Thinking about starting a restaurant. . . be careful about running up too much debt

The restaurant business is tough as it is, but when restaurants acquire a lot of debt, it is sometimes impossible to make it work. One of the biggest reasons that start-ups fail is inadequate capital and it is important to remember that debt does not equal capital.

Another local restaurant, Campagnia, has filed for Chapter 11 reorganization. Hopefully, this will allow the restaurant to get its financial house in order and keep its doors open. With $4 million in debt, it is unlikely the restaurant could have had adequate cash flow to survive without a reorganization.

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