I'm part of the ownership group of Lazy Bear and worked closely with Chef Barzelay along the way to come up with a solid business model. The foundational assumptions of the model were based off of the food / labor costing David developed while running a pop-up.
If you're friend is a first time restaurant owner, and isn't backed by a team of seasoned operational people, or experts in the industry, the single best way they can start is by doing a pop-up.
Doing a pop-up forces the following questions (among others):
- What are the unit economics?
- WIll people eat your food?
- How will you market the business?
- How much business do you need to do to make a living / cover expenses?
In the end we raised a round of financing that was in the range of a solid seed round for an idea with some market traction and good rates of growth (the terms were not standard convertible / series a terms).
Things are going amazingly well for us. We've actually just returned our second round of checks representing just under 50% of the startup capital to investors since our opening in Sept. 2014 and we're at capacity most months.
We're constantly looking at the expenses (COGS / Labor / Fixed) how they shift month to month and where we can optimize / reduce them.
Most startups aren't restaurants, but you can start one the same way you start a tech company.