Adventures in Bootstrapping: How I Started a Restaurant with $6,000

Last Updated Aug 24, 2010 2:36 PM EDT

By Pat Walther, Owner and Chef, Whatsmokin', Arnold/Imperial, Mo.
Two years ago I was laid off from my office job. I had no college degree, but I had spent six years working as the assistant to an inventor, and the rest of the time in HR and business management positions. I had some idea how to start and run a business. I'm also a good cook.

I am a huge fan of the cooking show "Diners, Drive-ins and Dives," which is hosted by my idol, Guy Fieri. On one show, he featured a mechanic who used a homemade rotisserie meat smoker in his camper to cook for his employees, and it inspired me. I approached a neighbor who had been pushing me to start my own restaurant, and essentially asked him to put his money where his mouth was. He loaned me $2,000 and I promised him a 25% return on the investment. Once we had that loan, a friend of my husband's lent me $3,500 with no interest due and a friend of mine lent me $500 with no interest due, for a total of $6,000 and a repayment of $6,500. It wasn't a lot, but I thought if I worked it right, it might be enough.
I keep costs and overhead low
From my previous work, I had experience filing for an LLC and doing accounting and payroll, so I knew I wouldn't have to hire a lawyer or an accountant. I invested $500 in Peachtree Accounting software to manage my payroll and finances. As for a head chef, I had that covered, too: I had been cooking since grade school. My father was an excellent chef and we used to make dinner together after he got home for work -- things like shish kebabs, ribs and homemade marinades.

We couldn't afford rent on a space right away, so on Craigslist I found a $1,700 camper trailer, which my husband remodeled into a kitchen. For the first year we parked the trailer in a vacant lot in High Ridge, MO, off of Highway 30 and made all our food to go.

I wanted smoked meats to be the center of my menu, but brand new smokers go for around $5,000 -- almost my entire budget. So I purchased online directions for building a homemade smoker. I bought about $150 worth of scrap metal, including a 250-gallon oil tank that had come out of an old home. With the help of some neighbors who owned a couple of welders, we were able to create a smoker for less than $200.

I decided to use a residential stove for my kitchen. I not only saved thousands I would have spent on an industrial stove, but I didn't need to install a vent hood to pass the safety inspection. Vent hoods cost around $20,000. Using a residential stove means I don't have a fryer, so I don't have French fries. But I offer steamed corn, baked beans and other homemade sides instead. My feeling is that if people can't live without French fries, they should just go to McDonalds.

I rely on my community
What's really gotten me through the first couple of years is having the support of my community. In addition to giving me seed money, helping me build my smoker and getting the word out about my restaurant, my neighbors have actually written checks that have allowed me to buy vital pieces of equipment.

At one point, one of my fridges died and I was putting everything in ice chests. A customer and friend from church dropped by and saw my predicament. When I told her that I was saving to buy a fridge being sold up the street for $1,600, she wrote me a check for the amount on the spot, without expectation of being paid back. I was blown away. Later, a customer and friend of mine sold me a walk-in cooler for only $300. Without this support I don't think I would have made it this far.

I had to spend a little more to make a lot more
Last November I finally moved to a new space in Arnold/Imperial MO. The restaurant is small -- just enough room for a kitchen and three tables, but it's made a huge difference.

The first year -- 2009, when I was working out of the trailer -- I had very little help. I only worked three days a week and it showed. In 2009 I made only $35,000 in revenue. In the new space, business has picked up. We've got more street visibility and people like that there's a place to sit and eat.

Now I work five days a week and have almost doubled the size of my menu. I hired four part-time employees and one full-time cashier. Rent is only $550 a month, so I continue to have very low overhead. I am making over $12,000 a month in sales so far this year -- quite a jump from last year. Within the next 12 months, I expect to repay the initial loans -- plus interest -- that let me launch my business.
In 2008, Pat Walther won a cooking competition and was invited to be a guest on the Rachael Ray show and to participate in several cooking-related competitions in New York City.
-- As told to Harper Willis