Kro's Business Partner Yuan Jie on the Breakup

Most of us are well and truly aware of the drama that surrounded the very public breakup of Olaf Kristoffer "The Kro" Bauer and his business partner Yuan Jie in the middle of last year, which culminated in a physical fracas at the Gongti branch of their well-known “Kro’s Nest” pizza restaurant chain. If you somehow managed to miss all that you can read Kro’s account from May 2010 here. At the time of the split theBeijinger.com approached Yuan Jie for comment, but he declined to speak to the press. Today, the Global Times published Yuan’s first public statement on his relationship with Kro, in the form of an interview.

In a nutshell, Yuan’s version boils down to the following claims:

-there was never a formal partnership with Bauer (a point Kro concurs with)
-most of the start-up money for Kro’s Nest was Yuan’s
-Kro was essentially Yuan’s employee.

“When we started to plan the first restaurant in 2006, we never considered what formal kind of partnership we would have,” Yuan says in the interview. “Setting up the first Kro's Nest cost nearly 600,000 yuan ($89,820), 100,000 of which was Bauer's and the rest mine. In 2007 I started paying Bauer a salary of 30,000 to 40,000 yuan per month as an employee, but I was the official owner of the restaurant.”

Yuan goes on to claim that the pair planned to establish a formal joint venture in 2008, but by that time Kro had become a “local celebrity” and wasn’t interested in working with Yuan any more.

This contradicts Kro’s claims in an interview with theBeijinger.com in May 2010, when he stated, “I have been pushing for a legal agreement [with Yuan] for two years.”

According to Yuan, although Kro was no longer interested in working with him, “I still promised him one million yuan for his efforts in Kro's Nest apart from the salary I'd given him every month prior. However, in 2009, he asked me for 3.5 million yuan and the naming rights to Kro's Nest.”

When Kro turned up at the Gongti branch in May 2010, things became heated, the police became involved and the relationship irrevocably broke down.

Whatever the truth of the matter, in October last year the Kro’s Nest signs came down on the old restaurants, which have since been renamed Tube Station Pizza. At the very end of 2010, Kro opened a new “Kro’s Nest” restaurant at Sanyuan Qiao.

And the lesson for the rest of us in all this? ALWAYS have a formal written agreement with your business partner.

NB: The image that originally accompanied this article incorrectly identified a Kro's Nest employee as Yuan Jie at the Beijinger Reader Restaurant Awards. TheBeijinger.com apologizes for any confusion.

Comments

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I for one am glad to finally see the other side of this story come out. Although Yuan never spoke to the press previously, I still found it unfair that everyone jumped to conclusions and made him out to be a monster. This shows there is more to the story indeed.

I used to work at Kro's Nest and had many interactions with both parties. I can account for at least the part about Kro working for salary, being an "employee" of Yuan and only putting up a fraction of the starting cash as true.

Let's see how this turns out.

That said, Visa, it's a fairly paltry return when you've been the one that's (allegedly) developed Kro's menu, brand, and client base. If Kro invested 1/6 of the start up into the business, he surely deserved more than RMB 1,000,000 at the time of his buyout considering how much turnover Kro's was making annually.

From investment point of view here are some simple calculations:

In 2006 = "Invested" 100,000 RMB
Out 2009 = "promised" 1,000,000 RMB

annual return 333,3%

not bad investment, unfortunately some people are too greedy and loose everything