By Lauren Fernandez, Founder and CEO of Full Course
Early-stage investment and growth can be daunting for entrepreneurial restaurateurs. Further, restaurant owners are challenged by rising costs associated with food ingredients, packaging, delivery, merchant service fees, labor, lease and utility costs just to name a few. The vast majority of restaurants are independent, and a single-unit operation, struggling through a steep learning curve and a funding gap for their first unit. Of all startups, less than 10% of get any funding at all, undercapitalization continues to be the greatest challenge for independent restaurateurs, and disproportionally so for underrepresented entrepreneurs. So just how does someone who operates a food truck concept turn it into a restaurant? How does a one-unit restaurant grow to two units, to 10 and then to 20 and beyond? The answer lies in strategic partnerships, access to industry-specific education and mentorship.
Seek Investment Partnerships That Are Value-Add.
Before you look outward for investors, look inward first and make sure you are able to deliver more than promising financials and a unique food concept. You must go beyond the menu and demonstrate a culture that has a defined mission and vision to attract investors. When considering investors, it is important to think about what type of investor you are seeking. Who do you want sitting around your table as you grow and what will they bring to the table? Whether friends & family, angel investors, crowd raising – consider what you need and what in terms of involvement and value-add from your investors. A good rule of thumb is to assume an investor will bring more than a check, so be clear about your expectations and needs before you accept funds. If an investor is contributing expertise or operational support, set boundaries that include role definitions and scope of contribution. Having a partner that gives hands-on consulting and operational support is great, but you must proactively manage that relationship.
Look For Partners That Support Education for You and Your Team.
Our industry is ripe for continued growth through a re-investment in people. Approximately 50% of Americans’ first jobs are in the restaurant industry, with 90% of managers beginning their careers as entry-level employees. Investors with industry experience will support and understand that investing in education for your team will not only improve retention, but also ultimately improve the customer experience. One of the most significant challenges faced by the restaurant industry is high staff turnover rates. By providing affordable training and continued resources to staff, restaurant operators and employees can find growth and success earlier in their careers by shortening the learning curve. Furthermore, cohesion among the team will lead to a better guest experience in your restaurant. With nearly 70% of restaurants being independently owned, sourcing resources to provide ongoing education can be challenging and expensive. Whether monthly bite-sized webinars, easy-to-digest video content, or deep-dive training for your entire team, you’ll need an investor who supports these initiatives.
Pursue Investors That Can Provide Mentorship for You.
Amid the fast-paced and high-stress environment of restaurants, the lack of mentoring in on-the-job training is unfortunately commonplace. Regular, scheduled mentorship from an experienced investor is beneficial because you’ll have to carve time out to be ready to face tough questions and have a guide to find the right solutions. Are you wearing too many hats as an owner/operator? Is it time to hand off one of those hats? What is your short-term, and three-year, and five-year plan? An investor who brings both money and expertise to the table may be a partnership that can bring solid footing for you to excel in the future. Further, experienced industry investors can also leverage their networks and connections in support of your endeavor. Even after an investor exits, the tools and skills attained through mentorship will remain and lead to the sustained success of the business.