A restaurant can be an expensive investment, and having investors on your side will certainly ease the financial burden and help you manage the risks that come with such a business venture.
A restaurant investor will provide funding in exchange for some ownership of the restaurant. Most of the time, these people can also give valuable insight and advice that can guide you in running the business successfully. With that being said, it is important that you know how to find restaurant investors that will truly be of help in making your restaurateur dream come true.
How to Find Restaurant Investors: Who to approach
You can start with people you already know. An investor can be a friend or a family member where you have the benefit of the inherent trust. Having that connection and familiarity already removes a lot of the pressure that usually comes with fundraising with a complete stranger, although it is important that you are transparent with them.
You can’t be too laid back just because you know they might not give you a hard time. You should still make the effort to inform them of the risk, where their investment will go, and what you plan to do to make the restaurant successful. Update them regularly on what is going on. Breaking the trust between you and your family or friends can make for a broken relationship.
If you’ve already tried that route and are now focused on how to find restaurant investors that aren’t close to you, that’s where an angel investor comes in. An angel investor is an accredited individual with net worth no less than $1 million willing to use their own money to fund an idea that banks might feel a bit wary about.
It will be better if they already are your family or peers. Either way, an angel investor is still very easy to work with. While they want to make profits and see their investment grow, many angel investors are also as invested in helping you get through the most challenging part of the journey as an aspiring restaurateur.
Finally, you can also approach a venture capitalist, which may be an individual or a firm, who unlike an angel investor, uses money pooled from investment companies or large corporations. Venture capitalists tend to support established businesses to ensure a good return for their investment.
How to Find Restaurant Investors: Where to look
There are a few ways you can find investors for your restaurant idea. You can approach a former employer who may be interested in supporting a new concept. You can also reconnect with a patron from a restaurant that you worked for in the past and offer them freebies or VIP access.
If you don’t have those, track down fellow restaurateurs who successfully found investors for their business ideas. These restaurateurs may be able to directly connect you to an investor or they may know someone who could hook you up. Another option is to find people in high-paying industries that might be interested in getting into the restaurant or foodservice industry.
If you’re still stumped, you might want to try a food incubator. A restaurant incubator provides a space for aspiring restaurateurs where they can set up a proper commercial kitchen from which they can operate. Food incubators also give you training on how to manage your business wisely. Note that an incubator hosts multiple entrepreneurs so you will be sharing the space.
If you are wondering how incubators make money, one way is that they are paid by investors in exchange for essentially getting dibs on the restaurant businesses with great potential.
Food incubators typically charge a rental fee or take a percentage of your restaurant’s future revenue. Food incubators have become prevalent over the years so it will be easy to find one near you.
For first-time restaurant owners, cultivating and maintaining this network is imperative as they can be of massive help as you advance in the foodservice industry, test new concepts, or build new restaurants.
How to Find Restaurant Investors: Winning them over
Investors want an assurance that their investment will pan out. They want to know that you have a solid business plan in place to make the restaurant profitable. Their decision to spend money on your restaurant hinges on this very document. They are taking a risk with your business and want to know they won’t lose money.
That said, you can’t just wing it and hope for the best. You need to develop a solid elevator pitch to sell them your business and convince them that it is worth it. Present yourself in the best way possible, and stoke excitement for your concept. Paint a picture of the restaurant as a sort of primer to the whole experience. Show them what the restaurant will look like as well as the food you will serve.
Once you win them over with your concept, they themselves will connect to people who could help make it all a reality.
When you know you’ve got the goods, it’s time to boil it all down to specifics. Consider hiring professional services that will assist you in putting together a solid plan. A lawyer will be very helpful in reviewing deals and preventing any legal trouble. An accountant will be vital in developing realistic financial projections and keeping your finances in check.
However, keep in mind that you may not win everybody over. If you have someone like that, it might be because he simply might not be the right fit.
How to Find Restaurant Investors: Bringing it all to life
When you have the winning menu and restaurant concept, you start focusing on how to actually bring it all to life. Kitchen equipment will be vital to the success of your restaurant. You need to make sure that you have the proper tools to put together the menu items that you dreamed up. It is important to design the restaurant kitchen to support maximum efficiency and productivity.
For something as vital as ice, you can utilize a commercial ice maker to get the job done for you. A Manitowoc ice machine, for example, can do it with minimal manual intervention so the staff can focus on more creative and intuitive tasks.
Brand new equipment is recommended as opposed to second-hand equipment, which might break down unexpectedly during operation. This could cause you to lose precious business and force you to spend more money on repairs.
