Raising capital for a restaurant is notoriously challenging, especially for first-time operators. To help restaurant owners navigate this complex landscape, we spoke with Dimitre Krouchev of Paperchase, a firm with decades of experience connecting restaurateurs to investors while optimizing financial performance.
Dimitre shared actionable insights on where to find restaurant investors, common mistakes to avoid, and strategies to turn an investor for a restaurant into a long-term partner.
Understanding the Landscape of Restaurant Investment
According to Dimitre, the foundation of a successful restaurant investment strategy hasn’t changed much over the years.
“Nothing has changed over the last 50 years in this element. The personal and immediate network — or loyal customers from a previous venture that a chef or a restaurant may have — is really your primary audience,” he explains.
Many successful restaurants began raising capital for their first or second location by tapping into friends, family, or angel investors who believed in the founder’s vision.
Beyond personal networks, Dimitre recommends reaching out to accountants, lawyers, landlords, and developers. “If you have a good idea and you're well prepared to show people your vision, that's a great place to start,” he says.
This is the core of where to find restaurant investors — start with those who already know and trust you, and then expand strategically.
Trends in Restaurant Investment
Dimitre notes a shift in the industry toward smaller, premium casual concepts. “A lot of talented chefs are moving down the average spend category to really create amazing products at the $25 to $50 average spend range for guests,” he says.
The restaurant industry is evolving, and investors are increasingly focused on smaller, high-performing concepts:
- Elevated casual restaurants with simplified menus at the $25–$50 spend range
- Smaller footprints with lower upfront costs
- A strategic focus on digital sales and customer data
- The use of automation and tech integration to optimize operations
These trends indicate that investors are looking for brands that combine quality, efficiency, and scalability.
Avoiding Common Pitching Mistakes
When approaching an investor for a restaurant, clarity is essential. “The biggest mistake is really not having clarity in what you're offering the investor,” Dimitre warns.
Restaurateurs must provide a clear proposal: the amount being raised, the equity offered, and a timeline for a return on the investment. Supporting materials (including a pitch deck and benchmarks from similar brands) are crucial for building credibility.
Investors are focused on measurable performance and risk mitigation:
- Sales per square foot: Strong numbers demonstrate profitability potential
- Customer loyalty: Repeat business shows de-risked investment
- Capital efficiency: Low build-out costs relative to projected revenue
- Payback period: Ideally 3–4 years — faster paybacks are more attractive
“If you can hit a three-year payback, that's pretty strong,” Dimitre notes.
Structuring the Investment
For early-stage restaurants, equity is the most common form of investment. “At locations one through five, you're really building up predictable operating profit,” says Dimitre.
Angel investors, silent partners, or convertible notes can provide initial funding, while landlords and equipment financing can supplement capital needs. As brands mature, options like Small Business Administration (SBA) financing or growth equity may become available.
Investors generally prefer growing brands rather than a single location. “Investors prefer investing into multi-unit location brands with viable growth potential,” Dimitre explains, emphasizing the importance of demonstrating scalability and operational discipline. “Strategic groups and growth equity companies like brands that are obviously growing.”
Building and Maintaining Investor Relationships
Negotiation and transparency are key to maintaining strong relationships with investors. Dimitre advises approaching discussions with preparation and logical leverage.
“The more buzz and excitement and people that are interested in you, the better the negotiation will go for you,” says Dimitre. Knowing your offer, understanding market standards, and clearly communicating payback expectations help set a solid foundation.
After the deal, transparency through regular financial reporting and board meetings ensures investors remain confident:
- Be prepared: Know your offer, market standards, and payback timeline.
- Communicate regularly: Monthly reports and quarterly board meetings build trust.
- Collaborate strategically: Long-term investors value engagement without overstepping.
“Financial discipline helps an investor know what's going on with the concept and foresee future funding requirements,” Dimitre says. Long-term partnerships thrive on collaboration, where investors are part of the journey without interfering with the restaurateur’s vision.
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Lessons from Successful Partnerships
Dimitre shares a compelling example of how the right investor can transform a restaurant’s trajectory. A growth equity partner helped a multi-brand group in Southern California expand from 7 to 22 locations over a decade.
“Even when a site didn’t work out, they were willing to take lessons from that and adjust the store footprint or concept,” he explains. The story illustrates the value of patient, strategic capital for scaling restaurant brands.
(Explore more of Paperchase’s partnerships for other examples.)
Key Takeaways for Restaurateurs
Preparation is the golden rule. Dimitre emphasizes, “Raise [money] when you don’t need to. Raising from a position of strength instead of weakness is crucial.”
Having a healthy cash balance allows for strategic investments in staff, operations, and growth.
Equally important is thorough preparation. Accurate financials, a clear pitch deck, and a compelling story about customer demand can significantly increase your chances of attracting the right restaurant investors. If that seems like a lot to ask, working with an experienced financial partner like Paperchase can make this easier.
Finding and securing capital for a restaurant requires a blend of personal networking, strategic planning, and disciplined execution.
By following these insights, restaurant operators can improve their chances of connecting with the right investor for a restaurant, avoiding common pitfalls, and building relationships that last well beyond the first round of funding.
Looking Toward the Future
Securing the right investment starts with laying a solid foundation. Since investors are looking for restaurateurs that use automation and data to run efficient, profitable operations, having the right tech is part of that foundation.
Connect with Back of House to get personalized advice for optimizing your existing operation. This will let you set yourself up for success in attracting restaurant investors who believe in your vision.
