High-profile chef and restaurateur Gareth “Gaz” Smith has raised €400,000 of the €1.6 million start-up cost of his newest venture by forward-selling vouchers to a select group of 40 of his regulars, who have each stumped up €10,000 for exclusive access to back the project.
Mr Smith operates 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 has funded the project with his life savings, sponsorship deals and a €500,000 bank loan, but found himself still short of capital. After dismissing the idea of taking on a financial investor who might push him to open before he was ready, he settled on the idea of an elite form of crowd funding, and devised the vouchers club scheme, which he has christened Friends With Benefits.
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Individuals who join the scheme pay the €10,000 and in return they receive a book of vouchers for this sum, with each voucher worth €250 valid for five years across all his venues. Mr Smith’s Friends With Benefits members are also guaranteed priority treatment at his restaurants, with personalised knives and decanters on a members’ wall, and a personal meeting with the proprietor to discuss their options.
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“I got a fair few raised eyebrows at first. People in the trade thought I was a lunatic,” said Mr Smith.
While he expected the members to be mostly corporate entities who might use the vouchers for client nights and functions, most of those who have signed up have been restaurant regulars and locals from the wealthy south Dublin locale in which his restaurant group operates.
“Three-quarters of them are women,” said Mr Smith. “Many of them are locals who say they live five minutes away and appreciate being able to just show up at any time and get special treatment.”
Even if they have no reservation Mr Smith has guaranteed that special tables will be produced at his venues “out of nowhere” to accommodate the Friends With Benefits members if they show up at busy periods. He expected to reach 40 members by Christmas, but hit the threshold last week. He has put a cap on the scheme at 50 members to maintain service levels.
In effect Mr Smith has borrowed from the members at a 0 per cent interest rate, while they will be paid back in kind in the form of food, drinks and service over five years while joining a club.
“I’ve borrowed cheaply and if we get the other 10 members I’ve also guaranteed us €500,000 in revenues and there will be a margin for us in that. These people have taken a leap of faith in me.”
Big Mike’s will be the restaurateur’s biggest project to date. It comprises a 150-seat venue across three areas, including private dining booths and a Mini Mike’s exclusive area. The Friends With Benefits members “will be first through the door”.
“My deposit for my house went into this. I’ve got to make it work because my wife will kill me if I don’t,” said Mr Smith.
