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Restaurant advertising to attract investors

Restaurant advertising to attract investors

Question:

My family started a very successful Florida seafood chain in 1985. After taking the company public and expanding way too fast, the company eventually went bankrupt. I took over the last remaining store (the original store) in 2009. Last year we got our second store up and running and it's doing great. I am looking for investment for further expansion. My question is where can I advertise this to attract interested parties? 

– John Christen, Owner, Shells Seafood, Tampa, FL

Answer:

Congratulations on getting things back on track. Seeking investors—and managing their expectations—is a challenging thing and advertising is probably not the right way to go. Start with the 3Fs of entrepreneurship—“friends, family and fools”—and if they’re tapped out already, look to your biggest fans such as regular customers, a happy landlord or vendor, or even a fellow restaurateur who admires your concept.

Harris Eckstut, Principal of Eckstut Consulting, an independent restaurant consultant, agrees, “Oftentimes the potential investors are right there in your restaurant – your customers.  And best of all, they have already done the research that a prudent investor would do before putting money into a project:  they have observed your operation as a consumer –the quality of your product and service and your professionalism.  Just like the best opportunity to grow your business is from the customers you already have – returning and returning with friends, so the best opportunity above and beyond friends and family for future investors is your satisfied customers.

Formally advertising an investment opportunity can set you up with regulatory challenges and may attract an unintended audience. Eckstut cautions, “To advertise or promote for investors—in any manner other than one-on-one—will most likely be considered a “public offering” which automatically comes under the scrutiny of the SEC (Securities and Exchanges Commission) and other regulatory agencies.  And, as such, will be an expensive legal investment.  (If one is looking for multiple opportunities, this would be money well spent.  But, otherwise, too costly for the “next one.”)   If you do want to look into this direction, the next step would be to discuss with an attorney.”

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