Author: krghospitality

7 Tips on Pitching Your Restaurant Concept to Investors

Originally Posted on FoodableTV – By Doug Radkey 08/09/2016

You’ve developed your restaurant concept plan, you’ve completed a feasibility study, and you’ve written a pretty solid business plan. Or maybe you’ve been successfully operating a restaurant for years and are looking to expand. Fantastic! But now what?

Due to the high level of risk for independent restaurant related start-ups, the traditional bank loan is never an easy option. A majority of food service start-up or growth projects need an investor or business partner with the financial means to assist an aspiring restaurateur through the development stages.

However, you cannot approach an investor or potential partner without being prepared with factual research, a strategic forecast, and an execution plan. Investors are looking for opportunities that present scalability, profitability, consistency, and sustainability-related characteristics.

Here are a few tips to assist you through your first pitch!

No. 1 Perfect Timing. 

The first thing to keep in mind when pitching to an investor is their time. They will likely not want to read through the 100+ pages of feasibility, concept, and business planning content you’ve accumulated.

You need to first develop a “pitch deck,” a 10-15 page document (print and/or slideshow) that showcases the most relevant and important data from those plans. These points should quickly attract the investors attention, further exciting them and engaging them in key points of conversation.

No. 2 Being Prepared. 

Delivering a winning presentation starts with practice. Create a series of “pitch tests” to speak in front of friends, family, and other business or restaurant industry acquaintances. Adjust your timing, look for questions the investors may ask, and receive feedback on your presentation style (voice level, eye contact, posture, and more).

You can also watch episodes of “Shark Tank,” “Restaurant Startup,” or other investor-related shows and look at the questions they ask of the pitchers. Formulate a list of frequently asked questions and ensure you know the answers to them for your restaurant…quickly!

No. 3 Being Passionate.

As much as you’re selling the restaurant concept and explaining the gap it will fill within the market, you are also selling yourself. This is the opportunity to tell your story — a great way to start your presentation. Show your passion for food, beverage, hospitality, and general business.

Quickly highlight your education and industry experience. Why do you want to open or grow this restaurant? What makes you the best fit for this concept? Why did you choose that specific name? If there is a story, tell it!

 No. 4 Simple & Memorable. 

Include only key points within your pitch deck while using photos, graphs, and even quick video clips if it’s a digital presentation to help visualize and explain. Use investor and industry-related keywords while also leveraging any current food and beverage industry related trends.

If possible and safe to do so, have a small sample of your proposed and unique food or beverage offerings for the investor(s). This will help drive your value proposition points while indicating to the investor an element of your secret to success.

No. 5 Strategic Content. 

Keeping it simplified, along with it being approximately 30 minutes in length, will force you to concentrate on the most important points. Ensure that you identify the following:

• The gap within and size of the market
• How you will deliver a solution to the market
• Your secret(s) to restaurant success
• The overall concept and revenue model
• Your unique F&B menu options
• The summary of your marketing plan
• The current competitive landscape
• The structure of the management team
• Your projected key performance indicators
• Start-up or development costs plus exit strategies

For each key point, formulate three levels of time for discussion. Each point should be delivered or described in 5 seconds. However, you should be prepared to explain the point in detail over the course of 30 seconds and also 90 seconds if the investor would like to discuss it further.

No. 6 The Numbers.

Ensure you know your numbers. Know your market size, ideal customer counts, break-even points, seasonal fluctuation, total square footage needed, total kitchen size, detailed start-up costs, value of assets, interest rates, return on investment, food costs, labour costs, and the list goes on.

Yes, it’s hard to memorize all of this data. Most investors will not penalize you for having a ‘cheat sheet’ with all of the summarized data points for yourself. Include the most important ones within your pitch deck.

No. 7 No Guarantee. 

Nothing in life is ever guaranteed. If your pitch fails, don’t be discouraged. Note areas of concern for the investors, learn from any lessons during the presentation, and adjust your pitch for the next one. Look for other investors, visit local start-up incubators, attend industry-related trade shows, and build your network within the industry.

First impressions count, but good things also come to those that work towards a second opportunity!

Strategies to Save Time & Money During Start-Up

Originally Posted on FoodableTV – By Doug Radkey 07/12/2016

Going through the motions of starting your first restaurant requires an incredible amount of time and financial management.  Discovering opportunities to save on both will effectively result in less stress and a generous opening day budget.

Effective Planning

Before officially getting ‘started’, ensure that you complete a feasibility study, concept development plan, and business development plan. Although developing these can be time consuming (approximately 30-45 days, sometimes more) it will allow you and your potential investor to avoid financial pitfalls.

Feasibility study | This study informs you whether to move forward with your dream restaurant / bar or if you should re-evaluate your idea to fit and support the specific market space and start-up budget.

Concept development | This plan gives your proposed venue an identity with visual design components and a list of potential suppliers and contractors that can execute your vision in addition to the framework for your menu and the equipment that’s going to be required.

Business development | Outlines your action plan; including the details of your restaurant, the permits you will need, the time-frame for completion, operational strategies, marketing strategies, and the venues overall budget and financial projections for the next 3-5 years.

Saving Time

During start-up you want to save time, but you don’t want to cut corners or take uneducated shortcuts leading to future complications. Utilize and trust your developed plans and any expert advice.

Supporting Cast | First and foremost, don’t try to do everything yourself. Whether you’re building a small bistro or a large full-service 150 seat restaurant, you want to build a supporting cast and delegate tasks based on each individual’s strengths and weaknesses. 

Pro Tip: Work with someone who has ‘been there, done that’ in terms of starting a restaurant, for example a consultant, development agency, or close friend to be used as a mentor.

Checklists | Complete a start-up milestone checklist with S.M.A.R.T time-frames for completion, in addition to listing who is responsible, and the budget for each task. 

Pro Tip:  Hold weekly meetings and consider using an online project management dashboard to promote effective communication and organization within your start-up team.

Saving Money

Money management during start-up is vital. Numerous start-up restaurants overspend during this stage leading to a delay in opening, zero to minimal funds for marketing & advertising, minimal funds for training (paying) staff, or a combination of the three.

Hire an Accountant | Prior to signing a lease or hiring a contractor, build a relationship with a trusted accountant. This is your opportunity to stay on-top of budgets and control your spending.  

Pro Tip: Hold weekly meetings with your accountant to review, adjust, and then communicate the financial status with the entire start-up team.

Lease negotiations | First, always review your lease with a lawyer. Look for additional concessions, for example:  ‘free rent’ opportunities (for renovation period + first operating month), lease transfer opportunities (in case the restaurant fails), and negotiate other property maintenance & fixture costs (ex. air ventilation systems).  

Pro Tip: When seeking a new location, ensure it is feasible to be zoned for food service operations prior to signing.

Permits & licenses | Receive all of your permits and city requirements by visiting your municipal clerks’ office. Review federal, regional, and municipal requirements for operating a commercial food service business. Receiving a surprise infraction two weeks prior to opening can be costly and detrimental to your start-up. Receive each permit’s time-frame for approval, its initial fees, and any ongoing or future fees. 

Pro Tip: Work with a trusted architect who understands commercial food service requirements and building codes to complete drawings that will be quickly approved by your municipality.

Contractors & vendors | Ask nearly all experienced restaurateurs and most will say their largest headache was contractors. The most ideal situation is to hire an experienced general contractor that will lead a team of plumbers, electricians, mill-workers, HVAC professionals, and fire safety specialists through the project while managing the renovation budget. The best practice is to receive 2-3 or more quotes based on a specific and similar ‘job scope’ while measuring their level of experience, value, references, and overall cost. 

Pro Tip: Though you’re likely on a tight budget, don’t always go with the least expensive option. Sometimes, it will lead to higher costs or project delays later on.

Kitchen & Bar Equipment | A key tip to remember is that not all of your equipment needs to be brand new. Consider used prep tables, deep fryers, and lightly used refrigeration & freezer units. Depending on your start-up budget, consider equipment leasing opportunities versus purchasing upfront. There are pros and cons to this strategy in terms of assets, depreciation, and tax write-offs so it is best to work with your accountant. 

Pro Tip: Ensure your menu concept is developed and a chef is part of the kitchen & bar development process to ensure maximum efficiency in terms of food & beverage production.

Menu Development |  Customers today are seeking smaller menus; ensure that you engineer a small menu with re-purposed raw ingredients;  leading to less waste, easier training, and reduced start-up inventory costs. 

Pro Tip: Discuss payment terms with your food & beverage suppliers and don’t be afraid to ask for samples to reduce start-up training costs.

HR Management | Refrain from hiring your entire kitchen and front-of-house team until you have a very clear start date. This is likely 3-5 weeks prior, allowing for effective training, and for administrative tasks to be completed. Hiring your team too early will lead to increased administrative costs and time in potentially needing to re-hire. 

Pro Tip: Holding a job fair not only assists in time management, but if you execute it in an organized manner, it also works as a marketing tool to develop community awareness for your new restaurant.

POS Systems | Ensure you set aside a budget for a point-of-sale system prior to opening. It is surprising how often this is overlooked. 

Pro Tip: Look for speed and user friendliness plus a detailed revenue, staffing, & inventory report system that provides customer service support and no hidden costs for future POS updates.

Effectively using this list will undoubtedly save you and your start-up team hundreds of hours and thousands of dollars in unexpected costs; leading to a larger and speedier return on investment.