Can a business that gives away all of its profits survive?
Nick Vilelle and Raj Ratwani — the founders of a new bar that promises to donate all proceeds to charity — are hoping it can.
Cause, which opened about a month ago in the District’s Shaw neighborhood, is experimenting with a new business model — one that hopes to pay employees well, keep overhead costs low and donate as much money as possible to local charities every quarter. It’s a way, the founders say, to combine everyday life with charitable giving.
“Let’s say you have a 27-year-old living in the city,” said John Jarecki, the restaurant’s managing director. “Do you think he’s planning to write a $500 check to charity? No. Do you think he’s going to spend $1,000 in a bar this year? Yes. Well, hopefully some of that money can go to a good cause.”
Neither Vilelle, who does consulting work, or Ratwani, who has a full-time job as a research scientist for MedStar Health, are taking a salary.
Instead, they have lined up a team of experts: Jarecki, proprietor of the Light Horse in Alexandria, to oversee operations and Andy Stein, the opening chef of Queen Vic, to serve as executive chef.
“They’re the ones who come at it from ‘Can we make money here?’ and ‘How do we serve great food?’,” Vilelle said. “Raj and I focus on the idealistic part.”
The founders, who met as Ph.D. students in the cognitive psychology program at George Mason University, financed the project with about $300,000 of their own money. Nearly $200,000 went toward the building’s downpayment, while the rest covered start-up costs.
“Our business model was to keep set-up costs as low as we possibly could,” Vilelle said. “Obviously our goal is to give away as much money as possible.”
Vilelle and Andy Stein, the executive chef, renovated much of the property themselves. Stein built the banquette seating, while Vilelle refinished old tables using National Geographic covers from the 1950s.
The restaurant also raised about $23,000 through Indiegogo, a crowdfunding Web site, that went toward covering costs for bar stools and tables.
“We’ve just had a lot of people put their hands up and say, ‘We want to help,’” Vilelle said, adding that local law firms and public relations companies have offered pro bono services.
In an industry where it often takes years for successful restaurants to turn a profit, Vilelle and Ratwani have a lofty goal: to post a profit during the first three months.
Cause opened its doors in mid-October with about $100,000 in outstanding debt that the owners hope to pay off as soon as possible. All told, Jarecki said he expects the retaurant will bring in $1 million in sales this year.
Of that, he said about 10 percent — or $100,000 — would likely go to charity.
Each quarter’s financials, including breakdowns of employees’ salaries and overall profits, will be posted both inside the restaurant and on its Web site.
“Everyone’s going to be skeptical — and that’s fine,” Vilelle said. “But the numbers are going to tell the full story.”
This quarter, the restaurant has lined up four charities to support — Martha’s Table, Higher Achievement, Common Good City Farm and Agora Partnerships. An advisory board vets charity nominations every quarter.
“We certainly don’t want to be some sort of gimmick,” Vilelle said. “We didn’t want people to say, ‘Oh, that’s the charitable restaurant.’ We want them to think of us a good restaurant with good food.”
By 7 p.m. last Wednesday, the restaurant was packed with diners. Upstairs, there was a meet-up of couch-surfers and a World AIDS Day celebration. Downstairs, groups of twenty-somethings chatted over burgers and beers.
Katie Zacharkiw, 24, was having a drink at the bar. She said she’d heard about the restaurant on Twitter.
“I looked at the menu and it looked good,” she said, adding that she wasn’t particularly drawn to Cause because of its charitable mission.
“No,” she said. “That had nothing to do with coming here. I just thought the food looked good.”