Like many other sectors of the economy, the restaurant industry has been brought to its knees by the pandemic. As a result, some private equity firms and hedge funds saw the situation as an opportunity to get their hands on large areas of real estate by looking for struggling restaurants to acquire. This, of course, didn’t affect the fate of these restaurant employees, most of whom lost their jobs or have been put out of work for an undetermined amount of time.
But a new project in Denver is taking a different approach — once it buys a distressed restaurant, the Main Street Phoenix Project gives ownership to the place’s employees, enabling them to organize as a worker cooperative.
“By bringing new capital to the table, from mission-aligned, patient investors, we could buy businesses at significant value, we can hire their workers back, put them into ownership position, and lock in all of that improved cash flow and all that gain in value for the benefit of workers,” says Jason Wiener, a partner in the new venture.
After developing the financial model, the partners are now preparing to buy the first restaurant by the end of this year, with plans to acquire around 25 over the next two years.
The main types of restaurants the group will focus on are family-owned restaurants, struggling businesses at risk of private equity takeover, and restaurants that may have already closed. In addition to improving working conditions, turning the businesses over to the employees will also reduce worker turnover, helping the bottom lines of the restaurants.
For now, the Main Street Phoenix Project will work in the Denver area but it plans to expand to other parts of the country and replicate the model elsewhere too. The hope is to save small, independent restaurants that have taken the biggest blow from the pandemic.