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Wednesday, June 29, 2022

A trend-setting Denver restaurant group is now employee-owned

Before the pandemic shutdowns, furloughs and price hikes, Denver restaurant writer Justin QC was planning for the future of his six Denver restaurants in a way that few others have attempted.

About five years ago, Kuchi and his close team members began drawing up a plan for employee-ownership of Edible Beats, which includes popular Denver restaurants L Five, Root Down, Linger, Vital Root and Ophelia’s Electric Soapbox.

He wanted to create an ESOP, or employee stock ownership plan, a term that may be familiar to Coloradans who know the history of the Fort Collins brewery New Belgium. But Edible Beats is the first restaurant group in Denver to convert to this employee-owned structure.

In terms of business, it was Kyuki’s answer to the question of succession that provided a “win-win” for all, he said.

“When we went on some longer term (succession plans), none of them looked attractive,” Kuchi said. The idea of ​​selling to an outside investor, or even one or two high-ranking employees, did not go down well with him. But with employee-ownership, “ownership wins, employees win and, in theory, guests win.”

At a time when restaurants are coming out of a shattering industry-wide crisis, and are still struggling to find and retain workers and keep menu prices down amid inflation, Kukki thinks employees- The ownership model is an intriguing, if initially costly, solution. The Colorado Office of Economic Development and the Office of the Governor are also behind this plan.

Jared Polis said in a press release Wednesday, “We are saving up to $100,000 in tax credits on the qualifying cost of converting money from employee-owned companies, and I want to congratulate Edible Beats on this exciting move. Proud of.”

Edible Beats joins nearly 100 other Colorado-based employee-owned companies, according to the National Center for Employee Ownership. Of the approximately 6,000 ESOPs in the US, only 1% are in the housing and food service industry.

“It is, in fact, pretty much non-existent,” Kuchi said, “the process is by no means easy, simple or intuitive.”

Provided by Edible Beats

Justin Kuchi is the founder and CEO of Edible Beats Restaurant in Denver. Six of his local businesses have just become employee-owned, but Kuchi will continue to be active in them. (Provided by Edible Beets)

For Edible Beats, the process took five years, including a pause once the pandemic began, during which Kuchi stopped trying to secure bank loans for the restructuring process. The ESOP cost him more than $400,000 to set up and will continue to cost between $75,000 and $100,000 to maintain, Cucci estimates.

But the benefits include significant federal and local tax breaks and, hopefully, a viable business model for years to come. As of February, Cucci’s has switched to 100% employee-owned, with 330 employees enrolled in the program. Employees become fully vested after five years with the company; If they’ve already been with Edible Beats for at least five years, that counts in back-tenured ownership status.

“We thought, what a wonderful thing,” said Cookie. “We can ESOP and reward the people who have gone on this journey.”

World Nation News Desk
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