Forums: Discussions for entrepreneurs and small business.

There are people and VCs who invest in restaurants. Chains like Jamba Juice got ramped up with VC money, for example. Restaurants go in and out of style, but if you have a working concept and a good team it can be done.

My wife and I invested in the Qdoba burrito chain when it was a one store operation. In our case, we invested principally because we knew the founder, and thought he was a good guy to bet on. In part, we invested because the numbers out of his first store were pretty good and it looked like a growth category. It turned out to be a very good investment.

There are a lot of legal and regulatory costs associated with being a franchisor, and you may not want to bite that off before you get a bit more scale. If you do go that way, you would be well advised to bring in a top team member who has been there, done that, and let them lead the charge on recruiting and supporting franchisees. (In Qdoba`s case, the founder stepped aside, and brought in as the new CEO a guy like that.) While franchising can be a capital efficient way to grow the brand, it`s not a substitute for raising some money, because you are going to need a fair amount of money for lawyers and to pay the right person to do the franchising thing.

Be prepared for changes in the management team. Assuming that you`ve not been through a rollout before, you are likely to hear that the team will need to be beefed up, probably at the very top levels, to get onboard the kind of experience needed to make the rollout work.,

You might find this site interesting:
http://pxr.com/crepesboutique/htmls/objectives.html

Many good ideas here. However, it doesn’t change the fact that (i) restaurants are still considered a high risk undertaking, (ii) it’s very unlikely for you to enthuse any VCs whether linked-in or not, and (iii) starting a franchise will cost you money before it will generate any.

Since you obviously lived to see your restaurant’s first birthday (most new restaurants don’t) you are definitely off to a very good start. But instead of rushing the idea of franchising your concept, why don’t you keep going with your existing location for another year, and, if need be, open another location to get an idea of what it will be like to run your business on a larger scale?

This way, you will gain further experience, insights, and historical financial data that will validate your concept in the eyes of potential investors and franchisees.

As far as obtaining financing is concerned, I believe that you can neglect VCs as a potential source for capital. You should be looking for angel investors that have a link to or history of investing in restaurants and you may have a shot.

Alternatively, you may want to consider doing a private placement (so-called Regulation D Offering), which would enable you to sell restricted securities (let’s say of Valerie’s Crepes Restaurant Holdings Corp) to a number of accredited or sophisticated investors.

If you are interested, there are two articles available on our website at http://www.Insights.FastVentures.com under the “Reviews” tab that explain the process and offer guidance on researching and identifying high-net-worth individuals as potential investors.

Also, I will be glad to review your business plan. My firm frequently works with Miami-based Burger King Corporation and I have lectured extensively on Franchising http://www.francorp.com.ph/event1.html.

I hope this helps.


Mark

 



-------------------------


Jackson Steiner
http://www.JacksonSteiner.com

Advanced Document Design for entrepreneurs, intermediaries, and the financial services industry.
http://www.Publications.FastVentures.com

You may also want to consider a franchise development company to assist you with your plans.  They may not help you secure the funding but having them prepare all the needed documents and marketing of the concept along with their guidance in growing the business could go a long way towards reassuring possible investors that their money is safe.

-------------------------

Drink Up!

Hello,

  I am located in South FL and am seeking interested investors who want to know more about a concept I am working on paper that could be a successful franchise and would be the first major franchise of it`s kind.  All I will say at this point is that it is a "Fast Food Gourmet" type of establishment that will give everyone who is into Fast Food, healthier and better quality fare and will also appeal to those that don`t typically eat fast food. Quality and Taste are going to be the #1 priorities for this establishment because based on those 2 factors, the customers and the $$$ will indeed follow..

  Think of Fast Food as an upscale product...if you can visualize it well, contact me!

Steve G



-------------------------

Steve Gara

I am also looking for an angel investor for my fast casual dining concept, Dixie Picnic.  I have two years of experience in a seasonal  Jersey Shore location that has earned us a buzz and brand recognition in the Philadelphia area and NYC.  We had purchased the building a year ago with plans to tap the equity in the building (about $150,000) to use to start up a second location in a year round location.  Unfortunately, I wasted a year trying traditional funding and now with this credit crunch my credit has tanked.  If I can get one year round location started it is a formula easily replicated with plans for a central commisary to reduce operating costs in the near future.  I am only now trying the Angel investor route. We have a great product, an online store, retail product line, an opportunity to sell our signature baked good on QVC in the future, but cash flow is the name of the game. The business was from day one envisioned to be a multi-unit concept, perhaps not franchised but with an operater interest in each location, such as Outback Steakhouse has been so successful with.  Any suggestions would be appreciated.

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com