Back in 2011, a former colleague and a close friend approached me with an opportunity to join a partnership of owing a restaurant. We are both Network Engineers by trade and we knew nothing about operating a restaurant. However, after running the numbers and checking out other competition it made sense. The plan was to take over a retail space vacated by a struggling Chinese buffet restaurant.  They were in business for at least 10 years, however the economic downturn that started in 2008 had a major impact.  After a couple of days of debating on why I should or should not take another big risk, keep in mind two years prior I was an undisciplined trader that lost nearly $80,000 in options trading, despite that  I said yes.

I agreed to the partnership without knowing how I am going to come up with the funds to pour into the LLC. I was able to burrow money from my 401k but it wasn’t enough. So I did the unthinkable, I went into my vault and liquidated at least 30% of my precious metal coins and bars. I even sought advice from members on kitco forum and most of them told me not to do it. Keep in mind back in mid 2011 Gold was well above $1500 and silver was above $35 an ounce, see kitco charts below.

Once we took over the space and signed the lease, work quickly began. For the entire summer of 2011, I would go straight to the restaurant after getting off my IT job to help with the renovation and build out. After many hours of hard work, we finally opened in fall of 2011. The first day I will never forget, we made total sales of $900 and the next day we spent it all to pay the plumber, to unclog the grease out of the underground pipes. For the first year, this became a common theme, expenses were out pacing sales. We had to put in more money into the business to keep it operational, this happened at least twice and yes I had to liquidate even more precious metals. Many times I questioned myself if I made the right decision but I stuck with it.

Fall of 2012 started out with a bang, we ran a successful marketing campaign and people were pouring in especially during lunch. Then the residential projects came in, they started building condos and townhomes within walking distance to the restaurant. We knew we had something special. Since then, the restaurant has been profitable every year and has become one of the top Vietnamese Pho restaurants in Northern VA. We have been issued 2 -3 distribution checks annually, which I have invested back to precious metals and now cryptos.

The point of sharing this experience is not to talk down on precious metals but to cease the opportunity when it presents itself.  Sell overpriced assets to buy undervalued income generating assets. If you are ever in the Northern Virginia area come visit us and you will not be disappointed.

Thanks for reading!

Reference Links:
http://kitco.com
http://superpho.net

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Responses

    1. captainbluff Post author

      Yes I agree it took a lot of balls. Sometimes people will over plan a business and they start second guessing. Then they eventually abandon the idea. We knew taking over from a previous owner, the space would already have an operational kitchen, which saved us a lot of money.

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