Help me get money!

April 4, 2012 1:44 PM

Need investors for a restaurant/bar, but don't know how to get them.

I am a chef with a great resume, and an idea for a new venture. I want to open a music venue that serves great tasting beer, cocktails, and food, all sources as locally as possible. Everyone I've told about this says that it'll work, and that I definitely have the skills and drive to make it work. The problem is that no one I know has money enough to invest. I had happened upon an investor with an incredible amount of money ready to drop it in, but he only wanted to talk about it in the middle of the night while quite drunk, and that isn't how I like to do business. I've tried contacting him during normal hours, and I never get a response.

The question is, how does one find $0.5-$1 million dollars to open something that, based on statistics and my real-world experience, is guaranteed to not make money for the first year or two? Oh, caveat lector, I've never run my own business. I've rum things for others and I'm usually pretty good at it. I know my market, and I know how to make money with music and food, but I have never been completely on my own.

posted by bryanthecook to work & money (13 answers total)

Your first major goal is here will be to prepare a business plan. There are many books out there that can help you do this.

Once you have a plan that can show how you plan to become profitable, you can use it as a tool to find investor's. But no one with real money will invest a dime unless you can present the plan on paper.
posted by smitt at 1:57 PM on April 4, 2012

The best way to do this is to meet people who have invested in other successful restaurants and ask them for information regarding what they look for when they decide to back a given chef.

Note the "successful" criteria above. Lots of people try to invest in restaurants because it sounds like a romantic idea, but the reality is, as I hope you realize, that the vast majority of them fail. They're risky enterprises. You want to make sure that whoever you choose as your investor(s) is savvy enough and experienced enough to help you avoid common pitfalls.
posted by dfriedman at 2:13 PM on April 4, 2012

Who owns the restaurants where you've worked? Who are their investors (if any)?

Network with your fellow chefs, and with restaurant owners. It's a small world where everyone is one or two degrees from everyone else.
posted by rtha at 2:20 PM on April 4, 2012

Yep, this is a question that you need to ask chefs who run restaurants in your town.
posted by empath at 2:42 PM on April 4, 2012

Contact your local SCORE office (Service Corps of Retired Executives). They provide free small business counseling, help with a business plan, and you can probably connect with some retired succesful restaurant owners there.
posted by jabes at 2:46 PM on April 4, 2012

I think having a solid business plan and networking with other chefs is a fantastic start.

However, you should also think about what's going to make your restaurant stand out. The establishment as you've described it here (a music venue with good local food and drinks) sounds really generic. You don't have to make it a "theme restaurant" or anything, but my first question if I were your investor would be why should I invest in your restaurant over the 100 other people who are probably going to pitch me the same thing?
posted by Betelgeuse at 2:50 PM on April 4, 2012

From what I've seen, the drunk night-owl rich guy is perfect. People who back first-time restaurateurs do so in the expectation that a large part of the return on their investment will be the fun and social advantage of being an owner of the new hot spot. Leave him a voicemail to the effect that you are about to start interviewing waitresses and bartenders, and since he's interested in investing would he like to help with that?
posted by nicwolff at 3:50 PM on April 4, 2012 [3 favorites]

I agree with nicwolff- there is a cool factor in what you are doing. A party-hearty investor is a good fit.

You might also want to consider independent (no chains) bars and restaurants that are doing well on the other side of town. Contact their owners and see if they want to branch out in the neighborhood you are considering.

Since you aren't going to be making money the first year, do things wisely. Look for a space to buy instead of rent, that could house something along with your venue. Ideally you would have room to rent out practice space for local musicians. That ups the cool factor significantly.
posted by myselfasme at 4:13 PM on April 4, 2012

The drunk guy may well be making the calls in a blackout, which could be why he isn't willing to speak with OP when he's sober.
posted by brujita at 9:08 PM on April 4, 2012

Thanks guys. I know restaurants often fail. What I posted here is the abridged version of the the business model. I hadn't thought about contacting other bar owners. The dudes that have invested in places I've worked wouldn't be interested in a bar. I have found one other potential investor. Former chef who runs a booking agency and plays bass in a punk band. Hopefully he works out. I got a few books from the library today about starting a restaurant and writing a business plan. Fingers crossed.
posted by bryanthecook at 7:38 PM on April 5, 2012

Maybe Kickstarter?
posted by brujita at 8:26 PM on April 5, 2012

I've looked into using Kickstarter, but only to get a down payment on a business loan. I wouldn't be able to use it for all of the expenses.
posted by bryanthecook at 6:57 AM on April 7, 2012

It's a bit more appropriate for the high-tech industry, but consider reaching out to your local angel investor community. I doubt that you'll find investors there, but they will definitely know of folks more appropriate to the food services industry that you can reach out to.

Networking with other chefs is a good idea. Have you tried the 'usual' small business forums? Chamber of commerce, BNI-esque networking events? They are good places to 'put the word out', as it were.

Also doesn't hurt to get people aware/interested/excited about your new restaurant. Hello mailing list!
posted by felspar at 9:42 PM on April 15, 2012