the economics of a restaurant development deal?

[thdad]

With the opening of numerous restaurants bearing the names of famous chefs in Las Vegas hotels (and hotels in New York City), I am curious to find out about the general deal structure underlying these developments. If a hotel "A" decides to open a restaurant with star chef "B" then what would be the issues that would need to be agreed upon in order to finalize a development deal?

In order to open up a Michelin-quality restaurant in a hotel, I would assume that the initial capital investment as well as high operating costs would not result in a favorable return on investment for the hotel/developer contemplating on building such a restaurant (compared with putting in a standard steak house for example). What are the economics of such restaurant development deals?

[Wesley1]

I figure that it matters more to hotel A if people visit there hotel and potentially stay or gamble, which could pay for the high costs at a restaurant, right?

[RAHiggins1]

With the opening of numerous restaurants bearing the names of famous chefs in Las Vegas hotels (and hotels in New York City), I am curious to find out about the general deal structure underlying these developments.  If a hotel "A" decides to open a restaurant with star chef "B" then what would be the issues that would need to be agreed upon in order to finalize a development deal?

In order to open up a Michelin-quality restaurant in a hotel, I would assume that the initial capital investment as well as high operating costs would not result in a favorable return on investment for the hotel/developer contemplating on building such a restaurant (compared with putting in a standard steak house for example).  What are the economics of such restaurant development deals?

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I would imagine that the burden is on the restaurant and the star chef. The location is something they select. The hotel would simply agree to rent them the space. I certainly do not see any celebrity chef letting motel 6 tell them how to operate.

Edited March 13, 2008 by RAHiggins1 (log)