How to Approach Investors for Your Restaurant Business?
How to Approach Investors for Your Restaurant Business?
Subject: Going for investors is a hard decision for any restaurant business. You need to be sure if you want someone to be with you or better without them. Check our special article to read more about it.
Financiers consider the restaurant industry as novel investment interest. Assuming that you have weighed your restaurant startup options, we suggest you approach investors with your idea of a new business. The ideal investor should be passionate about the restaurant industry, meaning that they know what questions to ask regarding your business. Always keep in mind that investors have high expectations and if you are not prepared for the possible queries, getting the funding for your venture may be quite a task.
Defining Investor Benefits
Before you start crafting your pitch deck, you have to define how investors can benefit from investing in your venture. With strong benefits, you can achieve the ultimate objective: persuade investors that your business is worth their investment. Read on to know how you can attract a potential investor. Preparing a pitch for investors involves a lot of time and thinking. Your actual pitch deck may be written from certain parts of your business plan, you need to check your financials very carefully for preparing the answers you will face.Take a note of the things you wish to offer investors.
The percentage of ownership you want to give investors.
The worth of your business in the current period.
The perks and discounts you are ready to offer the investors.
Your long-term goals
What will you do to heighten your business?
This is how you can frame these advantages for investors.
Rate of return
When the gain or loss on an investment made over a particular time-period is shown as a percentage of the cost of investment, it is called the rate of return. Equity investors can be specifically interested in their “return on equity”. This is the income they will earn as a percentage of their equity provided to your business. An investor finally wants to know the amount of money they will make from investing in your business. At first, think about the worth of your ownership. You can calculate this number by dividing the amount of investment by the value of your restaurant. For instance, a $25,000 investment purchases 50% of a restaurant worth $50,000.You need to have an approximate idea about what these figures are for your restaurant. This assists you to know how much of your business you can offer in exchange for your capital.
The next step is to create a list of all the ways in which you want to scale your business after launching it. If your restaurant is a quick service, include food trucks that focus on serving specialty items. Any investor would want to know all your growth plans for the long-term as it exhibits bigger potential returns on their investment.
You may be looking for active investors whose industry expertise you can put to use. Sell them the fact that they too can work with you. Here again, you have to create a list of the positive things your business can enjoy if the investor becomes a part of your company. This clarifies to them that you are also open to a partnership. When a deal is signed and all agreements are made, investors want your business to succeed as that means more returns for them. Near-term benefits are preferred compared to long terms from their side and should be on the safer side as well. Hence, they are eager to know if they can jump in and lend a helping hand to fetch more profits.
Perks and Discounts
Most owners of restaurants offer promotional perks and discounts on meals to their investors as incentives. Make a list of all the facilities you would like to provide investors for mixing some sweetness to the deal. Keep this idea hidden when your pitch meeting is going on and reveal it when you see the investors agreeing to your earlier ideas.
Seek a Meeting with Restaurant Investors
Making a good first impression is important to take the thing forward.
1. BCC the person who introduced the correspondence
In case someone started the interaction, blind copy him when you send an email to the investor. You might find it unnecessary, but it is a courtesy to the individual who told you about the investor. Hurting someone’s ego is not the ideal thing in any venture.
2. Keep it brief
Since you are not writing an informal letter, write a brief email to the investor, introducing yourself, the type of business and why you wish to meet with them. Remember, share only those points that arouse their interest as they hardly have time to read a long email.
3. Suggest a meeting time
If you simply ask the investor to meet you, he will not take you seriously. Let him know a suitable time when you would want to meet. You can come up with two or three time slabs and tell the investor that you are free to meet him at a time appropriate to them.
4. Include a PDF copy of your pitch deck
Attach your pitch deck’s copy to the mail as a pdf file and avoid using a Dropbox download as this is going to develop an unwanted hurdle that the investor would better avoid in his busy schedule.
Tips for a restaurant investors pitch
Now that you have scored an investor meeting, ponder over how to present the best pitch in life. Consider it to be a matter of life and death and do the following.
Practice by yourself and change any place you think can make your appeal stronger. Then, share the pitch with friends having business experience. Seek their feedback on how you can make the pitch more convincing and influencing.
2. Support your claim with facts
You cannot get anybody’s attention by throwing information or making claims that are not supported by a reliable source. So just make sure you have matched each claim with the available facts and practice expressing a link between those claims and facts. Try to give them an image which clicks in the person's head.
3. Spot a problem, give your solution and unique selling proposition
Give the investor clear details about what you want. This involves the opportunities present in the market, how you are going to leverage the market and why your business differs from your competitors. Can you put this in words within 15 seconds?
4. Show your market knowledge
How much do you know about the market where you are selling? Whether the investor will fall for your pitch or not depends on how thoroughly you have gone through the market. Invest enough time to steer clear of gaps and guarantee a ready answer as an investor will identify breaches right away.
5. How about building an emotional connection?
Your investors are putting in the capital not just in your venture, but also in you. There is truth in the analytic and practical eyes of the investors. At the same time, show them how passionate you are about the venture. This makes an emotional connection with them and they will remember you when zeroing in on a business to invest. Can you get a connection to relate their past?
6. Let them know about the plus points of being an investor
Convince them how investing in our restaurant can be a smart choice for them. While making the presentation, keep your words as compact as possible. But, arm yourself with enough information about your finances. This is going to ultimately decide if the investors finally decide on helping you out or not.Good luck with approaching investors for your new restaurant business. Let us know if you need help with any restaurant problem.
Author: (Abhi Chauhan- The Restaurant Academy Professor. ''Invest in yourself. Your career is the engine of your wealth.''- Paul Clitheroe)