One of the biggest changes in the last 25 years is that the access to unsecured capital is pretty much dead. When my father started his diner in downtown Chicago in 1962, unsecured capital was king. Vendors of necessities like bread and milk would often extend one and even two years of store credit. Even in the 70s and early 80s when I first started getting involved in the business, getting a $2500 loan from a vendor and paying it back over a year at $10/day was commonplace. If any loans were secured, they were secured by your inventory and equipment, and maybe by the ability to take over and sublet your lease.

Today, forget it. Is an independent willing to put down his/her house, car, savings, etc. as collateral? Except for some ethnic groups, usually not. So, we get the full national chain conglomerates such as Brinker (Chili's, Romano Macaroni Grill) and Darden (Red Lobster and Olive Garden), or the regional multi-concept chains such as Lettuce Entertain You here in Chicago.

In some of these situations, new restaurants get funded by rounding up forty guys that want to invest $30k each to say they own a restaurant. The management firm makes it money by getting exclusive contracts for supervising construction, providing HR and quality control services, marketing, accounting, operations, etc. If that restaurant fails, the management firm might still have even made a profit.