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How do I Attract Restaurant Investors?

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  • Written By: Keith Koons
  • Edited By: Lauren Fritsky
  • Last Modified Date: 29 November 2016
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    Conjecture Corporation
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The first step in attracting restaurant investors begins with a solid business plan, and this document should leave absolutely nothing to chance. While many of the figures contained within it will be estimates of future projections, most the cost aspects can be predetermined to give a fair estimate of the chances of success. Everything from the cost of products to the monthly lease and utility expenses should be calculated to determine where monthly sales would have to be at for the business to become profitable, and then this data should be compared to the projected market share among competing restaurants within the area. Restaurant investors will not likely show interest in a new business unless the monthly sales potential is much greater than the repayment amount.

Another aspect that restaurant investors seek is originality or a new concept applied to a traditional business. This is especially true for potential store owners looking to incorporate more than food within their restaurant, such as the concepts found within comedy clubs, sports bars, and dance clubs. Each of these aspects can offer a different stream of potential clients so lenders can have more confidence in the implementation of the business.

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For existing businesses, restaurant investors normally make their decision solely based on the location’s profit and loss sheets and annual tax returns over the past 24 months. If the restaurant is profitable, but weighed down by excess debt or several smaller loans, restaurant investors will often consider granting the loan as long as consolidation is a major part of the overall goal. Since there are actual sales on which to base a commercial loan, these types of proposals are often much more successful.

Prospective business owners should search for venture capitalists or angel investors within the restaurant industry, and once several matches are found, the business owners should send an informal inquiry. Dealing with private financial lenders normally is a much faster overall process than conventional means, and even though the success rate is often higher, it is usually accompanied by a much higher interest rate. Business owners should always apply for traditional financing through banks and lending institutions in addition to seeking specialized lenders, because even though it is a much more demanding process, it could easily save a tremendous amount of money over the life of the loan or grant a longer repayment term.

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