How to Start a Food Business With No Money
Aug 15, 2024
Carmy & Sydney from FX’s popular show about the restaurant industry, The Bear, kicking off the process of opening their restaurant.
At Salt & Roe, we’ve helped open more than 50 successful restaurants and if there’s one thing we know for sure, it’s that the process of raising money brings up feelings of self-doubt, fear, and anxiety for even the most tenured entrepreneurs.
Whether you’ve got a dream of opening a restaurant years down the line, you’re gearing up to start sharing your pitch deck with prospective investors, or you’re years into the process of fundraising…you’re in the right place.
This article is for you if:
- You’re thinking about starting a food business now or sometime in the future
- You don’t have personal financial resources to put towards funding a restaurant
- You don’t have friends, family or an immediate professional network who are willing and able to offer you funding
- You want to learn more about the strategies and approaches that other successful entrepreneurs in the same situation took to get fully funded and open their business
- You’re looking for a taste of our free guide to raising money for your food business
If you see yourself anywhere in that description, read on. If you see a friend or colleague in it, give them a nudge of encouragement by sending this article to them!
The Challenges of Starting a Food Business
If you’ve shared your intent to open a food business with folks in your life, I’ll bet you’ve heard at least one person say, “You’re crazy!” in response.
Listen, they’re not entirely wrong.
We’ve done a bunch of our own writing on this topic, including blog articles about the unique business pain points of the hospitality industry and a deep dive on the number one reason restaurants fail within the first five years (hint: the owner didn’t have a well thought out restaurant location strategy).
The challenges associated with opening and operating a food business are numerous, including but not limited to:
- Rising costs associated with everything from food to labor to real estate
- High levels of price sensitivity amongst guests and customers (there’s only so much a person will pay for a cup of coffee, a burger, or a pastry)
- Lack of qualified labor for front of house, back of house, and management positions
- Inflexible hours of operation
- Demanding physical work environments
- An inherited professional culture of martyrdom, misogyny, addiction and burnout
- Low profit margins, even in the most successful food businesses
FX’s infamous show, The Bear, doesn’t get everything about restaurants right, but it nails a lot of the well-earned stereotypes that make this profession such a challenging one to thrive in.
So…why do it?
The Truth Behind Opening a Restaurant Successfully
While there are undoubtedly many challenges about starting a food business and operating it profitably over the long term, it’s also NOT empowering or honest to boil them all down to the common refrains we hear echoing throughout our profession that sound like;
“You need to know all the right people and have a network full of deep pockets to open a successful restaurant.“
“Restaurants are scrappy businesses run by pirates and they don’t make much money, so if you’re going to open one, it’s best to just resign yourself to a low salary and 7 day work weeks.”
“If you have a great menu, a team full of passionate industry vets and guests will come to you.”
These slippery untruths are precisely the type of reductive statements that lead entrepreneurs like you to either jump into this profession without doing your homework or to steer clear of it before you’ve even attempted to map out what a successful food business could look like for you.
Here are the raw, empowering truths you need to know before you move forward with your restaurant opening journey:
#1 Raising money for a restaurant is really fucking hard. Full stop.
Whether you’re super connected and loaded with industry accolades or you’re a committed industry professional without a deep network or award shelf, fundraising is a difficult process for everyone we’ve ever known.
The way to get a restaurant fully funded and successfully opened is by doing the exhaustive work of pressure testing your concept’s viability, making a bulletproof pre-opening plan, choosing the people you work with very carefully, and taking ownership of learning what you don’t know about business.
#2 Choosing the right location and lease for your business is one of the most influential decisions you’ll make, and it happens very early on in the development process.
We have supported the closure of many restaurants run by famous chefs who had exceptional teams and menus who ignored this fact. The absence of a thoughtful marketing strategy and an operations plan that accommodates for a challenging labor market are only a couple of other ways we see very well-qualified people shoot themselves in the foot.
#3 Restaurant people pride ourselves on our scrappiness, and it’s a beautiful quality we all share. However, using it as a guiding value (accidentally or on purpose) is dangerous and perpetuates the burnout culture I know you’re ready to be done with.
It is possible to provide good jobs with good wages in this profession, but it takes an immense amount of thoughtful planning and consideration to do it.
Opening a profitable restaurant that provides great jobs for you and your team, offers access to a healthy life inside and outside of work most of the time (there’s always gonna be hard chapters in any business), and gives guests consistent, rave-worthy experiences IS possible.
It is NOT POSSIBLE if you do not take responsibility as an owner for learning what you don’t know about running a business and putting the work into planning for success. If you’re looking for support with this, our How to Open a Restaurant Toolkit was made for you.
Gavin Kaysen, Chef-Owner of Minneapolis-based Soigné Hospitality, meeting with his culinary team before the opening of Spoon and Stable.
3 Top Tips for How to Start a Food Business With No Money
After reading this far, I bet you’re sitting with the one big question that faces almost every entrepreneur who hopes to start a food business: How do you get funding for a restaurant AND make sure that it’s successful when you’re starting from financial scratch?
It’s a question that almost everyone we work with has, so we talked to 21 trusted industry leaders who live all over the map, have varied life experiences, and own hospitality concepts that range from mom and pop shops to Michelin starred restaurants, all of whom started exactly where you are today, and we asked them one simple question:
What do you wish you’d known before you started raising funds for your first business?
Their answers pull the curtain back on the often elusive and always overwhelming process of fundraising, and speak directly to what scares you most about this journey. We’ve pulled just a few pieces of their best advice together for this article and encourage you to download our Ultimate Guide to Restaurant Fundraising for free to see even more of their invaluable wisdom.
Tip #1: You don’t need to have a bunch of wealthy friends and family members to raise the money you need to launch your business.
No matter how much net worth your current network holds, there’s no getting around the work that will be required to build relationships beyond the people and resources you’re already familiar with.
Getting from $0 to fully funded is about creativity, thoughtful research, and relentlessly seeking out funding sources that might be a good fit for your business whether they’re banks, non-profit or for-profit organizations that offer grants, or individual funders.
Don’t get too attached to a specific idea of who will invest in you, or how exactly you’ll reach your funding goal because it might close your eyes to creative possibilities.
Claudette Zepeda, Celebrity Chef & Entrepreneur says,
“Look for free money first! There’s more of it out there than you think. Figure out if you qualify for government grants (like USDA grants, for example) before you start fundraising and giving away equity.”
Tip #2: You absolutely must do your homework to ensure that you’re putting forth a clear, thoughtful, and viable business concept.
It can be easy to fall into the false belief that finding funding for your project is the biggest, most important mountain you have to climb.
The truth is, the success of your business depends first and foremost on the foundation you build beneath it: your business plan.
Taking the time to exhaustively think through the who, what, why, and how of your business and the confidence that will come from pressure testing your beliefs about its viability is what will ultimately attract the right supporters to your project.
And we have just the tool to help you write your business plan!
Emily Shaya, Founder & Director of New Projects at Pomegranate Hospitality, says:
“It is great to have a purpose driven restaurant and ethos, it sets you apart to your potential employees and customers. It’s equally important that you clearly communicate how your ethos is not only the right thing to do, but that it also positively affects your bottom line.”
Tip #3: Don’t quit your day job.
When it comes to opening a restaurant, getting it done fast and getting it done right are mutually exclusive. You won’t be able to accomplish both, so choose wisely.
If you find yourself believing that you need to open your restaurant within a certain timeframe or before you turn a certain age or before that chef you worked with 10 years ago opens their place, you might be at risk of prioritizing the wrong thing.
While most entrepreneurs we know felt surprised and often very frustrated by how long their fundraising process took, they also simultaneously acknowledge that those years contained essential learning that ultimately served the success of their business that they wouldn’t have acquired without the twists, turns, rejections, and speed bumps they encountered while fundraising.
Yes, you read that right. I said YEARS!
Let’s be real. Truth is, it took most folks we’ve worked with and nearly everyone we interviewed years to raise the funds they thought they could raise in a single quarter.
There are exceptions to this rule, but I wouldn’t plan on being one of them. Plan instead on writing a kick ass business plan and pitch deck, practicing your pitch relentlessly, keeping detailed notes to follow up on every fundraising conversation you have, and doing the thought work to stay in a growth mindset and keep your mind out of the scarcity thoughts gutter.
Charles Bililies, Founder and CEO of Souvla says:
“The amount of perseverance needed is significant. Give yourself plenty of time and be kind to yourself. There will be many more "no’s" than "yes’s.”
How to Support Yourself When You’re Starting a Food Business
The top piece of advice that all 21 of the successful entrepreneurs we interviewed shared with us?
Get help.
Find mentors inside and outside of the industry who can support you in growing your understanding of what you don’t know.
At Salt & Roe, we know that successful, thoughtful restaurants make the world a more connected place. We’ve made it our mission to support leaders like you in bringing their dreams to life because doing so will enrich the lives of everyone your food business touches.
We also know that when an entrepreneur is in the early days of refining a vision and preparing to get funding for a restaurant, they don’t have extra dollars to spend on getting the help they need.
That’s why we’ve taken our years of experience from opening 50+ successful restaurants, and channeled it into step-by-step, plug-and-play tools that give you clear structure to follow and feel like having a Director of Operations, a hospitality consultant, a leadership coach, a copywriter, and a graphic designer in your pocket.
Here’s 5 ways we can help for less than $1,000:
- $0 Investment: Download The Ultimate Guide to Restaurant Funding. This guide delivers expert advice from 21 industry leaders you won't find anywhere else on how to embrace fundraising.
- $95 Investment: Our Pitch Deck Template has everything you need to create a beautiful, polished, professional pitch deck that presents all of the information funders expect to see.
- $295 Investment: If you read this post and you aren’t sure if you have all the information you need to craft a complete pitch deck, check out our Business Plan Bundle. Writing a business plan demands that you get crystal clear about what you’re creating, why you’re creating it, how you’re going to execute your vision, and whether it’s financially viable. We see business planning as the unavoidable first step you must do before drafting a pitch deck that can close!
- $150 Investment: If you utilize our Business Plan Template and want a member of Salt & Roe’s industry experienced coaching team to review your draft from top to bottom and provide online, written feedback that includes in-line text edits, formatting suggestions, and comments with advice on structuring your plan, take a look at our Copyediting Support for your Business Plan.
- $995 Investment: Our How to Open a Restaurant Toolkit gives you instant access to all 5 essential tools you need to develop and open an irresistible hospitality concept that generates prosperity and purpose for you, your team, your guests, and your community from day one. It includes our Pitch Deck Toolset, Business Plan Bundle, our How to Open a Restaurant eBook, Pre-Opening Critical Path, and Guide to Hospitality and Service Template.
Remember, the first step is the hardest part. Our world needs your vision, and our industry needs you to invest time and energy into getting really, really clear about that vision before attempting to bring it into the world. You’ve got this.
Behind you,
