about $18 per hour.  And from as close I could tell from my research, about $16 of that goes into the pocket of the worker.

 

Assumably the worker is under contract, like Uber, and is responsible for their own taxes.  However, it’s still above the minimum wage.  And by circumventing payroll taxes, Yuka is coming out ahead as well.

 

And since her restaurant is now fully staffed, even if she was able to find a great dishwasher to hire at $15 per hour, she wouldn’t be able to promote them the way she had in the past.

 

So, for now this is a good fix for her.  

 

We will have to wait and see how well this app works for workers.  Or if by removing security nets like disability and unemployment insurance, it just contributes to the economic instability of the working class.  

 

One thing is for sure.  Something has to give between the cost of living in the Bay Area, the price of eating out, and the minimum wage.  

 

Which brings us, after a strong five years of healthy and growing sales, to the critical financial condition Yuka and Kris found themselves in.

 

Go Fund Me

 

March 5, 2017 after five months of slumping sales due to bad weather and post-election depression, Yuka had gotten behind on debt payments to the point where she could not order food for that week's dinner service.

 

So after the longest night, laying awake in bed, Yuka sat down at her computer and wrote a message for a GoFundMe campaign.  In desperation she offered lifetime discounts for patrons who pledged $250 and up.  A friend who worked at Facebook supplied her with some ad credits for greater circulation.  And it was off into cyberspace.

 

Within a few minutes Eileen, the owner of Ritual Roasters - their coffee supplier had called “YOU CAN’T OFFER LIFETIME DISCOUNTS!”

 

So, she re-wrote the campaign, breaking the discount into a smaller number of gift certificates … $205 for $250 (in 6 certificates) for example.

 

And then …. It was a waiting game.

 

We posted on a Wednesday night at 5 … and then the dinner service starts.  Around 9pm I checked again.  $8,000.  I couldn’t believe it!

-Yuka, from the podcast

 

They wound up raising over $51,000 total, which saved them from bankruptcy and pushed them into the spring and summer months as sales picked up.

 

Although the campaign generated a good amount of haters ...

 

"50k wtf i could start my own business with handouts....wow!"

-Comment on GoFundMe page

 

... the haters just made the conversation bigger, and wound up attracting the attention of the premier restaurant critic in SF.

 

So … not Yuka and Chris versus the world.  But Yuka, Kris, and the Balboa Strip community, together, fighting for great food and coffee in the Outer Richmond.

 

Now if you want to try that immaculate waffle, which is seriously off the charts, their GoFundMe page is still open.  And you can get a 15% discount if you shell out $100 bucks in gift certificates.  If you’re in the area it’s something to consider!  Go to their website at CassavaSF.com

 

Or … maybe … you and your partner, and maybe your little furry friend just go over there on a nice summer Sunday and grab a sidewalk table, share a waffle, a mimosa ... maybe a Japanese Breakfast.

 

Ask for Yuka, and tell her you listened to the show!  I’m sure you’ll have a great time.

 

Friends & Family

Much Love

We’ll see you next time, here on Working Sunday

 

 

Sound design this week by the indefatigable William Mandell of Broken Record Music.

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