Entrepreneur Sells Restaurant on His Own Terms
Sooner or later, you’ll ponder the idea of selling your business. But will you do it?
That’s the question Michael Diedrick asked himself as the three-year anniversary of The National Cafe & Takeaway approached. When Diedrick opened The National in December 2008, he vowed to support local and regional food producers and transform Milwaukee’s industrial neighborhood of Walkers Point into a hot spot -- and then sell it to someone else.
“I felt that something had to be done to make this more of a neighborhood place — and make this neighborhood better,” he says. “The idea of selling it is really part of my original plan to make the neighborhood better.” Eighteen months before opening The National, Diedrick moved his web-design business (Byte Studios) from another neighborhood to Walkers Point -- the same block, in fact. "We saw how a lack of space made a neighborhood desolate and wanted to do something about it," he says.
In October 2010 an eco-friendly screen-printing company (Orchard Street Press) set up shop across the street. The chef of a highly regarded restaurant in Milwaukee, Carnevor Steakhouse Moderne, gave props to The National in a recent Milwaukee Magazine article. The magazine also named The National one of the city's top-25 restaurants. The neighborhood is slowly finding itself on the up and up.
In September, encouraged by the neighborhood's slow, but steady, transformation, Diedrick decided it was time to sell. Instead of handing over the keys to another restaurant owner or a real-estate investor, he decided to hand-pick a buyer through an audition-type process, forcing the buyer to implement at least one of his sustainability aspects, including sourcing local foods for the first year, or staying in the same location for two years. Diedrick, armed with the know-how to build a flashy website for potential buyers, outlined a tiered system with 11 terms (including retaining the current employees for a set period of time, or pledging to operate as a non-profit or cooperative); the more of the terms the buyer agreed to implement, the lower the price -- conceivably down to nearly nothing. If none were implemented the purchase price was $32,200 -- still a steal.
“Doing things creatively and differently is what I do at my other business,” explains Diedrick about how he came up with this unique offer. “One of the line items to make your price lower is to feed us (Diedrick and his girlfriend) for the next year, which is $2,000 less. Of course, I’ll probably eat more than $2,000 in a year!”
Twenty-four people applied to purchase The National through the website, answering questions such as “What’s your favorite cafe in the world?” and “What do you want to do with the place?” — and making an initial offer. Less than a month later, 12 applicants were called in for 20-minute interviews with the entire staff. (“Well, they have to work for that person!” explains Diedrick about the democratically run interviews.) Each applicant gave a presentation about how he or she would manage the restaurant. On Nov. 10, Diedrick announced the new owner’s identity: Nell Benton, most recently the executive chef at Thirst and Vine in the Milwaukee suburb of Shorewood. Her lifelong dream to open a restaurant had hit a brick wall because she lacked enough capital; even her second-choice dream, to start up a catering company, required cash (which she didn't have) to rent commercial-kitchen space.
Her $100 purchase price means she'll implement 10 of the 11 terms, including operating as a non-profit/cooperative by offering pay-what-you-can menus on Saturdays. "I have to admit that when I first read about (the sale) I was a bit skeptical and couldn't really understand why an owner would relinquish his investment for such a pittance. However, after meeting with Michael, I realized that his main desire was to see The National succeed," says Benton. "Clearly, Michael's main focus was not money, but finding the right owner to keep The National's mission by taking it to the next level."
Diedrick says he sold the restaurant to focus on other small-business ventures. In addition to running Byte Studios for the past 14 years, he’s a founding member of Milwaukee Makerspace, part of a national movement to foster social clubs for tinkering, building, and sharing ideas. He says he’d like to start a letterpress-printing collective, where members chip in to buy a press and other materials (such as paper and ink).
Kristine Hansen is a business writer for Intuit and is passionate about solving small business problems.