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AndrÃ© Williams was in a tight spot. While working for a large software company in Chicago, he saw the firm’s market capitalization plummet 99%. Sweeping layoffs were the norm, and morale couldn’t be lower. It was the beginning of the high- tech meltdown. The company had been riding the e-commerce wave and now it was crashing down. So Williams decided to do what anyone with an engineering degree in aeronautics and astronautics would do: He opened a Japanese restaurant.
“I’m sitting here, having joined the company at the peak and watching this drop-off, and I’m scrambling trying to keep my job. I was wondering ‘What the heck am I doing?'” recalls Williams. “I have this skill set I’ve developed, I have an M.B.A., I understand operations, I have all these tools–why don’t I go and do something entrepreneurial?”
It made good business sense. Williams opened Kaze Sushi, now a hip restaurant in the trendy Roscoe Village neighborhood of Chicago. At the time, the blue-collar area was going upscale and real estate prices were increasing sharply. Williams, who managed a residential real estate business on the side, was in the right position to take advantage of the area’s revitalization when he learned that a 2,000-square-foot corner property that had formerly housed a hardware store was available.
In analyzing the area, Williams concluded that its residents money to spend but no appealing restaurants. He intended to fill the void. “The market research was coming out and it was screaming at me ‘An upper-end Japanese restaurant would do well here.'”
But Williams didn’t know the restaurant business. However, he understood the industry’s dynamics enough to know he would need partners.
A friend introduced him to Executive Chef Macku Chan, who later introduced him to Chef Kaze Chan and Chef Hari Chan. They had all worked at top Japanese restaurants in the Chicago area. The plan was for the executive chef to manage food preparation while Williams controlled the business side. Williams put down the initial capital, roughly $500,000 he earned from his real estate holdings and savings, to renovate the building, including upgrading the plumbing and installing a new ventilation and air conditioning system. He also purchased kitchen equipment, supplies, and furniture.
To acquire his top-notch chefs, Williams gave them a generous incentive plan—equity in the business. “I basically said, ‘Today I’m 100% owner of this business. Now if you give me a preferred
return that helps me recover all the capital that I put into this business over a certain period of time and you give me that return on an annualized basis, I’ll let you vest ownership in the business,'” asserts Williams, who currently owns 67% of the business. The remaining ownership percentage is spread among the partners.
That ownership-sharing model was a winner. The team worked hard to manage costs–labor and food costs account for more than half of Kaze Sushi’s expenses–while providing a pleasant dining experience and stellar customer service.
In 2004, the first year of business, sales grew to just under $1 million. By 2006, sales
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