Kenneth Rader was hanging out with friends, watching TV and eating cereal when it struck him: Why not create a place where people can hang out with friends, watch TV and eat cereal?
What started as a lark while he was studying at Syracuse University slowly gathered steam in his head until - in a fit of inspiration - he stayed up all night pouring his thoughts onto paper.
He e-mailed the document, known at "The Cereal Project, " to his twin brother, Josh, and they kicked it around for a few months until it finally emerged as a 19-page business plan.
The idea was brutally simple: a Starbucks-style cafe that offers clients a choice of 35 different kinds of breakfast cereal and 60 different toppings for about $3.25 a bowl.
"You either love it, hate it or just don't get it, " says Kenneth.
Their childhood friend Michael Glassman loved it and immediately signed on as the third partner.
Whether customers will get it should be apparent next month when the three 24-year-olds throw open the doors to The Cereal Bowl at 1560 South Dixie Hwy.
Located across the street from the University of Miami, the 1,700 square-foot bar will seat about 40.
The friends are betting a combination of strong coffee, soft couches and free wireless access will turn the place into a college hangout. But the store's centerpiece will be a bar where customers can mix and match cereals and top them off with everything from fresh fruit and nuts to M&Ms and Gummy Bears. The menu is rounded out with hot cereals, yogurt desserts and steamed milk drinks.
The Herald will be following the trio over the next 12 months, as they try to turn The Cereal Bowl into a successful business.
According to their calculations, they'll need to make about 250 sales a day - at about $5 a pop - to break even.
But about five weeks from opening day, it's hard to imagine the place abuzz with cereal-slurping students. The cavernous space is still barren; permitting snags have kept the partners from finishing construction and pushed back the grand opening by a month.
The only piece of furniture in the place is a small glass-topped desk, and the three men were huddled around it one recent evening, taking care of some of the thousands of details that need to come together before the doors open.
"This isn't like opening a Dunkin' Donuts franchise, " said Josh. "We have to build relationships with vendors; we have to go out and decide what we want the store to look like - the furniture, the menu, everything from the bottom up."
One of the pressing issues this evening is where they are going to store the 25,000 biodegradable cereal bowls on their way from California.
Answering cellphones and shooting out e-mails, the clean-cut partners seem older than their years - as if long-term exposure to lawyers, contractors and city regulators have them channeling middle-aged MBAs.
Growing up together in Kendall, the Raders and Glassman have known each other since they were about 6 years old."I've always considered myself an honorary triplet, " said Glassman.
Even then Kenneth and Josh were showing a knack for enterprise. When they were about 9, the twins designed and built their own version of Animal Kingdom in their playroom - years before Disney inaugurated the park.
"Even today we joke about it and say 'Geez, Disney stole his idea, ' " says mother Susan Rader.
After Hurricane Andrew, the boys gathered their friends and collected money to replant neighborhood trees.
"If they set their mind to doing something, they'll do it, " she says. "My husband and I have faith in them."
After graduating from Miami Sunset High School, the three friends went their separate ways.
Kenneth left Syracuse went on to earn a business degree from Nova Southeastern University, while Glassman did the same at Florida Atlantic University.
Josh - who claims to be Kenneth's older brother by about a minute - eventually received a master's degree in accounting from Nova. He works at the Miami-based accounting firm BSS&S and plans to keep the job while moonlighting at The Cereal Bowl.
It's been a trying several months. While their peers are working nine-to-five jobs and starting promising careers, they've been slogging through 15- to 16-hour days, including weekends, trying to get a risky venture off the ground.The fact that there is little in the space to show for the hours is a stark reminder of how much effort goes into getting a small business up and running.
For starters, there are as many lawyers involved as there are partners - an intellectual property rights attorney, a corporate tax lawyer and a real estate attorney. Although it has been painful forking over the $400 to $500 hourly fees, it's simply part of doing business and safeguarding the company, says Kenneth: "You either spend it now or spend it later."
After getting their legal framework in order (they're structured as an LLC, which limits their personal liability and gives them more flexibility at tax time), they spent several months trying to find the perfect location to reach their target customers - college students. When a deal they were working on in Gainesville fell through, they eventually set their sites on the University of Miami, where Josh earned his bachelor's degree.
PERMIT HASSLESSince taking possession of the space in August, they have been on the slow merry-go-round of permits with the county and the City of Coral Gables.
At one point the city mulled whether or not the "C" in their store-front logo should be allowed to jut over the top of a green oval background. (It does.)
When they were suddenly told by the building's management in September that they would need to build their own bathrooms, it sparked another round of permits.
Then came Hurricane Katrina. Although the storm didn't damage the locale, Coral Gables temporarily barred contractors from walking plans through the permiting process - a strategy that usually expedites approvals.
"Dealing with [permits] has been a real challenge, " says Kenneth.
Barring any problems, new restaurants can usually get all the required permits within about two months, city officials said. And retail and office permits tend to be faster. But the trio are expecting to get the final go-ahead this week, so there's light at the bottom of the bowl.
"Once we clear this [construction] hurdle, everything is going to take off, " says Josh.
One of the reasons they can handle the stress of whiplash changes, mounting fees and cost overruns is because they made sure they could afford it.
Since November they've raised enough money from family and friends to cover most of the estimated $180,000 start-up costs. And on the strength of their business plan they secured a 10-year Small Business Administration-backed loan worth more than $100,000 to cover unexpected expenses.
GUTS AND PLANNINGTheir financing success has as much to do with guts as it does with planning. All three have plowed their own savings into the project and have promised investors they won't draw a salary for at least six months to a year.
What that means in practice is that Kenneth Rader and Glassman have moved back in with their parents.
While they admit the project has taken "a huge toll" on their social life, what keeps them going is that there's already a faint whiff of success in the air. Before they've even sold a single bowl of Kix or Trix, they've been getting queries from people interested in franchising opportunities.
"I got an e-mail about two weeks ago from [someone in] New Orleans interested in franchising, and I'm saying to myself, 'Are you kidding me? The whole city is devastated, ' " recalls Josh. "But I talked to him on the phone and he's interested and wants to get a group of people together and try to bring The Cereal Bowl to that area. . . . It makes you kind of happy and confident that you're on the right track."
Expanding had been their dream all along, but the flurry of interest has them talking to lawyers that specialize in the issue.They've also popped up on one radar screen they were hoping to evade a little longer - that of their competitors.
Chicago-based Cereality has been selling breakfast cereal in kiosk and cafe settings since 2003. With restaurants in Arizona, Chicago and Philadelphia, the company has applied for a "business method" patent that essentially tries to appropriate the entire cereal bar concept.
The Cereal Bowl and another independent cereal bar in Gainesville called Bowls - A Cereal Joint received letters from Cereality warning about trademark infringement.
The Cereal Bowl says it's well protected and their intellectual property lawyers have responded to the warning. "We knew that proprietary information was important from the beginning, " said Kenneth weeks before getting the notice, when The Cereal Bowl was trademarking some of its menu items. "We don't want to be sued or have to sue."
RISKING IT ALLRisk is an integral part of running your own business. According to government statistics, The Cereal Bowl has a 66 percent chance of making it past the two-year mark, and just a 40 percent chance of surviving six years.
But those are odds the friends seem prepared to handle.
"No matter what you do there is a risk, but this is a huge thing that I wanted to be a part of, " said Glassman. "God forbid anything [bad] should happen, but there's so much you get out of this experience that you don't get out of academia. So far, I've learned so much."
And while the financial risk is in the forefront, Kenneth is also aware of the time and energy the partners are plowing into the project. While peers are going off to graduate school and starting to build nest eggs, he's going into debt.
"We are putting our future on the line by trying to make this our future, " he said. "Josh has a steady job, but Mike and I are hoping this will be it for us. This is what we're doing."
FROM BRAIN TO BOWL - THE CEREAL TRAIL SO FAR September 2004 - Inspired by late-night cereal-eating marathons at Syracuse University in New York, Kenneth Rader decides that a hangout serving breakfast cereal might make a good business. The "Cereal Project" is born with a flurry of e-mails to his twin brother, Josh, and long-time friend Michael Glassman.
November 2004 - The trio hammer out a 19-page business plan that they start showing to friends and potential investors. They also decide on the name, create a logo and launch their website www.the cerealbowl.com.
April 2005 - After gathering money from family and friends, they take their business plan to the Small Business Administration and secure a 15-year SBA-backed bank loan to cover unforeseen building expenses.
August 2005 - They sign a five-year lease on a 1,700-square-foot locale right across the street from the University of Miami. The permitting process and cost overruns begin.
October 2005 - They hope to clear the last permit hurdle and start construction. They also place their first order for 25,000 biodegradable cereal bowls, reach an agreement to distribute Seattle's Best coffee and hire an assistant manager.
Fall 2005 - The Cereal Bowl expects to open its doors by the end of November.