You know those Mastercard commercials. They go something like this: Vanilla Latte: $5; IPA on tap: $7; free beer and coffee for life: priceless $1,000?
Yes, my thirsty friends, a $1,000 investment in a Minneapolis restaurant called Northbound Smokehouse & Brewpub gets you a lifetime’s worth of almost free beer and almost free coffee at the Groundswell coffee shop in St. Paul.
The story starts with the beer:
For those of you old enough to remember the television show “Cheers,” a pay-once-drink-for-life is a Norm-worthy investment. And it’s pretty darn clever in this day and age of Kickstarter-ish crowdfunding. It worked for Amy Johnson and her two business partners who needed $220,000, reports the Atlantic’s Citylab. “They went to investors who offered to give heavily for a voting share in the restaurant. But since the potential investors had no experience in the restaurant industry, the owners backed away.”
Friends and family stepped up with a few thousand here and there, and it sparked the idea, Johnson told Citylab. “And people kept saying this over and over, and we latched onto the idea. Why not just take a couple grand from everybody and then we’d have all the money we’d need?”
They took the idea to their community and offered the $1,000 for almost free beer for as long as the restaurant stays open (or until you die, hopefully not from drinking too much free beer). Plus, the $1,000 investors also receive a 0.1 percent nonvoting equity in the company (for every $1,000 invested).
That was two years ago. The restaurant is reportedly thriving and only “giving away” approximately 17 beers a day, with a cost of around 40 cents per beer. Not a bad trade off to get your business off the ground.
Not too far from Northbound Smokehouse & Brewpub, over in St. Paul, the Groundswell coffee shop was struggling to make ends meet. The owners took to the investment model and rallied the support of 75 customers to invest $1,000.
The coffee shop has now “transformed from being in a space and bleeding cash to now operating in three times the space and earning eight times the daily profit,” reports Citylab. “And it all happened in one year and all from the support of 75 people willing to give $1,000 on a gamble.”
No longer just serving coffee, Groundswell added food, beer and wine, and opened up their offerings to include one beer, glass of wine, or cup of coffee per day for life, for the $1,000 investment. Smaller investments as low as $250 were good for one years worth of daily drinks.
“From the business side of it, it was a no-brainer,” co-owner Tim Gilbert told Citylab. “When someone comes in to have a beer, they’re probably not just going to have one, they’re probably going to bring friends with them, they’re going to be buying food items with it. Even with a cup of coffee, margins on coffee are high as it is.”
If you’ve ever doubted crowdfunding or sharing economy models, these ideas probably seem pretty appealing, yes? It’s almost like a store loyalty card—one of those silly stamp cards you fill up every time you buy a smoothie and then finally cash in on a free one. But these models offer a bit more ownership and (hopefully) pride in keeping community-run businesses afloat. That always tastes delicious.
Find Jill on Twitter @jillettinger
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Image: Anders Adermark