As the new year approaches and many operators and entrepreneurs will look at new locations or new concepts. There are opportunities to access capital worth exploring. Whether opening a new restaurant business or hoping to grow your existing one, capital is a necessary component of expanding. Lauren Fernandez, founder of Full Course, offers tips for blended capital as a means for successful restaurant growth—and stresses both the opportunities and challenges to each type of funding.
While any business venture is accompanied by risk, how a restaurant is run instills confidence in investors. Owners should always be primarily focused on their business practices and operations above all else—and this is especially true post-pandemic. As the industry normalizes, investors are excited about opportunities, but they are more cautious than before. “We’re looking for alignment, great operators, great culture, great leadership, store-level economics. In 2019, everything was going great. Now, we’re more surgical and careful about nurturing brands,” says Jim Balis, managing director of CapitalSpring™, an investment company out of Nashville.
Alicia Kelso reports for Nation’s Restaurant News (NRN) that investors are most interested in “scrappy growth” or “four walls growth.” Andrew K. Smith, managing director of Savory Fund, says, “Our non-negotiables (for an investment) are unit economics and financials. If you’re just focused on speed – getting in, making as much money as you can and then getting out? That’s going to be a short conversation for us. Culture and values are more important than ever.”
The best way to assess these areas for growth and create a stable, applicable plan is our customized Operations Analysis process or for new concepts, a complete and concise feasibility study/business planning process. At National Restaurant Consultants, our consultants have perfected the Operations Analysis over decades spent in the restaurant industry. An Operations Analysis creates a full picture of everything in “four walls,” from operations and staffing, to menu design and operations. By honestly reviewing your restaurant business practices, it becomes easier to create a clear picture of what needs remedying and what methods provide the best fix. A restaurant operating on a solid business plan will draw the eyes of cautious investors wanting to partner with a sure-thing.
“This four-wall growth is what Smith calls ‘scrappy growth.’ ‘It’s extremely powerful. It’s also less risky. Pause and perfect,’ Smith says. ‘Sometimes you have to slow down to speed up. It’s OK to slow down and think about your next moves.’”
Richard Weil, principal and owner of National Restaurant Consultants, weighs in on the expansion side of the industry. “It is not just the concept that will excite the investor community. It is the entire package from an operations perspective, marketing/promotions, and, of course, realistic and credible bottom-line forecasts.” Reach out for a free consultation to learn about what National Restaurant Consultants can offer you and to initiate a thoughtful feasibility study/business plan or the Operations Analysis process.