You're thinking about restaurant finance wrong
The next in a series of reexamining everything we know, with inKind’s Johann Moonesinghe
Here’s one unexpected side effect of three years of Covid: from my vantage point at least, the average diner has a far greater understanding about how restaurants work. If you didn’t understand how fraught restaurant finances are, you probably do now1.
Johann Moonesinghe, the founder and CEO of InKind, thinks he knows a better way. “The traditional structure of you get a bunch of investors for equity, or you take on debt to open your restaurant, doesn’t work, because at the end of the day, restaurants don’t make that much money,” Moonesinghe told me in a recent interview. What’s likely to happen instead, he said, is that restaurateurs take investment with the best intentions and solid financial plans to repay the debt, but years later realize it’s not working.
He believes his company can change this. InKind works as an investor of sorts by purchasing food and beverage credit from partner restaurants. But unlike most traditional investments, these cash infusions don’t require owners to give up a percentage stake in the business. Instead, InKind sells the credit to guests, with added bonuses. (Think: “Spend $300, get $350.”) Guests use the InKind app to pay their checks and redeem balances, and plenty of big-name restaurants are using it, from a number of chef Michael Mina’s restaurants in San Francisco to Danny Meyer’s Union Square Cafe and Gramercy Tavern.
Last quarter, Moonesinghe said the company bought close to $60 million in credit to restaurants, adding, “I think at this point, we’re pretty squarely the largest independent restaurant finance company.”
He speaks from experience. Before becoming a startup founder, Moonesinghe was a restaurateur in Washington, D.C. He ran a restaurant incubator of sorts, inviting chefs to use the space and helping them start their own businesses, including with an investment. “Because I had done about 20 restaurant investments prior to this, I realized there's something broken in this model,” he said. InKind was born from that experience.
Soon after, Moonesinghe moved to Austin, Texas. “My husband was like, absolutely you’re not allowed to open another restaurant,” he said.
Spoiler alert: he opened a restaurant2.
Moonesinghe’s new Austin spot, Ember Kitchen & Subterra Agave Bar, debuted just over a week ago. It’s a big new business, but also a “test kitchen” of sorts, meant to give InKind a proving ground for its model and tech integrations.
We talked through the whys and hows of the new opening, plus his thoughts on conceiving and launching a business to completely rework an ages-old system. Our conversation has been lightly edited.