This month, we caught up with Darrel Connell from Imbiba - the specialist leisure and hospitality investment company - and asked him the question every budding restaurateur wants to know the answer to:
‘How can I attract funding from an investor?’
Darrel explains; "Differentiating yourself from the competition is probably the most important place to start! It sounds obvious, but it is often the area where people fall short when looking for investment.
"Many chefs looking for first time investment believe their food is different - and it probably is. However when you look at it from the consumers’ perspective, the quality of the food just isn't enough to differentiate you. It has to be about more than just the food. The brand, the ethos, the style - it all has to stand out.
"It can have a much bigger impact on a potential investor if they can see and share your vision - identifying a site, sketching out a design theme and brand identity will all add to the sell-ability of your project. They will also want to be sure that you plan to work with credible and well regarded professionals when designing and constructing the restaurant.
"It's also worth considering your role within the business, do you intend to remain in the kitchen or are you going to run the business as well? In our experience, it is always more attractive to investors when a chef teams up with an appropriate business partner to look after the commercial side of things. Some investors can provide you with a business partner but finding someone you can work with and trust to implement your vision front of house is key."
"It goes without saying that you need to ensure that the numbers stack up! An investor will not only want to know how long it will take to make a profit but also what long-term plan you envisage. If you don’t plan out a strategy at the beginning it can lead to fall out later down the line.
"Some investors will be interested in making as much money in the shortest amount of time, and for them, once a restaurant is established, selling for a profit may be their preferred option. If your plan is to build a restaurant, or a small chain, as a long term income, you need to agree this upfront and find an investor that is happy to commit to a dividend, or a financial plan that enables them to extract their money at some point in the future.
"Finally, make sure you are realistic with your budget and how you plan to allocate it - and then stick to it! Many restaurants fail within the first year because they do not have enough working capital to support the business in its infancy as it grows. If your total budget it £200,000, don't spend £190,000 on the fit out and assume your expected turnover will kick in straight away - you need a healthy contingency."