Could funding from customers fuel the next great restaurant concept?

It’s a story we often hear about in franchising - venture capitalist, private equity firms and wealthy investors looking for their “unicorn” that offers a big payoff and exit. But what about the single unit restaurant looking to make it big in the world of franchising? Or what about the guy with the great idea, but the lack of financial capital to get it off the ground? Well, things are about to change for the supposed “little guy.”

This week, the long awaited Title III JOBS Act will be released allowing anyone to invest in start-ups, rather than just the wealthy. Ever thought what it would be like to invest in the new Korean funk fusion restaurant that just opened in the hip, new neighborhood? Well now is your chance. Experts believe that these types of restaurants and many others are going to find a new foothold with small investors, which could put them on the path to franchising and growth much faster.

These new equity crowdfunding rules are set to change the relationship between customers and a restaurant. Customers turned investors will now have a vested interest in the performance of their investment. A dozen small investors could suddenly become a powerful marketing team leveraging everything from word-of-mouth to social media to drive sales and increase brand awareness. Unlike traditional funding establishments such as a bank, these new micro-investors will be walking sales and marketing representatives on behalf of local restaurants looking to make it big.

Equity crowdfunding won’t be without its challenges however. Restaurants are going to have to figure out how to pay back investors – whether that’s in food or in an actual cash return. A lot remains to be determined, but it will be interesting to see how this affects small single-unit restaurants and their ability to grow and scale. Maybe the next Subway is out there and ten or twelve of its most passionate customers will initially fund it. That wouldn’t necessarily be a bad way to start the next big thing.

Nick Powills, CFE, founded No Limit Agency in 2008 and serves as Chief Brand Strategist for the Chicago-based firm. No Limit is a full-service communications agency that establishes and elevates brands by bridging Public Relations, Social Media, Marketing, Advertising, Digital, and a lot of creativity, to best strategize well-rounded and successful campaigns for 50+ global franchise brands. By presenting visionary ideas and building real relationships, No Limit is able to create effective media branding strategies to help companies grow. Nick currently leads a staff of writers, media strategists, designers, social media experts and digital producers in an office think-tank where brands are humanized for strong, compelling media stories. Prior to starting No Limit at the age of 27, Nick spent four years working at a franchise PR agency where he mastered the art of building rapport with media outlets and creating newsworthy pitches for earned media placements. He holds a Bachelor of Journalism from Drake University in Iowa.

Could funding from customers fuel the next great restaurant concept?

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