how to get funding to open you own restaurant?

Josh Williams chef

May 3rd, 2019

I have a dream have work my life on it. I went to school for culinary arts and have some college in business. I under stand how it works have been working in the industry for over half my life. Done everything you can from front to back even mangement. i just cant get the captial.

Paul Garcia marketing exec & business advisor

May 3rd, 2019

You face a very steep uphill battle. Bankers will tell you that they are entirely unwilling to loan any money for a restaurant that is not a franchise. I'm guessing the franchise route is not what you're considering.

You may or may not be aware that Tampa,FL is the hub of restaurant pilot testing. You might find collaborators in that area, however they're likely already getting ready to test their own restaurant concepts.

Unfortunately for independent restaurants funding typically comes only from personal savings, family, and friends. Because the restaurant business is considered very high risk and profit margins are typically in the 6% range after 18-24 months of "success," traditional lenders are not interested in taking the risk. Speculators/investors are perhaps interested in restaurant concepts that could turn into chains, but if that's not what you want to create, I'm afraid you may be out of luck.

I don't know what amount of this is discussed in culinary school or if it is even a topic. Schools may consider that most students will work in, not on, restaurants. I don't know. What resources does your school have to offer in terms of connecting you with people interested in new restaurant concepts?

Experience isn't going to win you a lot of favors. Operations experience does help, but what investors are looking for is business experience far more. It's that business manager function that understands the financial risk in the way that investors do. So while you may be a talented and experienced hospitality professional, that's rarely who investors give money to for restaurants.

I've been involved in hospitality since the late 1980's and it's become much harder to get restaurant money, partly because the industry is over-saturated. There are more restaurants than customers want nationwide. Investors know this and see it as needing to steal business from competitors, not generate new demand. It's a very steep ask for financial support as a result.

I don't want to dash your hopes, but you may need to focus on how you can accumulate enough savings to launch on your own without outside funds.

Tony B All knowledge is self knowledge. Keep learning. Stay hungry.

Last updated on May 4th, 2019


I'm going to take a slightly different angle at this for you, but don't discount what the others are saying. There is some truth to the challenges of getting traditional funding to go straight into a new restaurant. This would be a big risk and investment for anyone. I do have many years in this industry under my belt, but I'm also a big advocate for the little guy. I won't tell you your out of luck if you've got the drive. It just might happen by next week if you get what I'm saying. So let's come at this from a little bit different direction and we can workshop it right here with everyone.

Why your own restaurant? (What about your food is special? What exactly are you bringing to the table that you can do consistently and competitively in your current position or with someone else?)

Is your goal to own a restaurant or to cook good food? (You should know from the various positions you mentioned that there is a distinct difference in the roll a chef or a front/back house manager contributes. I am wondering; why now? Is it your environment, the industry is lacking, the food is sub par...etc ?)

Chicke Fitzgerald

May 3rd, 2019

Paul hit the nail on the head Josh. What you might also want to think about is whether there is a restaurant that would allow you to become a "chef partner", taking part of your compensation in equity. You'll need a solid agreement to make this work. Slicing Pie is a great methodology.

Thomas Sutrina Inventor at Retired Pursue Personal interrests and family

May 3rd, 2019

Josh, what type of experience do you really have? The breath of experience is just as important as the depth in a few areas. Many of the people right out of culinary school work for large restaurants. That is totally different then working for a small one. Have you really done everything? My twin brother also graduated from culinary school, He chose to work for a small restaurant as the head chef that both did lunch and prepared all the food for the big rush period. Ordered and created the menu selection after a few years, everything , including suddenly working two shifts when the cook didn't show up for the evening and banquets.

My mother went into the catering business. A great way to boot strap into a restaurant. You can start out small and work your way up. Add more equipment and people as the events get bigger. Before doing this she worked for two different caterers. One made great food but had poor presentation, and the other had the reverse. Get some experience before going the route.

A third approach is to not own the equipment and contract out to provide the staff to run the facility. Companies, athletic gyms, even can fine people that are closing a restaurant because they are not doing well or decided that it is not what they want to do, but they still own the location and equipment.

Be creative and get some legal help together so that you do not get trapped.

Curt Sahakian Attorney

May 4th, 2019

Take a look at equity crowdfunding (selling ownership interests in the restaurant, hopefully to people who will later patronize it). Take a look at these guys or one of their competitors:

Curt Sahakian Attorney

Last updated on May 5th, 2019

Tony. B.

You're right that there are limitations to Equity Crowdfunding, but to date the hospitality sector is one of the sectors in which it has proven most effective (Breweries, Spirits, Restaurants, Etc).

It's real power shows itself later, when investors start promoting the company to their network of friends and acquaintances.

Personally, I think that any retail venture that benefits from word of mouth should make use of it as a complement to other sources of financing. Even if it is not especially needed. Just for purposes of bonding and generating loyalty with a core group of customers.

Paul Garcia marketing exec & business advisor

May 3rd, 2019

I like where this discussion is going. @Tony B presents some very important questions about what your dream actually includes. @Thomas Sutrina also has a path that could make a lot of sense for you just starting out, that's catering.

As a caterer you have more occasions to revise your menu, can use contract kitchens and start with rented equipment, get very useful feedback on many elements of your food program without the massive overhead of rent due every month for three years, and building out a space, hoping that enough people will find and love your restaurant to keep the doors open. Another advantage is that with catering, no one can tell how busy you are or how many other clients you have. When you have a physical restaurant, people tend to only go to busy restaurants, not ones that look empty. It's one of the biggest hurdles to overcome with a new restaurant, looking full. Patrons tend to go with the herd and not be the first to try something out.

Catering can be a great way for you to experiment, while still being able to make money. The licensing isn't nearly as complicated. And you can easily get staff on-demand instead of managing a weekly payroll burden.

I like this idea Thomas brought up, and urge you to consider it as a possible path to building the reputation and cash that you'll need to take the next leap to restaurant. What you'd really want from a catering business is for most of your customers to be asking you, "Do you have a restaurant?" Then you know it's time.

Tony B All knowledge is self knowledge. Keep learning. Stay hungry.

May 4th, 2019

Thanks @Thomas and @Paul for the good input as well.

@Josh, do what you can to answer as many peoples questions as you can; as best you can. Don't worry about formality, just put it out there.

Thomas mentioned the catering, which is one direction I was thinking of as well. I actually heard a great interview this week from Onwuachi, the executive chef at Kith and Kin who started out with a chance opportunity to cater an event. Look him up on NPR, he has a great story. So catering is definitely an option, especially if you are starting with little resources. I think I have another idea as well that has proven successful for a few chefs that could break down the process of starting your own operation even more and give you a solid foundation if catering doesn't seem like an option for you. I won't speculate at this point though until you get a chance to interact a little.

Looks like you've got some people willing to help advise you here. Awesome!

Tony B All knowledge is self knowledge. Keep learning. Stay hungry.

May 5th, 2019

Crowd funding is a possibility, but not in a very straight forward process. Curt isn't completely wrong here, but just keep in mind that crowd funding is achieved in many different ways. In your case, you have one great challenge that most online crowd funded businesses don't. Your particular investors will want to taste and sample what they are investing in. They can do that with an online product or service rather easily, but not in your particular case. This means that you lack a practical approach to crowd funding in the context in which it is being suggested.

This isn't impossible though and there are several ways to incorporate this into a solution for you.

@Curt, thanks for mentioning this option.

Tony B All knowledge is self knowledge. Keep learning. Stay hungry.

Last updated on May 5th, 2019


I don't doubt that there are some good success stories within the hospitality industries related to crowdfunding. In the context of your initial post, I'd hate to see Josh interpret that crowdfunding would be the same as; say a real estate or microbrewery crowdfunding opportunity, where the investors decision making process is predominantly based on outside factors such as location(s), units sold, average profit and earnings history and not so much on who is behind the curtain. Josh could be starting from a limited and fixed position where in he has little to none word-of-mouth or compelling story to just jump straight into crowdfunding with any chance of success. Of course this is all just speculation and brainstorming at this point until more details arise for us all to help him narrow down a starting path.

I think crowdfunding is a legitimate opportunity and I'm glad you brought that to the table for him to consider. How to segue into crowdfunding from his specific position might require laying down a bit more ground work before just signing up to a crowdfunding site such as I'm sure we all would certainly be interested in hearing more on your suggestions for this and then possibly we can all contribute to a good working strategy for Josh to consider crowdfunding or any other option as a viable solution. Thanks again for your generous input.

What other specifics do you think Josh can pursue to get to a good position to start crowdfunding, based on what we know so far?