Oct 6, 2008 7:50 pm US/Eastern
Denied Loans, Restaurateur Cooks Up Risky Recipe
HASTINGS, N.Y. (CBS) ―
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John Halko decided to get creative when banks denied him the loan to expand his Hastings restaurant.
CBS
From huge corporations to mom-and-pop enterprises, businesses are complaining it's harder and more expensive to get credit. One local restaurateur concocted his own recipe to finance an expansion, however.
Chef John Halko's creativity in the kitchen has won him rave reviews, but the banks he recently asked for a loan didn't seem impressed by his score from Zagat.
"Not good news. They're really tightening the noose these days," says Halko, who owns Comfort Restaurant.
You can blame the credit crunch, which has chopped off capital to so many small businesses. Two banks refused to lend Halko money to finish an expansion of his restaurant into larger space across the street, where Halko had already spent $75,000 of his own money to create a sleek restaurant and lounge.
"There's a lot of things that have to come together for this restaurant lounge to open," he said.
So Halko cooked up an idea: he's treating gift cards as a sort of stock, a way to invest in his restaurant. He's offering a 20 percent rate of return and has already sold two for $10,000 each.
So that 10-thousand dollar investment will get the buyer $12,000 worth of food and drink when the new Comfort Lounge finally opens. The 20 percent return is preloaded right on the card.
"I think it's a great idea. It's unique," said restaurant patron James Vagios.
The minimum investment is $500, which appealed to Vagios, a longtime fan of Halko's food.
"We bought a couple of the cards already, me and my family, and we're really big supporters of John's," he said.
The $500 now will get him $600 worth of restaurant meals later. Halko says his expansion is moving forward thanks to devoted diners willing to step up to the plate.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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