With the rising popularity of the food and beverage industry, investing in restaurant concepts has become an attractive option for many investors. However, the restaurant business is notoriously challenging with tight margins and high failure rates. Choosing the right restaurant investment group is crucial for success. This article will examine key factors to consider when evaluating restaurant investment groups.
Look for experience and expertise in restaurant investments
The top restaurant investment groups have extensive experience in selecting, growing, and operating restaurant concepts. They understand the complicated dynamics of the restaurant industry including site selection, build-out, staffing, training, marketing, and ongoing operations. Groups with proven success bringing multiple brands to profitability demonstrate the expertise to guide investments.
Seek innovative and differentiated restaurant concepts
Leading restaurant investment groups focus on emerging concepts that fill an unmet need in the market. Unique offerings that excite diners are more likely to stand out in a crowded industry. Innovation can also come through service models like fast casual and delivery focused brands. Evaluate if the concept brings something new to consumers.
Understand the growth strategy and expansion plan
The top restaurant investment groups have a solid growth roadmap for scaling concepts regionally or nationally. They should have the capabilities and infrastructure to open multiple locations per year. A defined expansion strategy with sufficient capital for new unit growth is essential for investors.
Review operational capabilities and support systems
Success in the restaurant business goes beyond an appealing concept. Excellent operational execution is critical. Analyze if the investment group provides robust corporate support for vital functions like marketing, HR, accounting, supply chain, and IT. Also assess if they have systems and processes to deliver a consistent customer experience.
Evaluate the economics and unit level performance
In addition to concept and growth potential, restaurant investments must pencil out financially. Review historical data on sales volumes, profit margins, and cash flows for existing locations. Realistic projections for new unit economics based on relevant assumptions are also important. Top groups focus intently on unit level ROI.
Selecting the right restaurant investment group gives concepts the expertise and infrastructure needed to thrive. Key factors like experience, differentiated brands, growth strategy, operations, and economics allow investors to evaluate opportunities effectively.