New eatery uses foreign money to expand franchise
October 8, 2012
By Alexandra Clough
Palm Beach Post Staff Writer
A program designed to lure foreign investors to finance new ventures is helping one restaurant chain expand throughout Florida.
Jack Flechner is a franchisee of VooDoo BBQ & Grill, a New Orleans-based barbecue restaurant on an expansion kick.
Flechner, a former franchisee of Five Guys Burgers and Fries in Miami-Dade County, plans to open 26 restaurants in Florida with help from foreign investors. The first VooDoo BBQ, in Pembroke Pines, will be completed in about a month. Others in the works include Kendall, Fort Lauderdale and downtown Delray Beach, which could open in January or February. A total of 36 to 40 stores are planned for Florida.
While Flechner says he could have financed the expansion on his own, he instead decided to tap a program called the EB-5 Investor Pilot Program. The program offers foreigners a chance to obtain a visa in exchange for a sizable financial investment in a U.S. business that creates jobs.
The waterfront development in Jupiter known as Harbourside, for instance, used the EB-5 program to tap investors. The program also has been used by developers building other large, mixed-use projects.
But the concept of using EB-5 on a smaller scale, such as a restaurant, is a newer one, according to Joe Sloboda, vice president and co-founder of Exclusive Visas, which helps arrange EB-5 programs. “We are getting asked by foreign investors about smaller projects because big projects scare them,” Sloboda said.
Flechner still is putting his own money into building the restaurants, but now he has plenty of cash from EB-5 investors, too. The first offering raised $5 million in a matter of weeks. Each of 10 investors put in $500,000 as a loan for five years, with interest of 2 percent paid each year. When requirements are met, the investors and their spouses, plus children under 21, are granted legal permanent residence in the United States.
The new restaurants will employ 174 people, exceeding the EB-5 rules that each investor has to create 10 jobs. Other EB-5 phases are planned as the company works to expand its network of restaurants throughout the state.
And where do these investors come from? Norway, Brazil, China, Pakistan, Nigeria, Canada, to name a few countries. “They all want their kids to get into U.S. schools,” Sloboda said.
VooDoo BBQ & Grill is a fast-casual restaurant with a New Orleans vibe and a choice of sauces. In addition to barbecue, the menu offers salads and sandwiches, in a bid to also cater to women and men watching their weight.
Flechner said he knew this was the right concept when he and his partners brought their wives to sample the food, and the wives “were in agreement that they loved the food and there was more than one thing they could eat.”
Alexandra Clough writes about the economy, real estate and the law. Contact her at email@example.com.