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  • Information needed to set up a Luxury Bar business

    Hi everyone !

    This is my 1st post so i will introduce my self:
    I'm a 38 Year old french man living with my japanese girl friend in Paris.

    I plan to open a Luxury Bar in Tokyo and i'm still working on the Business Plan but i encounter some difficulties...

    I got a potential investor for 30 000 000 Yen then I'll try to outline briefly the difficulty I currently meeting :

    30 000 000 Yen is the budget to create the company (Costs of construction, purchases products, services fees, etc ...)
    This is the amount that I will ask the investor in exchange for a profit of 20% over 3 years so a total refund of 36 000 000 Yen. So 1 000 000 Yen per month to pay for 3 years.

    15 000 000 Yen is the blocked deposit for renting the commercial place so 15 months advance rent to 1 000 000 Yen per month.

    27 000 000 Yen this is the starting bankroll that will ensure the Bar activity for a period not exceeding 6 months from the montly charges that costs 4 500 000 Yen (amount to be repaid with interest to the investor is included in the montly charges expenses)
    Knowing that the first 3 months will be difficult and must make themselves known by customers so possible deficit at the beginning of the activity.

    So a total of 72 000 000 Yen

    The problem is that if I ask an investor 72 000 000 Yen, and I offered him 20% interest, it will be included in the monthly charges
    therefore 3 333 333 yen per month to pay for 3 years.
    So a total of 6 833 333 Yen that is a too heavy monthly charges to handle instead of 4 500 000 Yen planned.
    In addition, it is too much money to easily find and convince an investor.


    Possible solutions:
    30 000 000 Yen is the targeted budget. > The actual potential investor or other business angel's, etc...

    15 000 000 Yen deposit> Is there a company in Japan that offers service to pay the deposit against the monthly interest?
    Or is there another solution?

    27 000 000 Yen from the initial working capital> Is there in Japan a service company or bank or insurance may pay the fee in case of need against a percentage interest in the operations?
    Or is there another solution?


    If any of you got some idears, solutions, services or have a bar business, feel free to reply or discuss about this subject.

    Thanks for reading

  • #2
    Are you here in Japan and what type of visa are you on?

    Comment


    • #3
      Originally posted by sayato View Post
      Hi everyone !

      This is my 1st post so i will introduce my self:
      I'm a 38 Year old french man living with my japanese girl friend in Paris.

      I plan to open a Luxury Bar in Tokyo and i'm still working on the Business Plan but i encounter some difficulties...

      I got a potential investor for 30 000 000 Yen then I'll try to outline briefly the difficulty I currently meeting :

      30 000 000 Yen is the budget to create the company (Costs of construction, purchases products, services fees, etc ...)
      This is the amount that I will ask the investor in exchange for a profit of 20% over 3 years so a total refund of 36 000 000 Yen. So 1 000 000 Yen per month to pay for 3 years.

      15 000 000 Yen is the blocked deposit for renting the commercial place so 15 months advance rent to 1 000 000 Yen per month.

      27 000 000 Yen this is the starting bankroll that will ensure the Bar activity for a period not exceeding 6 months from the montly charges that costs 4 500 000 Yen (amount to be repaid with interest to the investor is included in the montly charges expenses)
      Knowing that the first 3 months will be difficult and must make themselves known by customers so possible deficit at the beginning of the activity.

      So a total of 72 000 000 Yen

      The problem is that if I ask an investor 72 000 000 Yen, and I offered him 20% interest, it will be included in the monthly charges
      therefore 3 333 333 yen per month to pay for 3 years.
      So a total of 6 833 333 Yen that is a too heavy monthly charges to handle instead of 4 500 000 Yen planned.
      In addition, it is too much money to easily find and convince an investor.


      Possible solutions:
      30 000 000 Yen is the targeted budget. > The actual potential investor or other business angel's, etc...

      15 000 000 Yen deposit> Is there a company in Japan that offers service to pay the deposit against the monthly interest?
      Or is there another solution?

      27 000 000 Yen from the initial working capital> Is there in Japan a service company or bank or insurance may pay the fee in case of need against a percentage interest in the operations?
      Or is there another solution?


      If any of you got some idears, solutions, services or have a bar business, feel free to reply or discuss about this subject.

      Thanks for reading
      I am afraid I do not have any answers to your questions. I have some well-intentioned and somewhat obvious observations for people who live in Tokyo. There are already MANY, MANY luxury bars in Tokyo. I cannot begin to count them all. I have been in 15-20 during a multi-year period. In Shiodome, there is a fabulous one that has a superb view of Tokyo. The 2 drinks were excellent. The interior was 5-star or better, but our jaws dropped when we got a bill for 6,000, even though we could afford it. So I hope you have a fantastic concept to differentiate yours, such that people will find some kind of perceived value for vastly overpriced drinks. Currently, many men with money to blow, go to hostess bars or similar.
      Bon courage!
      Last edited by Super Grover; 2013-08-23, 08:58 AM.

      Comment


      • #4
        When does your business plan projects a break-even ?
        The obvious thing would be to not start paying back the initial investor from day one but only from month 3 or 6 when the company is turning a profit. Otherwise you'd better include this in 'start-up' costs as well rather than breaking them up into 'creation' and 'first 6 months'.

        Regarding the Y 15 mio deposit, it depends whether this is 'risky' capital or not, meaning wheter this money could be returned to the investors or might disappear. To give you a concrete example, let's assume the company fails after one year but the minimum rental period is two years. In that case, the Y 15 mio deposit would be withheld by the landlord to make up for the lost rent as well as to rebuilt the property to its original stage. So in that case, it would be capital 'at risk' and any investor (or bank) would have to charge a risk premium accordingly as well as scrutinize the business plan.
        On the other hand, I have heard of restaurants who pay no rent at all, just some % of their profits, as some buildings 'subsidize' restaurants to attract tenants for their office space.

        Comment


        • #5
          TheHotCondom :

          My Girl Friend and i live in Paris right now but we have to leave the appartment for february 2014 so let's say this is the deadline for the project.
          If the business plan will be good, we may move to Tokyo in march and open the bar end of april 2014.
          I know a bit japan, i have been 6 times (a total of 1 year) and for the visa, well, i'm thinking about investor or spouse visa but this is an other story that i have to seriously concider.

          Comment


          • #6
            Originally posted by sayato View Post
            editing........................................... .....................
            12345678910
            Last edited by sayato; 2013-08-23, 05:14 PM.

            Comment


            • #7
              Originally posted by sayato View Post
              TheHotCondom :

              My Girl Friend and i live in Paris right now but we have to leave the appartment for february 2014 so let's say this is the deadline for the project.
              If the business plan will be good, we may move to Tokyo in march and open the bar end of april 2014.
              I know a bit japan, i have been 6 times (a total of 1 year) and for the visa, well, i'm thinking about investor or spouse visa but this is an other story that i have to seriously concider.
              Have you ever worked in a bar in Tokyo, particularly a luxury bar? The job is not the same as in other countries (though there are similarities), and if you don't have the work experience, you are setting yourself up for failure. Japanese customers have expectations of the type of service they should and shouldn't receive in a bar, and it's essential to understand their mindset.

              Comment


              • #8
                I find the financial model a bit hard to get my head around to be honest. It seems a strange way of calculating - but hey - I know nothing at all about the bar business. Anyway, you say you need 72 million Yen in the bank to get started and plan to have that all paid back within three years. Near enough 550.000 Euros on the line with very limited security and for a business with track record at all. Finding someone to invest that kind of money in something as risky as a luxury bar is not going to be easy. Even for a rich family that is going to give pause for thought. I can't imagine any bank even considering it. You say you have someone who is interested - treat that person like gold dust because she or he will be difficult to replace.

                Super Grover's comments above are well worth noting. Unless you can offer something really special, it is difficult in the current economic climate to imagine that you will take in 4.5 million a month never mind the almost 7 million a month you calculate you will need.

                Your calculations include the rent for the first 15 months. After that it will have to be paid out of monthly income. Doesn't that then mean you will need 8 million a month coming in from month 16 to month 36? Also, the staff, stock and services costs for the first 6 months are covered by the initial investment. After that, won't you still have to pay the 7 million a month and also have to pay those running costs out of you income stream?

                It just all seems very very ambitious and near impossible to achieve unless you really have a unique, brilliant idea and a fantastic marketing plan to back it up. But it's a bar - Isn't there already every conceivable type of bar in Tokyo already? Aren't company entertainment budgets and people's budgets for everything severely curtailed at the moment?

                Comment


                • #9
                  Originally posted by Super Grover View Post
                  I am afraid I do not have any answers to your questions. I have some well-intentioned and somewhat obvious observations for people who live in Tokyo. There are already MANY, MANY luxury bars in Tokyo. I cannot begin to count them all. I have been in 15-20 during a multi-year period. In Shiodome, there is a fabulous one that has a superb view of Tokyo. The 2 drinks were excellent. The interior was 5-star or better, but our jaws dropped when we got a bill for 6,000, even though we could afford it. So I hope you have a fantastic concept to differentiate yours, such that people will find some kind of perceived value for vastly overpriced drinks. Currently, many men with money to blow, go to hostess bars or similar.
                  Bon courage!
                  Thank you very much Super Grover for your inducement i really apreciate.
                  This is interesting that you try some luxury bar i will be interested by your experiences later if i go more far into my business plan.
                  You have been to Majestic ? http://www.fish-bank-tokyo.jp/11majestic/majestic.html
                  I have not set prices accurately but i can say my bill will be around 4 000 yen for 2 ____tails.
                  Hostess bar are famous in japan but i hear they start to have difficulties to survive with crisis is that true ?

                  Comment


                  • #10
                    Originally posted by ttokyo View Post
                    When does your business plan projects a break-even ?
                    The obvious thing would be to not start paying back the initial investor from day one but only from month 3 or 6 when the company is turning a profit. Otherwise you'd better include this in 'start-up' costs as well rather than breaking them up into 'creation' and 'first 6 months'.

                    Regarding the Y 15 mio deposit, it depends whether this is 'risky' capital or not, meaning wheter this money could be returned to the investors or might disappear. To give you a concrete example, let's assume the company fails after one year but the minimum rental period is two years. In that case, the Y 15 mio deposit would be withheld by the landlord to make up for the lost rent as well as to rebuilt the property to its original stage. So in that case, it would be capital 'at risk' and any investor (or bank) would have to charge a risk premium accordingly as well as scrutinize the business plan.
                    On the other hand, I have heard of restaurants who pay no rent at all, just some % of their profits, as some buildings 'subsidize' restaurants to attract tenants for their office space.
                    Your post make sense i like that.
                    The break-even is not fully and accurately calculated but let's say
                    with the montly charges that costs 4 500 000 Yen per month i need
                    each customer to pay 6 000 Yen and i need 30 customers per day or
                    each customer to pay 3 000 Yen and i need 60 customers per day

                    You are right, i was thinking about the same things for the 3~6 month.
                    I was thinking about opening on 28 of april to have a good start with the golden weeks then it's summer time then i guess in august less activities...
                    So yeah 3 month without payingback investor will help for a good start and i think he will understand that.
                    Also if all works great in the better dream world it will help to fill initial working capital.
                    Anyway this point will be aborded when we sign contract with lawyers.

                    For the 15 000 000 Yen of deposit, this is tricky because the owner of the local can almost do what he want in japan.
                    I can only count on a good contract where both part are agree and certified with lawyers.
                    I can argue that i'll make a Luxury Bar that will attract high class customers and upgrade the value of the commercial place and hoping owner will make me some favor...
                    So perhaps i can find on time a owner who ask only 2 month of deposit, the problem is that i have a dead line time and i need to be prepared for the worth and pay 15 month deposit if i find the ideal business place...

                    And yes you are right, if i rent a skeleton local to build my bar in, then i have to give back the local as the same initial state.
                    So that mean to pay the rebuild work of the place, this money could be provided by bankroll that will ensure the 6 month Bar activity.
                    Like this the 15 000 000 Yen of deposit will be a 100% money back guarantee.
                    Hum i like the idear, now i should focus on the 6 month bankroll problem that is not guarantee to pay back but this money should be used wisely and gradually depend of the financial situation of the bar.
                    So i'll call that an half blocked capital with half risk depend of the situation and decision...

                    Restaurant who not pay rent that's just great ! If you know who do that you will gain some profit for sure !

                    Comment


                    • #11
                      Originally posted by ttokyo View Post
                      Regarding the Y 15 mio deposit, it depends whether this is 'risky' capital or not, meaning wheter this money could be returned to the investors or might disappear. To give you a concrete example, let's assume the company fails after one year but the minimum rental period is two years. In that case, the Y 15 mio deposit would be withheld by the landlord to make up for the lost rent as well as to rebuilt the property to its original stage. So in that case, it would be capital 'at risk' and any investor (or bank) would have to charge a risk premium accordingly as well as scrutinize the business plan.
                      Is it a refundable deposit or is it 15 months rent in advance? The OP said:

                      15 000 000 Yen is the blocked deposit for renting the commercial place so 15 months advance rent to 1 000 000 Yen per month.

                      Comment


                      • #12
                        Originally posted by Esoteric View Post
                        Have you ever worked in a bar in Tokyo, particularly a luxury bar? The job is not the same as in other countries (though there are similarities), and if you don't have the work experience, you are setting yourself up for failure. Japanese customers have expectations of the type of service they should and shouldn't receive in a bar, and it's essential to understand their mindset.
                        Well i'm actually IT engineer but i use to work as waiter is some restaurants accros the world when i was young and my girl friend use to work in her parents restaurants in Sendaï.
                        Unfortunaely i never work in Japan and i know it's quite hard to find a job for a gaijin.
                        Anyway if the bar open we will recruit :
                        a professional barman who can do ____tail and flair.
                        a professional cooocker who will do some tapas because japanese are focused on food.
                        Sometimes a extra waiter/barman if needed.

                        I'll manage the team, help the barman, help as waiter indoor.
                        She will manage the team, do the waitress indoor.
                        Beside that there is the services of a lawyer, accountant.

                        I didn't set the failure plan for the business yet but i will do if i can achieve the business plan.

                        Anyway, thank you to remind me that, it's true that in Japan the services are just perfect and higher service will be expected in high class business such as luxury.

                        Comment


                        • #13
                          Originally posted by Brown Cow View Post
                          Is it a refundable deposit or is it 15 months rent in advance? The OP said:
                          It's a deposit based on 15 months (max) of the local rent
                          .
                          The owner can take some part of this deposit if i dont pay the rebuild work of the place when i leave.
                          The owner can ask also 1 or 2 month of rent as a gift.
                          The owner can ask also a guarantor that i dont have but i know company who can be guarantor if i pay the service.

                          Comment


                          • #14
                            Originally posted by Brown Cow View Post
                            I find the financial model a bit hard to get my head around to be honest. It seems a strange way of calculating - but hey - I know nothing at all about the bar business. Anyway, you say you need 72 million Yen in the bank to get started and plan to have that all paid back within three years. Near enough 550.000 Euros on the line with very limited security and for a business with track record at all. Finding someone to invest that kind of money in something as risky as a luxury bar is not going to be easy. Even for a rich family that is going to give pause for thought. I can't imagine any bank even considering it. You say you have someone who is interested - treat that person like gold dust because she or he will be difficult to replace.

                            Super Grover's comments above are well worth noting. Unless you can offer something really special, it is difficult in the current economic climate to imagine that you will take in 4.5 million a month never mind the almost 7 million a month you calculate you will need.

                            Your calculations include the rent for the first 15 months. After that it will have to be paid out of monthly income. Doesn't that then mean you will need 8 million a month coming in from month 16 to month 36? Also, the staff, stock and services costs for the first 6 months are covered by the initial investment. After that, won't you still have to pay the 7 million a month and also have to pay those running costs out of you income stream?

                            It just all seems very very ambitious and near impossible to achieve unless you really have a unique, brilliant idea and a fantastic marketing plan to back it up. But it's a bar - Isn't there already every conceivable type of bar in Tokyo already? Aren't company entertainment budgets and people's budgets for everything severely curtailed at the moment?
                            In fact i would like to avoir to need 72 000 000 Yen.
                            The plan is made to pay back 30 000 000 Yen on 3 years with 20% of interest so a total of 36 000 000 Yen for the investor. Let's say, this is OK.

                            The 1st Problem is :
                            The rental deposit of 15 000 000 Yen (15 month max) will be placed in the bank of the owner of the commercial local the time i stay in his local.
                            Then when i leave his local, i have to give back the local as the same initial state and the owner give me back
                            the 15 000 000 Yen that i borow or found from any investor, bank, company, organisation, gouvernment, or any others, any idears are welcome.
                            The 1st good news that remind me Mr ttokyo : This amount can be 100% garanted back.

                            The 2nd Problem is :
                            I need a reserve of money in case of bad results to offset losses of 6 month to be confortable and keep alive the business maximum as possible and rectify for better situation until that delay.
                            So 4 500 000 Yen per month (charges to pay) X 6 month (time can be use to rectify situation)= 27 000 000 Yen (reserve of money in case)
                            The question is how to avoid this reserve of money or ask to a bank or other organisation a part by part the reserve of money or any other idears are welcome

                            Yeah this is complicated and i also think this is nearly impossible to ask to a bank to take such a risk plus i'm gajin and dont live and work in Japan.
                            An investor think different they will invest into financial market, Stock Exchange, etc... to take the risk to loose all or gain some extra money.
                            Well it's based on fluctuation, informations, etc.. nothing sure...
                            Well a business like a luxury bar is not a sure things as well but someway it's a bit more reliable bacause it's based on primary needs, eat and drink, then the concept and inovative idear will make the difference.

                            Exemple : The Robot Restaurant http://www.shinjuku-robot.com/pc/
                            I will pay a lot to know who had beleive and pay this project and why it's still up and working ? (i will not make the same crazy idear)
                            So why not me ?

                            This is crisis but i still beleive Japanese got a great power of buy , even the Yen is geting better.
                            Japan is a great consumer society and they often purchasing things impulsively or for emotional.
                            In France we count the money and think a long time before buying something.
                            I also beleive there is still some rich people in Tokyo.

                            Comment


                            • #15
                              Bonjour!

                              Ok, where to start ....

                              The numbers sound a bit unrealistic...

                              1-Have you factored in labor and material costs for construction? If you are going high-end it will be pricey.
                              2-Cost of permits, licences, etc. ?
                              3-No advertising budget?
                              4-Staff costs.... salary, social security charges, transportation for staff and meals as most places feed their staf/pay transportation(sometimes cabs after public transit hours)?
                              5-What about your salary and the girlfriend's?
                              6-Luxury bar means high-end brands hence your costs are going to be higher
                              7-Visa status...have you read the fine print carefully for the investor visa and having to provide your own funds?
                              8-Most commercial leases have deposit and advance rent built-in... what is the breakdown?
                              9-Are you aware that many luxury places have to resort to promotions to attract clients these days? Just have a look at the Japan times restaurant/food section or others or just have a look at places likePeter at Peninsula Hotel to give you an idea of what you are up against.
                              10-For a newer type of place expect everything to be billed COD, what is your working capital and more importantly have you figured the cash flow?
                              11-How serious is the business plan..I mean throwing figures on a piece of paper is all good and well but any investor, angel or not , will want to see a serious business plan with a lot of details into it.
                              12-Have you factored in the effect of the sales tax raise in all this.... you would be surprised how inelastic the entertainment budget is for most people in Japan.
                              13- you are an IT engineer... have you even looked into a job into that?
                              14-How comfortable are you to be in byusiness/associate with the girlfriend? Can you deal with the fact that you will be in each other faces 24/7 and add to that the stress of business and days where things will be more difficult? Recipe for disaster and speaking from past experience.
                              15-Hopefully your place will be distinctive and will offer some kind of special view as this is usually part of the package here unless you shoot for hostess bar.
                              16-You are thinking Tapas.. how original.. these have been done to death here...
                              17- What about certains essentials that you will have to buy from certain unsavoury suppliers at an inflated price?
                              18-How cool/patient/legit is your investor? do yoiu want to end up like the Shibuya yakiniku restaurant owner who faced his demise at the hands of a baseball team a year or two ago?
                              19-Insurance and other costs like that?

                              I'm sure others will add/comment more. Bonne chance mais je pense que tu reves en couleurs!
                              Again why not look for a job in IT?
                              Last edited by curing; 2013-08-23, 11:54 PM. Reason: missing sentence

                              Comment

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