You have the experience and skills to open a restaurant; you just don’t have the financing. Luckily, many potential investors are attracted to the idea of being an owner of a restaurant. It’s an investment that holds prestige. Despite not being an actual operator, many investors may consider themselves a restaurateur now which may cause some grief.
Send me in, Coach
Investors are comfortable to sit on the sidelines at the outset and enjoy the status. Comping some meals & drinks or receiving preferential treatment like a good table or a last-minute dinner reservation are perks to keep them satisfied momentarily. Making a profit from their investment is still the primary goal though.
Two scenarios will draw them closer to the actual day-to-day decision-making.
The restaurant is overly popular, and anyone would want to be more connected with its success. It’s definitely a status symbol. Why do you think so many celebrities own restaurants?
Investors may not know how to operate the restaurant, but they can sure offer up some advice on making it better. There’s no limit to the changes they feel will enhance this already great establishment. Unsolicited suggestions are plentiful and meddling is a given.
These don’t include the major decisions, but the little ones that can become an irritant. Like a new menu item or a server they don’t like. As long as your business arrangement doesn’t affect the overall operation, it’s a small price to pay for running your own restaurant. Lessening their creative or logistical involvement while keeping investors satisfied is a fine line to walk.
The restaurant is floundering, and any investor will be anxious to protect his investment. Rash decisions may be made to right the ship since the investor will be focused on the bottom line.
Recommendations may be mandated by investors, and you, as the restaurateur, will be responsible for the evident fixes. Avoid straying too far from the original business plan if you can. You are close to losing control when the investor’s confidence in your abilities wavers.
Investors to the rescue
This doesn’t mean that certain savvy investors can’t provide some sound business advice. Or even advance more money until the bleeding stops. Your share of the restaurant may dilute as a result, but you’re still an owner. The business plan may just need more time to succeed.
The last straw could even involve you being pushed out and a new operator found. The shareholder agreement will be important on how this plays out. Remember, it’s a business.