Pop-up restaurant project Prequel, which is being crowdfunded in part by EquityEats, aims to connect foodie investors with their bread-and-butter: up-and-coming chefs.
It will offer diners the very best from about five restaurateurs at a time, exposing chosen chefs to potential future investors. (“Backers” may be more apt. The Prequel investments can be a little as $100.)
"We want to make this a food tech hub."
Prequel, which is located at 918 F St. NW, cleared a final hurdle Tuesday when it was granted approval from landlord Douglas Development to sublease the space from LivingSocial.
Now, CEO Johann Moonesinghe and his team are setting up the décor, trying to round up more small-time investors and fine-tuning their concept floor-to-floor. Technical.ly DC got a sneak peek at the interior.
The 17,000-square-foot space is spread over four floors and a basement.
In the entrance, a large screen will list the restaurants and plats du jour with drink pairings. A typical three-to-four-course meal should cost about $50 per head, said Moonesinghe, plus a wine, beer or cocktail pairing.
“It’s more about the experience than about coming to a restaurant,” said Moonesinghe. “We want to make this a food tech hub.”
The bar is fittingly located in the basement. The first floor has a secret VIP room “like in Vegas.”
A bakery will service the third floor, which is set up like a coffeeshop with pull-down outlets hanging from the ceiling; in the evening, it might be converted into a display area for chefs or cooking lessons. The elevator shaft is illuminated by LED lights, which will change colors to fit each new ambiance.
After their meal, guests will get an (electronic) receipt with details on how their pop-up restaurant is faring. “We want people to understand how investments work, how pop-ups work,” said Moonesinghe. And chefs will be able to follow up with satisfied customers with email updates on their restaurant.
There will be no cash money allowed. “Cash is dirty, it’s kind of gross,” said Moonesinghe.
Instead, you can use all manner of digital payment methods, like Apple Pay, Google Wallet, or, for old heads, a simple credit card. And guests will be encouraged to buy their tickets in advance through an online system being developed by in-house developers based in Boulder. (Prequel will also accommodate walk-in visitors who can buy their tickets at a booth — like in a movie theater.)
Through the digital-only system, Prequel will also be able to analyze patterns in their customers’ orders. “We really want to understand the data,” said Moonesinghe. One hunch he’d like to verify is whether backers of a particular restaurant are better customers.
The ticketing system will also reduce waste by allowing cooks to get a better estimate of how many of each meal they’ll be serving that day.
Another key ingredient of the restaurant business — the space — will be used for optimal efficiency. “We’re actually dynamic within the space as well,” said Moonesinghe. Besides the constant rotation of restaurants and concepts, it will be rearranged from day to day: pop-ups might switch floors depending on how many guests they’re expecting that night.
All restaurants will share the 2,000-square-foot kitchen space and the waiters, dishwashers and a cooking staff, including an executive chef, will be Prequel employees. (In the early mornings, the kitchen will be used by Galley, the food delivery startup founded by former LivingSocial executives Alan Clifford and Ian Costello). The extra hands will leave time for the chef to circulate, said Moonesinghe: “We really want the chef to be free to interact with the guests.”
The chefs of Prequel are not just restaurateurs; they’re also entrepreneurs cultivating relationships with potential investors. “Anyone who has a restaurant or wants to open a restaurant can do a pop-up here,” said Moonesinghe, whether you’re a regular bake-off winner or ready for business. The chefs will be presenting for anywhere from one day to four weeks; Prequel will accommodate up to five restaurants at a time.
Moonesinghe is a tech entrepreneur and angel investor by trade who wants to disrupt the local restaurant industry.
A member of the inaugural 2007 class of Techstars, an accelerator in Boulder, Colo., Moonesinghe was a coufounder of MadKast, which was sold in 2008 to ShareThis, and before that, Zemble, a project by “me and my college roommate,” Moonesinghe said. “That company folded within about a year.”
He started “invest[ing] in a lot of tech companies.” Then, a whiskey joint popped up in his neighborhood. “I decided to make an investment in Black Whiskey,” Moonesinghe said. “I was the biggest investor there.”
He followed up with a stake in EightyTwo, a Los Angeles arcade bar, and soon developed a taste for the restaurant (investment) business.
But he realized that investing in restaurants called for a different recipe altogether. More of his friends — including those who weren’t accredited investors — should be allowed to back their neighborhood bar, he thought. So he launched EquityEats in November. The equity crowdfunding site currently has a menu of four restaurants: Albright Special, Bluebird Bakery, Lighthouse and Sussex Drive.
But the regulatory precedent wasn’t there quite yet. When EquityEats launched, it had to play by the tortuous rules of the SEC. The minimum investment was $2,500. Moonesinghe’s target investment amount? $300. “We would much rather have 500 small investors than one big investor,” he said.
The D.C. Department of Insurance, Securities and Banking agreed to allow crowdfunding campaigns last October. In February, Prequel became the first crowdfunding campaign approved by the District. It had taken two months for the project to win approval, according to the Washington Post; by the city’s rules, it should have been a ten-day process. Still, “we got really lucky,” said Moonesinghe.
In Prequel, he wants to create an exclusive — but not too exclusive — community of inveterate foodies. Prequel investments can range between $100 and $25,000, but investors have to be District residents. EquityEats owns 90 percent of Prequel; it is crowdfunding $200,000 for the reamining 10 percent. By Friday, Prequel has raised $103,000, reaching more than half its goal in eight days. Once it opens in the spring, Prequel will set aside 50 percent of all profits until investors are reimbursed in full. Then, it will pay them a 22 percent return every year.
Hopefully, they’ll return to Prequel more often than that. “I want our investors to eat here five days a week,” said Moonesinghe.