What percentage of the profit to give to new partner in a restaurant setting?

Posted: 09-08-2010 | Author: admin | Category: Small Business


My uncle has a restaurant that needs money for an expansion. He already put in $250,000 and his friend is willing to loan him $50,000 but wants 20% of all future profit?
Is his friend asking too much? What percentage is fair to give to his friend for future profits?

Category: Small Business by admin

3 Responses to “What percentage of the profit to give to new partner in a restaurant setting?”

  1. General Custer, on August 10th, 2010 at 10:21 pm Said:

    Fair offer.
    9 out of 10 new resturants fail within 5 years. He is taking a big risk.

  2. douglas, on August 11th, 2010 at 3:48 am Said:

    No way is that a fair offer.

    He came to that number because $50K is 20% of the $300K total invested for the expansion. What isn’t being considered is the time and energy spent to get the restaurant going to the point of needing to expand.

    I would say something more like 20% until 50K is paid and then continue paying 20% for 3 or 5 years. But all future profit forever is to much.

    And he isn’t a “partner” he is an “investor”. The difference is your uncle still makes all the decisions. Bringing a “partner” on means someone trying to help make decisions and that really complicates things.

  3. Eddy T, on August 11th, 2010 at 2:28 pm Said:

    I don’t think so. Especially his share of the capital is also 20%.

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