- explain the problem and what needs to be negotiated in the case.

- the 3 methods for handling the negotiation.

"If you want to make a deal with me, you gotta get rid of him," Jose said to Stephen as he looked across the table at Ed, Stephen's business partner. Stephen Marltonali's work was amazing Stephen was clearly gifted. Not only did 100% of the people who came to the pop-up like the food, but Stephen was able to do this in spite of Ed's bungling and incompetence The negotiation with Stephen and Ed was the crescendo in Jose's reality TV show Pop-up Start-up. Jose gives hopefuls a short amount of time to make a pop-up restaurant, then invites people from the restaurant industry to try out the food and say what they think. If all goes well, Jose negotiates a deal. Part 1 Page 3 of 7 Can Friendship Stand the Hout? Negotiating Funding for a New Restaurant SSAGE businesscases SAGE Business Cases SAGE Matthew Cronin 2019 Jose's Deal Jose Guerrez is a food industry magnate who provides start-up funds for innovative restaurants, Stephen Maritonali and Ed Fageaux (pronounced Fa-joo) are the creators of a restaurant concept called Fresh-a restaurant specializing in rawatural food preparation (eg, crudite and steak tartare). They have also been best friends for the past 30 years Jose was putting Stephen in a tough spot, basically asking the man to cut his best friend out of a potentially lucrative restaurant deal. But this was business. And, as Jose told Stephen at the outset, Ed needed to prove himself. Ed was a high school history teacher with no restaurant experience. He was a nice guy sure, but Inea ha con this before all these middle Schoodard stunningdalen Jose's Deal Jose Guerrez is a food industry magnate who provides start-up funds for innovative restaurants. Stephen Marltonali and Ed Fageaux (pronounced Fa - joe) are the creators of a restaurant concept called Fresh-a restaurant specializing in raw,natural food preparation (e.g., crudit and steak tartare). They have also been best friends for the past 30 years. Jose was putting Stephen in a tough spot, basically asking the man to cut his best friend out of a potentially lucrative restaurant deal. But this was business. And, as Jose told Stephen at the outset, Ed needed to prove himself. Ed was a high school history teacher with no restaurant experience. He was a nice guy, sure, but Jose had seen this before: all these mid-life crisis types who had never worked in a restaurant and all of a sudden wanted to live the entrepreneurial dream of owning one. "Can I say something?' Ed asked. "No," Jose said. You had your chance. Restaurants are serious business, and I don't waste time with people who think anyone can run a restaurant." "Please, with all due respect, ...' Ed tried to continue but Jose cut him off. "Let's review, shall we? Stephen shows me his menu and it's fabulous. I agree to let him try his food in my pop-up restaurant, and you agree to make it so that he can do that. He agrees to manage the kitchen, and you say you will take care of the finances and the front of the house. But it turns out you can do neither. "It takes you forever to do the food cost averages, and this is even with Stephen's help. These are essential for accurate revenue estimations. When I came to look at the menu food costs, you had numbers that cannot be right. Rather than throw you out, I just let it go "Then I saw how you were a hindrance in the kitchen as Stephen was trying to prepare the food. I knew it meant you would be a hindrance when it comes to actually managing the wait staff. So I brought some of my people in to help. I saved your hide, but I didn't make a big deal of this either. "Then when we opened the pop-up, it became clear you know absolutely nothing about management. You have no plan for table service, table sharing, or plate sharing. In fact, you can't even clear a table properly, This whole operation would have been a disaster no matter how good the food was if I had to rely on you for anything "About the only good decision I have seen you make is to shave that stupid braided goatee off your chin." Jose picked up his appointment book and spat, "If I bought the book of Stephen, this is the page of Ed," as he tore out a page, crumpled it, and threw it away into the darkness. The three men sat in stony silence. All of what Jose had said was true, and they knew it. Ed had messed up pretty much everything he was asked to do. Ed had burned mushrooms, he almost ruined an expensive piece of fish by storing it improperly, and he cut tomatoes at a glacial pace. Ed had come to meet Jose with a braided goatee that was about three inches long which Jose had commented on at that first meeting. Ed had gotten the hint and shaved it off, "So Stephen, are you putting your friend before a business deal?" Jose finally asked. Page 4 of 7 I Can Friendship Stand the Heat? Negotiating Funding for a New Restaurant SSAGE businesscases SAGE Business Cases SAGE Matthew Cronin 2019 Ed's Deal "We need a minute, Stephen said to Jose after receiving the ultimatum. Stephen and Ed got up from the table and walked into the next room. Before Stephen could say anything, Ed spoke: "Steve, we ve been friends for 30 years. And this guy is a tool. What does he know about me or how we work together? Look, I know I have a lot to learn. But it is not like this is rocket science. I can get better. Not for nothing but that was my marinade recipe that everyone loved on the hangar steak. It was also my design for the logo. We can find managers and waiters. Ultimately what you need in me is someone you can trust. Can you trust him? You know I am there when you need to be Ed's Deal "We need a minute," Stephen said to Jose after receiving the ultimatum. Stephen and Ed got up from the table and walked into the next room. Before Stephen could say anything, Ed spoke: "Steve, we've been friends for 30 years. And this guy is a tool. What does he know about me or how we work together? Look, I know I have a lot to learn. But it is not like this is rocket science. I can get better. Not for nothing but that was my marinade recipe that everyone loved on the hangar steak. It was also my design for the logo. We can find managers and waiters. Ultimately what you need in me is someone you can trust. Can you trust him? You know I am there when you need to be mellowed out. Is he going to do that for you? You know the answer to that Finally, Stephen spoke. "I don't see how he is going to give me money with you as part of this deal." Ed said, "So fire me, take the deal, and then rehire me for equity." "That does not sdund like a sensible strategy. Besides I can't just give away equity," Stephen replied. "Then forget this guy," Ed said, "All the local news outlets have covered our story. Jose is gonna put this episode on TV, I am sure of it. So we have more press material than we know what to do with that can be the promotional tool for our business. We won this challenge, everyone liked the food, and he wants to give you money. If he wants to other people will as well." Ed was a long-time friend and had stood by Stephen through the good times and the bad for the past 30 years. Stephen could get frustrated easily, and Ed always had a cool head. Many times, Ed had supported Stephen through tough personal struggles, especially during his divorce. When Stephen called Ed and asked him to drop everything and spend two weeks to help in this competition, Ed said "yes" no questions asked. Even though he had a family with four kids and responsibilities at the high school where he had been teaching for close to 15 years, Ed found a way. Stephen's Deal Stephen knew he had a tough choice. Stephen could run the restaurant with or without Ed, and 10% was not a big piece of the ple for Ed, so what the hell did Jose care? Was this some power play? At the same time, Ed really did fail spectacularly. Stephen had wondered if bringing Ed along was a mistake. in the tourant we would Stephen knew he had a tough choice. Stephen could run the restaurant with or without Ed, and 10% was not a big piece of the pie for Ed, so what the hell did Jose care? Was this some power play? At the same time, Ed really did fail spectacularly. Stephen had wondered if bringing Ed along was a mistake. The strain was mounting for Stephen. He knew Jose was very influential in the restaurant world, so would he get another chance like this? What's more, as a man in his mid-forties, Stephen was already viewed with skepticism by many investors who see restaurant start-ups as a younger person's game. In addition, he had his son to think about. Stephen's most important goal in life was to be a good father. It was why he left his old restaurant in the first place. If he hadn't, he would never have been able to get custody of him after his divorce. Stephen knew he needed to be able to provide for his son, but that was not the main concern here. Stephen wanted his son to see him as he really was, a gifted chef with the drive and passion to manage and run a restaurant that he himself, conceived. That was the kind of role model he wanted to be. Of course, what kind of role model would he be if he threw his best friend under the bus for money? Discussion Questions Part 1 Page 5 of 7 Can Frlendship Stand the Heat? Negotiating Funding for a New Restaurant SSAGE businesscases SAGE Business Cases SAGE Matthew Cronin 2019 This is a very personal and important decision for Stephen. Nonetheless, it can be useful to apply a systematic decision framework for what to do. One of the better ones is Hammond, Keeny and Raffia's (2015) POACT decision framework. It can be used to help make the choice for Stephen by thinking through the following steps