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The average cost to open a restaurant can fluctuate anywhere from 95,000 dollars to 2 million dollars, according to Upserve. To cover those costs, restaurateurs will typically seek restaurant financing, whether through loans or investors. Some entrepreneurs have also found success in raising money through a type of crowdfunding called Regulation CF, created in 2016 as part of the JOBS act
Through regulation CF, anyone over 18 can buy securities in private companies. In addition, entrepreneurs can raise capital from their customers and fans, making it possible for historically underfunded businesses, such as female and minority-funded businesses to access early investments, according to StartEngine.
Adam Weiss, the CEO and Director of Honeybee Burger, knew he wanted to fund his company for long-term growth and stay true to his company’s core mission, which is why he turned to Regulation CF for his restaurant business.
“Honeybee Burger is a humble fast food burger joint with a grand mission to save the planet by making plant-based food more accessible. “Our mission is everything,” Adam Weiss explained.
Weiss’ commitment to Honeybee Burger’s mission led him to crowdfunding to support his goal to expand his restaurant’s footprint nationwide. “We wanted to raise money in a way that allowed our customers to join our mission, regardless of where they live.”
Building a “honeybee colony” through regulated crowdfunding
Adam Weiss knows a thing or two about pitching investors and raising capital for business ventures. As a Wall Street veteran, he’s raised billions of dollars for hedge fund managers and other financial projects. But when it came time to raise money for Honeybee Burger, he wanted to break the mold. “We try to be disruptive in everything we do, and I thought there was a way to democratize restaurant funding,” he said.
We wanted to build an army of 1,000- 2,000 stakeholders who could invest with their heart and soul and have a rooting interest in not just Honeybee Burgers, but also the planet.
Adam Weiss, CEO of Honeybee BurgerRead the story
On February 26th, 2021, Weiss launched his 6-month campaign on StartEngine. In about 6 weeks, Honeybee Burger raised over 1 million dollars from more than 1,400 people. According to QSR Magazine, this growth made Honeybee Burger one of the fastest-growing food and beverage brands on StartEngine.
Is Regulation CF the right path for your restaurant financing strategy?
Whether you are looking to open your first restaurant concept or expand, financing is critical. While Adam Weiss found success through regulation CF for his restaurant, he advises other restaurateurs to be diligent and cautious about this approach. “There are a ton of regulations, rules, and guidelines- unless you have a background in financial markets, it’s easy to take a misstep.”
While regulation CF is a great way to raise capital and build awareness for your restaurant’s brand, it does require you to publicly disclose your company’s financial conditions, as well as provide ongoing annual public reporting.
If you are thinking about Regulation CF for your restaurant, here are three critical tips to ensure this is the right path for your restaurant financial strategy.
Do your research
There are many nuances to regulation CF, and it’s critical you do your due diligence and research the rules, regulations, and guidelines before embarking on this path. If you are going to use regulation CF, Adam Weiss suggests finding an advisor who understands financing to help you through the process.
Tell your restaurant story
When Adam Weiss started on his journey with StartEngine, the first piece of advice they gave him was to share his story. “StartEngine said- if it is not a founder’s story, it won’t resonate as strongly. They have to care and believe in the entrepreneur,” Adam Weiss commented.
Within Honeybee Burger’s StartEngine profile, Adam Weiss crafted the Honeybee Burger story and mission while also providing proof of why Honeybee Burger needs to expand its footprint.
Within his StartEngine profile, Adam Weiss communicated:
Honeybee Burger’s brand, journey, and mission.
Honeybee Burger’s value propositions and how they stand out from the competition.
How an investment with Honeybee Burger could help make a positive and lasting global impact.
Know your performance metrics and how you will achieve them
According to Adam Weiss, there are three key metrics all restaurants should have an understanding of when raising traditional restaurant financing:
Ownership split (what your ownership split will be with investors; this is less relevant with crowdfunding the whole company)
Timeline for when restaurant investors will start seeing returns on their investment (again, for specific restaurants)
The projected return on investment an investor will see if the restaurant is successful
“To succeed, not only do you need to have an understanding of these key metrics, but you also have to have an understanding of how the business you are opening can meet those metrics,” Adam Weiss commented.
Honeybee Burger’s StartEngine profile communicates how their 3-part business plan will succeed and provide performance projections based on historical data.
Pie chart demonstrating performance projections
Honeybee’s successful crowdfunding experience was not an overnight success. It takes a lot of hard work to develop your strategy, pitch, and find the right regulation CF platform. Adam Weiss suggests trying to get advice by speaking with the entrepreneurs who have actually used the various from the regulation CF platforms, whether they received funding or not.
Empowering customers to become restaurant investors
Honeybee Burger’s success with regulation CF demonstrates how innovative, mission-driven restaurants can empower their customers to fund their growth and expansion. While this approach was a lot of hard work and focus, it paid off for Honeybee, which has picked up over 1,400 passionate, engaged stakeholders, each vested in helping Honeybee succeed.
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