High-profile chef and restaurateur Gareth “Gaz” Smith has raised €400,000 of the €1.6 million startup cost of his latest venture by selling vouchers to a select group of 40 of his regular guests, who have each hoarded €10,000 for exclusive access to the support of the project.
Mr Smith runs the well-known Michael’s Seafood Restaurant and Little Mike’s Venue in Mount Merrion, South Dublin and he has also gained a large following on social media in recent years. His newest venue in Blackrock, Big Mike’s, is slated to open towards the end of September.
The restaurateur funded the project with his savings, sponsorship deals and a €500,000 bank loan, but was still short on cash. After scrapping the idea of hiring a financial investor who might push him to open before he was ready, he decided to pursue an elite form of crowdfunding and developed the coupon club program he calls Friends With Benefits baptized.
Individuals joining the program pay the €10,000 in exchange for a voucher book of that sum, with each €250 voucher valid for five years at all of its venues. Mr. Smith’s Friends With Benefits members are also guaranteed preferential treatment at its restaurants, with personalized knives and decanters on a members’ wall and a face-to-face meeting with the owner to discuss their options.
“I got a few raised eyebrows at first. People in the industry thought I was crazy,” said Mr. Smith.
Whilst he expected members to be mostly businesses who could use the vouchers for client nights and events, most of those who signed up were regulars and locals from the affluent area of south Dublin where his restaurant group is based is working.
“Three quarters of them are women,” Mr Smith said. “A lot of them are locals who say they live five minutes away and appreciate that they can always just show up and get special treatment.”
Even if they don’t have a reservation, Mr. Smith has guaranteed that special tables will be set up at his venues “out of thin air” to accommodate the Friends With Benefits members if they show up at busy times. He was expecting to hit 40 members by Christmas but hit the threshold last week. He has capped the program at 50 members to maintain the level of service.
In fact, Mr. Smith has borrowed from members at a 0 percent interest rate while repaying them in kind in the form of food, drink and services for five years while they join a club.
“I took out cheap credit and if we get the other 10 members, I’ve also guaranteed us €500,000 in revenue and we’ll have a margin on that. These people put a leap of faith in me.”
Big Mike’s will be the restaurateur’s biggest project to date. It includes a 150-seat venue in three areas including private dining booths and an exclusive Mini Mike area. The Friends With Benefits members “will be the first to walk in the door.”
“Here’s my deposit for my house. I have to make it work because my wife will kill me if I don’t,” Mr Smith said.