How to Sell a Restaurant Concept: 3 Valuable Tips
- By Otilia Dobos
- INCREASE RESTAURANT REVENUE
- OCT 03, 2024
While the food industry is very adaptive to change, it also relies on some tried-and-tested methods for ensuring profit. If you want to make it big as a restaurateur, you need to find the right balance between innovation and tradition.
Do you have a restaurant concept that you believe in, and you want to grow? We’ll show you how to sell a restaurant concept to attract the right investors and create a business that will withstand the test of time.
Why you should sell a restaurant concept
Having an idea is just the start. You have to prove to potential investors that the business model is profitable and that it will actually make them money in the long run.
You need to learn how to sell a restaurant concept in two main situations:
- Opening a new restaurant: if you want to take your first step in the food industry and you have a great concept idea, but you don’t have the money to start your business;
- Expanding an existing restaurant: when you already own a successful restaurant with a unique concept and you feel that you are ready to expand to new locations.
What do you need to sell a restaurant concept
How to sell a restaurant concept? Create a comprehensive business plan that will convince any investor to put their money in the business. Here is what your plan should include:
1. Define the audience
Consider using conventional and non-conventional research methods, such as surveys and social media polls to get insights into the local market. You should find out the audience’s preferences for
- Type of establishment
- Type of service
- Menu items
- Cuisine
- Pricing
By gathering this data, you can make an informed decision for your restaurant concept. You may realize that there is no customer demand for your concept or that you just have to tailor it a bit to fit the target market.
2. Identify the competition
If you want to know how to sell a restaurant concept, you need to look at the competition and ensure your idea is unique. It will be harder to find investors if many other businesses are using the same idea.
Therefore, scope your direct and indirect competition to find out:
- What items are on their menu;
- What types of service do they provide;
- What their reviews look like;
- What is their pricing strategy.
Read more: How to Make Your Restaurant Stand Out: 5 Creative Ideas You Must Try
3. Conduct market research to find opportunities
To better sell your concept, you would benefit from a strengths and weaknesses analysis. This will allow you to find untapped markets that will potentially transform into a continuous stream of new clients for your business.
For example, you may notice there aren’t many vegetarian options in your area. Or that family restaurants aren’t available anywhere near you. Could you profit from this opportunity and integrate it into your concept?
Read more: How to Find Restaurant Strengths and Weaknesses: A Short Guide
4. Create financial projections
No person will invest money in an idea that is not backed up by data. Therefore, the answer to how to sell a restaurant concept is simple: show them thorough financial projections that will convince them your idea is profitable and will end up making them money.
Here is what you should include:
- A business plan detailing your road to success;
- Initial project expenses, such as costs for location, equipment, employees, and inventory;
- Marketing costs and strategies to get the business noticed.
5. Estimate the profit
After you have the business plan in place and knowledge about the potential audience, you can start estimating the sales. The profit numbers are what will ultimately convince investors that your concept is worth it.
It is important to keep the profit estimations realistic because a savvy businessperson can immediately identify if the numbers are too optimistic and can’t be achieved. You can even consult with a financial advisor to ensure your projections are accurate.
3 tips on how to sell a restaurant concept
Now that you have the idea, the research, and the business plan, it is time to persuade some investors to fund your business. Try these ideas:
1. Seek out your personal network
The hardest part of finding an investor is getting them to trust you. What if you could find someone to give you money that already trusts you? The first step for how to sell a restaurant concept is to reach out to friends and family and see if they would be interested in joining your business venture.
You should keep it professional and present your business plan in a clear way to show them you have done the work and are committed to making the concept work. Furthermore, you can offer equity in exchange for capital to convince them to invest.
2. Try angel investors
Speaking of equity, angel investors are businesspeople who are looking to invest in start-ups in exchange for it, with the promise of a high return on their investment. Look for investor invents in your area and prepare to pitch your idea by highlighting the big growth potential.
Before you go to an event, you should protect your concept by:
- Trademarking your branding items such as logo and name to get legal ownership over them and prevent them from being used without your knowledge;
- Create non-disclosure agreements: and have investors sign them before the meeting. This will ensure that anything you share is confidential and people won't be able to steal your idea and use it for their benefit.
3. Implement crowdfunding
Another solution to how to sell a restaurant concept is to appeal to the crowds. Platforms like Kickstarter and Indiegogo are the perfect place to share your idea and convince people to invest in it. Here is what you must do to be as persuasive as possible:
- Create a campaign video: where you appeal to the emotions of the viewers while highlighting what makes your business idea unique and who will benefit from transforming it into a reality. Don’t forget to pair it with captivating imagery and keep it short;
- Promote what makes your concept unique: let people know why your concept is so different from others, be it the menu, the service, or the location;
- Offer rewards: motivate people to invest by promising a reward for each sum, such as free dinners for a week or invites to exclusive menu tastings.
Final Words
There isn't just one answer to how to sell a restaurant concept. Different options work for different ideas and businesses. If you do the research and are prepared with the documentation, you are ready to venture into the investor world to get the right funding for your restaurant.