A Gastronomic Revolution via Crowdfunding for Restaurants
A restaurant business is a very capital-intensive and risky business to launch. A place, equipment, licenses, staff, supply chains and other expenses may easily amount to hundreds of thousands of dollars while an average profit margin is between 3 and 5 percent.
The overall competition of the food and beverage industry, the challenges that entrepreneurs face and the effort to execute on the restaurant development strategy present the major challenges when raising funds the traditional way.
Crowdfunding for restaurants has become one of the ways to raise the needed capital. For example, the number of restaurant crowdfunding projects raising funds on Kickstarter grew from 3,400 in mid-2019 to over 4,400 by the end of 2023, and this trend demonstrates clearly that more entrepreneurs are trying to get funding from the crowd for launching, renovating, or otherwise modifying their catering businesses.
While big established restaurant chains and franchises may launch investment-based campaigns, smaller restaurants rely on reward-based or donation-based crowdfunding campaigns.
Let’s have a look at several examples of how different restaurants raise money online, how they run their campaigns, what their funding goals are, and how much they managed to raise.
What you will learn in this post:
MJMK, an equity crowdfunding campaign on Crowdcube
MJMK, an independent restaurant group, launched a crowdfunding campaign on Crowdcube to ensure its further growth. With a funding goal of £1m, the company was looking to expand across London and open a new concept with a Mexican chef-partner Santiago Lastra.
MJMK now consists of 5 restaurants: KOL, Lisboeta, and Casa de Frango (3 locations)
- KOL, with a chef-partner Santiago Lastra, the first Mexican restaurant in London that received a Michelin star. It is also included in the prestigious “World’s 50 Best” list.
- Lisboeta, a critically acclaimed Portuguese restaurant from Michelin-starred chef Nuno Mendes.
- Casa do Frango, a traditional Portuguese piri-piri chicken and small plates restaurant.
The restaurant owners commented that they “had only friends and family investing in the business”, and that they “didn’t want any institutional investors on board at that stage to maintain control of the business”. Thus, they selected an option to raise funds in equity crowdfunding.
The campaign was launched with a target to raise £1,000,000. The share price was £10, and 12,55% of the equity shares were offered to investors.
Additionally, the restaurant announced rewards based on the invested amounts. So, those who invested £50, were promised to be sent investor updates on the business progress every quarter. Those who invested £100, would get complimentary wine for their visits to Casa de Frango, and automatic enrollment in the restaurant loyalty program with special dining perks and new openings. The further tiers were £250, £500, £1,000, £25,000, £35,000, and £50,000, each tier bringing more benefits up to welcome perks every visit to the restaurant, free dinners, priority reservation access, VIP reservation contact, invites to chef tastings, and similar.
The restaurant raised £2,568,890 from 389 investors.
Burnt Truffle, a reward-based crowdfunding campaign on Kickstarter
Gary Usher, an award-winning chef, raised money for his second project – a bistro Burnt Truffle in a reward-based crowdfunding campaign on Kickstarter.
Gary Usher invested all his resources in his first restaurant, Sticky Walnut. Over time, his restaurant became famous, and the number of visitors grew. Thus, one more place was needed to accommodate the visitors. However, the banks declined all the credit applications, and Gary Usher decided to try crowdfunding.
Gary Usher’s restaurant crowdfunding campaign was launched in July 2015. Depending on the pledge, the Burnt Truffle bistro offered free lunches, company Christmas dinners, and private parties, among other rewards. To the surprise of Gary Usher, the target of £100,000 was reached and exceeded within the first week. 891 backers pledged £103,915, and the bistro was opened in 2015.
Usher also successfully raised funds for his next projects such as:
- Pinion, a bistro, raised over £80,000 within less than one hour (with a target of £50,000)
- Kala, a restaurant, raised £114,271 from 1,308 backers (with a target of £100,000)
- Elite Bistro Events, raised £172,380 from 2,071 backers (with a target of £150,000), among several more projects.
The Bravas restaurant, a donation-based crowdfunding campaign on Indiegogo
Bo Gonzalez opened his hot dog cart Bravas in downtown Fort Wayne, Indiana, at the age of 19. Since then and until the COVID-19 pandemic when all restaurant businesses were closed, Bravas was in operation selling hot dogs in the streets.
The campaign on Indiegogo was launched in December 2022 to move to a new level and open a permanent location for Bravas. The funding was needed to transform an old building into a vibrant and beautiful place to open a new restaurant.
The main funding of $700,000 was obtained from friends and family members. But to get the project to the finish line, $20,000 more was needed. 202 backers donated $22,949 to make the new restaurant true.
The money raised on Indiegogo was used to buy the final equipment for the kitchen, some work on interior design, and some other business needs. The restaurant would have two separate kitchens to keep the food truck and catering and prevent burdening the restaurant during peak times.
The only thing that won’t change is its menu. Bravas was initially focused on hot dogs and burgers, and that will remain. The focus on being environmentally friendly is another distinctive feature of Bravas, with radical recycling and composting procedures being introduced to address the ongoing challenges of climate change.
Launch a restaurant crowdfunding platform with LenderKit
Crowdfunding for catering businesses may be a profitable venture, given the potential demand. Crowdfunding for food and beverage might become one of your target industries or you could even launch a niche platform, like for vegans only.
Starting a crowdfunding platform for restaurant businesses is easier if you are using our white-label crowdfunding software. LenderKit helped launch many crowdfunding platforms across the globe with a focus on different sectors, so we know exactly what to do to when it comes to staring your restaurant crowdfunding platform.
Reach out to us if you want to see how the white-label investment software works and let’s schedule a call to discuss your business requirements.
