Urban Space 500 restaurant was opened in Kyiv. What is it and why is it different

On December 18, Urban Space 500 restaurant opening took place in Kyiv. It was initiated by the public organization Insha Osvita under social franchise of the Teple Misto platform funded by Druzi Cafe & Bar management company. The restaurant has 500 co-founders and it is called an example of socially responsible business undertaking. The editor of AIN.UA was present at the press briefing and extracted the main information about the restaurant. All photos in the article are by Olha Zakrevska.

What is it?

For the guests, this is a restaurant in the centre of Kyiv. It includes 4 parlors named after Kyiv districts. Peker and Partners was in charge of the interior design.

The menu is represented by the European cuisine with a focus on healthy nutrition and minimum meat dishes. The restaurant will work every day from 07:00 a.m. till 11:00 p.m. It is situated at 9, Boris Hrinchenko Str. nearby Kyiv Architect House, in the former building of the music school. The average bill in Urban Space will make UAH 200-250.

Urban Space 500 is particularly interesting from the organizational point of view. The project has 500 co-founders each of whom invested $1,000 for opening the location. They will not get return on their investments and will not have any profit. The co-founding organizations call it an attempt to draw together the Kyiv community and facilitate the development of the civic society.

The total period of preparation for opening was over 2 years. 500 investors have been gathering for 1 year and 13 days. The repair of premises took over 9 months.

Basic information about investors:

  • 87% of co-founders live in Kyiv;
  • 29 of co-founders are from abroad;
  • co-founder average age is 34 year old;
  • 40% are women;
  • every fifth is an entrepreneur;
  • every tenth works in the field of public and charity organizations;
  • every tenths is an IT specialist.

Who are among 500 investors

The list of all investors is published on the project web-site. Among them are:

  • Roman Khmil, the former CEO of Ciklum and co-founder of Creative Quarter;
  • Nazar Shymone-Davyda, the founder of Tesla Club Ukraine;
  • Max Yakover, the Managing Partner of UNIT.City;
  • Aliona Kalibaba, the Manager of Chasopys coworking network;
  • Roman Apostol, the co-founder of Preply startup;
  • Yaroslav Azhnyuk, the founder of Petcube startup;
  • Dmitry Derkach, the co-founder of Planeta Kino cinema network;
  • Artem Borodatyuk, the founder of Netpeak agency;
  • Lyunomir Ostapiv, the Financial Consultant;
  • Vlad Voskresensky, the founder of Invisible.io startup.

What the earned money will be spent on?

The restaurant is characterized by non-standard income distribution model. It is planned that 80% of the net profit will go for financing of social municipal initiatives, and 20% – for the benefit of the management company and additional initiatives coverage.

The priorities of the first year are as follows:

  • transport solutions and improvements;
  • development of city planning culture;
  • inclusive projects;
  • environmental education projects;
  • progressive training for people of all ages.

In addition to incoming criteria, a special commission will select the project applications. Then the financing priority will be solved by the preferential voting of 500 co-founders. This is the only privilege in the project as no allowances or special provisions are provided for co-founders of the restaurant.

Urban Space 500 will also provide a free event site. Nadia Parfan will be the supervisor, and any inhabitant of Kyiv can submit an application for using the site. The top priority is for lectures, discussions, music events with open access and without any commercial item. Political propaganda and discrimination are prohibited.

In the course of time, Urban Space Radio studio will start working. They promise to broadcast qualitative Ukrainian music and make themed programs.

Previous Experience

Kyiv Urban Space has a predecessor – Urban Space 100 restaurant in Ivano-Frankivsk. As can be easily guessed from its name, it has 100 co-founders. The project was launched in 2014. It has been successfully working for the benefit of the city since that time.

According to the Teple Misto platform Manager, Yuriy Fylyuk, in 2018, Ivano-Frankivsk transferred about UAH 1 million for social projects financing. He says that the amount was gradually increasing as the initial first-year financing was considerably lower.

Yuriy Fylyuk

How Urban Space 500 is organized from the business point of view

$500,000 invested by the co-founders is not the project final cost estimate. According to the Member of the Board of Insha Osvita public organization, Alyona Karavay, the final amount invested into Urban Space 500 has yet to be calculated. The managers cannot declare it now.

Firstly, some of co-founders invested more than $1,000 under the terms of the interest-free loan or donation. One of the options is ordering of individual engravings of tables (UAH 25,000) and chairs UAH 10,000). The inscriptions willbe made in the nearest future.

Secondly, Oschabank opened a preferential credit line for the project, and Western NIS Enterprise Fund allocated funds under the Social Business Undertaking program. Close to opening, some partner companies provided  pro bono services, some – with a considerable allowance.

Alyona Karavay

The project co-founders say carefully about outgoing financing yet. According to Alyona Kavavay, they are not ready yet to declare specific amounts the project could compete for, and, first of all, in order not to raise the level of expectations too high. As the experience of Ivano-Frankivsk shows, the first year will be adaptation for the business. She notices that:

The restaurant in Ivano-Frankivsk is three-times smaller, and we cannot just multiply the project economics by 3.

The other Urban Space 500 co-founder, Valentin Desyatnik, also makes fun of this:

The more coffee you will drink here, the more money will go for the projects.

However, the project lease terms are fully known.

The premise with the area of 471 sq. m. owned by Suspilne Movlennya PJSC was leased through the platform zakupki.prom.ua, linked to the Prozorro public purchase platform.  The lease rate is 375 UAH/sq.m., the contract amount is 176,625 UAH/month, inclusive VAT.  The platform (zakupki.prom.ua) gained 3% of yearly lease amount.

The agreement was signed in February 2018 for a validity period of 35 months. The preferential price was given for first three months – 1.2 UAH/month, and then the declared terms came into effect. The lessor (the National Public Television and Radio Broadcasting Company) has the right to increase the price by 10% times per year.

Full terms and documentation are available on the auction web-site.

What the Management Company will get

Liabilities, at a minimum. Druzi Cafe & Bar guarantees Urban Space 500 working for two years after opening. Also, the company is a co-borrower under the loans got for the restaurant development. In case of force-majeure, they will pay money under the 3-year credit line.

According to the Druzi Cafe & Bar representative, Yevgeniy Lavrenyuk, they are interested in the project not from the point of view of its profitability, but as an experiment in the field of socially responsible business undertaking.

Our work can be described in two words: organization and control. We must build the business so that it gives the maximum profit but conforms to initial purposes.

As compared with standard commercial projects, we will earn not too much. 80% of the net profit will go to public activities, and  20% will remain for us but partially repaid by the costs. As the result, we can count upon 7-8%  from 100% profit. This is more like a pleasant compensation for our efforts.

Such terms for the project provide for possibility to substitute the management company. If we fail to fulfill our liabilities, wish to withdraw  from or terminate the business, Urban Space 500 will be able to involve the other management company.

Lavrenyuk also complained that 90% of the restaurant business in Ukraine is “shadow”, and only large companies like McDonald’s are large and fair market players.

Yevgeniy Lavrenyuk

Urban Space 500 intends to become an example of the responsible and fair organization. The restaurant will pay all applicable taxes and employ the personnel on a legal basis. However, this will slightly reduce the marginality as compared with the average market indicators. But, according to the entrepreneur, if the standard restaurant projects are intended for 2-5 years, people want to support Urban Space 500 operating for decades.