High costs you'll face as you open up a restaurant

It’s been a strange few years for the restaurant industry, and especially after the COVID-19 pandemic started, changes for each and every business have been sporadic. Our Mainvest alumni have seen it all, whether it be pushing off the grand opening day by over a year because of COVID, or waiting an extra few months to finally get a liquor license. We took some time to connect with businesses that have used the Mainvest platform and get some insight into the costs they’ve faced.

1. Tons of delays

No one saw the pandemic coming, and we can’t predict the future, but we do know that emergencies can happen at any time. If a business is struggling with raising capital, a random emergency- or in this case, a global pandemic- can change everything.

Crazy Good Kitchen used Mainvest prior to opening their second location on Newbury Street. Tony, the owner, tells us “one week after, we got hit with the pandemic and it took me one year and three months to bounce back”. It was completely unexpected, but a global pandemic hit us all, and delays for everything were intense, from construction to even planning the menu at a much larger location.

If you were lucky enough to check out Crazy Good Kitchen on Newbury street when it first opened, you likely saw an empty bar. Now, you can grab almost any drink you could think of - from a seasonal cocktail to a simple beer. The owner Tony also told us it “took 8 months to get approval for the liquor license.” According to this blog post by OpenTable, a restaurant can see profit margins increase by 25% once they have a liquor license. It’s not easy to obtain a liquor license, but it can change the game for how much revenue your business will produce.

Bouncing back from a pandemic is tough. Luckily, CGK has kept up well with the times, and their Newbury Street location is now constantly busy. If CGK hadn’t been prepared, it could have dramatically impacted their Newbury street location even opening at all.

2. Expanding your network

One of the key benefits of investment crowdfunding is the ability to turn your wider network into investors, and pull in new supporters with a unique investment opportunity. Mike & Patty’s recently opened up a new location in Jamaica Plain, in Boston, and made use of Mainvest to raise over $150,000 for their first-ever standalone dine-in spot. We were able to connect with the owners, Mike and Ania. They told us “it’s always crucial to find the best contractors and Mainvest was extremely helpful in facilitating those relationships. They ensured we were set up properly with qualified professionals in their fields. It made the entire process easy and seamless.”

According to Thumbtack, a contractor on average can cost you $30,000. That’s a big investment. Your network is crucial, and as a local business, it’s best to find ways to expand it. In this scenario, we were able to help our friends at Mike & Patty’s with opening up their network of contractors.

Another big part of Mainvest is that as a business, you will access numerous investors using our platform. That means more eyeballs on your investment opportunity, and ultimately, your business. Having access to a community of eager investors is a game changer for your next capital raise campaign.

3. Not every space you take over is ideal.

Mike & Patty’s was able to take over a previous restaurant in the Jamaica Plain neighborhood of Boston. It was a great piece of real estate to take over since it had been a dine-in spot, but there was a lot of work to be done. The owners shared with us that “upgrades are everything. Some shelves were left inside the restaurant that we thought we’d be able to use, but they weren’t matching how we wanted to optimize the space. Our Mainvest raise was a great help with getting things going!”

4. It all comes down to time.

In conclusion, all of this comes down to how much time you have, and how much experience you and your team have. We were able to connect with Eric Flanagan, who has been able to run two different Mainvest campaigns - King G and Jim’s Alley Bar.

“Construction and raising money is the biggest hurdle. You need to be professional and experienced at both. Once you become experienced at construction, you have to find ways to minimize Change Orders and minimize your construction timeline so you don't have to raise a ridiculous amount of working capital for rent, bills, etc. while the building is in construction. This can be buffered by savvy lease negotiations, but … you need to have a contingency plan.”

It you can create an efficient plan surrounding your business’ build out, you are much better off than you would be if you took too long. With a larger network, a proper understanding of necessary upgrades, and the right plan, you’ll be able to take on your business endeavors and thrive.

Written by Abigail Sullivan, Community Manager @ Mainvest

posted January 11, 2023
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