The Jumping1ton Story Part II
The Journey and the curveballs
In Part I, I talked about how Jumping1ton came about and provided a glimpse of issues encountered. Before I proceed, here is a disclaimer. What is written here and in other parts of the Jumping1ton Story are purely my opinions and perspectives. There are always two sides to a coin and may differ from what is express on this site. Any negativity expressed is just my personal opinions and views of the situation. Now that is out of the way, Let’s begin with the journey and the curveballs.
Now that we have found the ideal location and negotiated a reasonable lease agreement, the only thing left is to sign it. The partner insisted that the four of us should signed the lease agreement even though he and Claudia are technically the principles in this venture. I have no issue with this arrangement since any liability incur by the business entity affects Claudia and therefore myself whether I signed any legal documents or not. My thought is that, this is an 50/50 (or in this case 25/25/25/25) partnerships, it is the right thing to do. I am always of the opinion that “the business succeed, we all succeed”. It is a team effort.
Curveball # 1
Here comes the curveballs. A few days after the ink dried on the lease contract, the partner aka Mr. H called Claudia up and suggested they meet up, just the two of them. As it turned out, the topic was about the ownerships shares in the venture. Mr. H wanted at least 60% ownership. He explained that he and his wife originally were only willing to let us have 20% ownership, but since we have been so helpful and they know that we will not agree to the 20% and therefore they are willing to let us have 40%. He further explained that he needed that extra 20% because he wanted his son to have it. He assured Claudia that even though it is a 60/40 partnership, all decision making will be treated like a 50/50 or rather 40/40 equal voice. The remaining 20% will have no voting rights. These terms will be specified in the Partnership Charter and an agreement will be drawn out by an attorney.
Claudia was surprised and taken back. She was always on the assumption that it will be a 50/50 partnership. Looking back, she did bare part of the blame for making this assumption. However, the timing of this discussion right after the lease was signed was suspicious. This was the only condition, Mr H would be willing to proceed with the partnership otherwise he was going to back out! At that time, I was trying to determine whether Mr H had taken us hostages since we are now legally bound by the lease or he does not understand the financial impact of backing out of the lease. Regardless, here we were facing the first of many curveballs and trying to find a way acceptable to all. The plane is speeding down the runway with its front wheel lifted off the tarmac and Mr H is threatening to pull the brakes if we did not agree to his demand!
Over the next few days, we struggled with finding a way out of this predicament. We were furious at ourselves for not talking over the terms of the partnership before signing the lease, but instead had focus on the product end of it. I blamed myself for getting carried away and not learned anything at all from my past failed partnerships back in my early days. Since I could not stop Claudia from charging forward, I have to make sure that i highlighted the bumps and potholes ahead. After several conversations Claudia and Mr H had and the firm assurance from Mr H that he will be respectful of our opinions and treat us as equals, that Claudia and I decided that the best way is forward as the alternative is financially prohibitive. Basically in the worse case scenario, we were liable for the duration of the 5 year lease and going to court to ensure the Mr H comply with his part of the financial obligation. Our energies and time are better spent trying to make the business a success which should be the goal of any business venture! In short, our goal is to make money, right?
Planning and Getting Ready
With the partnership agreements out of the way, it is time to start deep diving into getting the shop ready for opening day. We took the entire three months that we had for free rent for this stage. There were building permits and various licenses to apply for, talking to potential vendors and contractors getting as much information as we can. To be honest we are all inexperienced in running a food business in spite of Mr. H emphasizing he and his wife vast experiences running multiple businesses back home in China and his son’s experienced working as a waiter for a local hotpot franchise. It was based on these experiences that Mr. H feel that Claudia and I should take the back seat and play second fiddle to them. In his words, “Claudia and Eric is just too simple and nice, and does not know how to handle anything”. In short – “You guys are not very smart and capable!” In other words, we are the weakest links especially in my case. This was despite the fact that Claudia actually do have some experiences operating a Japanese fast food restaurant with her sister and their Japanese Chef Partner more than a decade ago. Claudia with her financial background was more involved in the accounting aspect of that operation. As for me, my experience in the retail personal computer business 30 years ago is nothing to brag about. I was happy that they know what they are doing and since I do not plan on getting involved in the day to day operation, it was news to my ears. Claudia for her part, feels that her contribution would mainly be in the back office area which is her strong suite and don’t plan on being involved full time in the daily operation of the shop.
I was tasked with taking care of all the permits, licenses, and necessary regulatory requirements that are needed. In addition, I am also Mr. H researcher for any “ideas” that he came up with and believe me he did have a bunch of them, some are head scratchers. My early impression of Mr H is that of someone whose brain is going at 100mph in a 30mph zone. He was constantly rattling off ideas and suggestions with example of how things were done in China. We had to constantly dampen his enthusiasm with “This will not fly in the USA due to regulatory restrictions and laws”. Surprisingly, Mr. H was the one with the most accountant and attorney friends and connections. Maybe he is just the type that will knock on every door till he gets what he wants kind of guy. In those early days, Mr. H had the loudest voice in the room and the assumed title as the most knowledgeable guy there, remember Claudia and I were the weakest links. On one occasion, he want ed to accompany me to the City Hall to observe the business license application process, so that in the future “I can do it myself and not bother you” (his words). After about an hour, he decided to take off and left me to my task. In case you are wondering why I was tasked with all these paperwork assignments, it was mainly because in their words “Eric you went to school here and your command of English is better, these are your assignment”. And I did feel like an intern or an assistance to a CEO getting thrown into the fire doing all the mundane stuff. But hey, take one for the team!
Curveball # 2
Since I was the one that advocated for having sandwiches on the menu, I took on the assignment of coming up with that part of the menu item. Since Mr. H was the “Wonton Master” and his son was the “Boba Tea Master”, we left them to coming up with that part of the menu. For my part, I collaborated with one of the vendors, Sysco, on the sandwich menu design through their business services department. We adopted a 2-3 of their ideas with some modifications and came up with these items. #4 on this list was named after Chef Nakai san, former owner of Kinokawa and Claudia’s ex-partner at Teriyaki Hut. #2 was named after Chef Rigo at Sysco.
- Kimchee Shortrib
- Rigo Shrimp PO Boy
- BBQ Pulled Pork
- Nakai Pork Cutlet ( Japanese style Pork Cutlet)
The photos above were the original creations and on opening day, they were slightly modified by me to adapt to the reuseability model of Jumping1ton and quick served concept. Claudia and I felt that we need to have between 8 to 12 items under the sandwich menu to make it enticing and cater to the most people’s food preference. Remember, the Sandwich menu is to complement the shop Signature item – Fried Wonton and eventually be phased out once the Fried Wonton and the Boba teas sales mature and can sustain the shop on their own. This is the selling point I made to Mr. H and his wife to assure them that “their” fried wonton is and will always be the focus of the shop. The name of the shop – Jumping1ton – reflects that. Personally, I wanted the fried wonton to succeed as that is one item that can be made in a central kitchen. A well design and managed central kitchen is key to the success of restaurant franchise. In my opinion, sandwiches will be harder to prep ahead of time in a central kitchen concept if “Made Fresh or Made to Order” is your selling point.
In case you are wondering why I felt the need to include sandwiches to the menu when we were emphasizing fried wonton. The shop location was in an area that is predominantly Hispanic with what seems like tacos shops at every street corners and the medium income if I remember correctly was between $45K – $65K range. I would say, almost everyone knows what a sandwich is, but fried wonton not so much. Imagine walking into a shop and you have no idea what they are serving, you would probably walked out and never come back again. So I prodded along with creating more sandwich items. Along the way, Mr. H had mentioned that we should limit the sandwich selection to only 2-3 items, even his wife reminded me of that when we met one time. I discussed this with Claudia and expressed my thought that it would be waste of time and ineffective just to have 2-3 sandwich items. She agreed with my view and told me to proceed as plan and she will handle this with Mr. H. And so i prodded along and eventually arrived at 10 items which i felt would be sufficient to make the sandwich menu look like a legit menu. It had beef, shrimp, pork, and the good old fashioned grilled cheese! The only protein missing was chicken. Not sure what I was thinking then, it was most probably due to the number of item constraint.
This curveball wasn’t as shocking but it is more a head scratcher coming from a family full of “experienced, knowledgeable business people” as Mr. H like to keep reminding Claudia and I about it. On the day we met up at the shop to go over the menu and met up with the person design the artwork and menu layout, Mr H was upset that the menu item had more than 3 items. He made it a point to let us know his displeasure that we ignored his instruction that we limit sandwich to 2-3 items only and yet we have 10 items among other items not listed under sandwiches. At that point we asked what was his main reason for wanting to put a limit on sandwich items. Initially he and his wife kept parroting, “Oh we don’t want to over burden you”. After repeatedly reassuring them that these are not complicated and they were not expected to support this initially that their blurted out their next and real reason, that is they are concerned that the sandwich will take sales away from “our” fried wonton!! There was actually a real reason behind their resistance which did not dawn on us until much later. At that moment, the thought that raced through my mind was, “wait a minute, what you mean by “our” fried wonton sale?” Aren’t we in the business to sell food to people who walk in? If customers walk in and want sandwiches but not fried wonton, should we turn them away and faced the prospect of losing potential customer. Wouldn’t it be better to make a sale and let them sample our fried wonton and maybe they will come back and order wonton? I felt like this is cheap but effective way to promote the fried wonton.
During this meeting, Mr H. blew his top when he saw that we had included fresh brew coffee on the menu. The reason why I wanted to included coffee is that almost everyone drink coffee but not some much asian boba iced tea. In addition the city hall and main police station were across the street. You know the thing about cops, donuts, and coffee right? Or so we thought. Mr. H complained that it will definitely take sales away from his son boba milk tea sales. Now you are wondering why I made it sound like it is their fried wonton and his son boba milk tea! Shouldn’t it be Jumping1ton fried wonton and boba milk tea sales? Exactly my thought, when Mr. H said their fried wonton and milk tea. I had gotten the impression after this that only fried wonton and boba milk tea sales are considered sales and everything else not! Great business logic. When we proposed carrying bottle water as an item for people who doesn’t drink coffee or tea, it was rejected based on this reasoning, i quote “It will cut into the tea sales, and why are we interested in selling items making only a few cents” When I asked what if customers requested water or not a tea drinker? The initial response was either they drink tea or they can walk away!!!
Read about The Jumping1ton Story Part I – How it started
