How to make your hospitality business more attractive to investors

A promising business idea with a strong brand identity and a long-term plan will all help lure in an investor, says Julia Weeks.

Attracting the right investor could be crucial to the future success of your hospitality business. They will bring not only financial backing, but expertise on how to scale your business and secure its future success. It’s a well-known truism that the best time to start a business is in a recession. This also holds true for the past 18 months – any business that has started, survived or grown during the pandemic must have a resilience and attractiveness to consumers that could see it go from strength to strength as easier trading conditions begin to emerge.

So, whether you are seeking loan or equity investment or jumping to the next level in seeking backing from private equity investors, the following tips may help to win you the interest of those key investors.

Make sure that you have a strong plan

If your business has thrived during the past 18 months by being agile and entering new markets, such as home delivery, this is a good indication to investors that you have the commercial acumen to meet any future shocks head on. A strong and regularly updated business plan will help to prove that you are planning for the future.

Protect your brand name

In a highly competitive area, what makes your business unique? While recipes may not be protected, is the name of your hospitality business protected by way of trademark registration? If not, does any other business operate in the same area and use the same or similar branding, which could prevent you registering your business’s name as a trademark? If you have ambitions outside the UK, have you checked the use of your brand name in overseas markets?

Protect key elements of your branding

Another key element of your branding may be the design of your premises and your cutlery and plates. If you use eco-friendly and biodegradable cutlery and plates as part of your takeaway business, are your supplier relationships and contracts strong?

Build lasting supplier relationships

If any other key supplier gave notice to terminate their contract, how easily could you source equally high-quality products?

Create a stable cost base

Your plan should deal with when the next rent review under your lease is due. When do staff appraisals and salary reviews take place? What opportunity do suppliers have to increase their prices?

Location, location, location

Check the notice provisions in your lease. If you are operating from a glamorous venue with high passing footfall, you may wish to ensure that you have a reasonably long time to run on your lease. The converse consideration is how quickly can you give notice to your landlord if you wish to move to new premises in order to expand?

Invest in staff training

All businesses have key staff but no one person should be so essential that they could damage your turnover if they leave. As long notice periods are unusual in the hospitality sector, a good training programme will ensure that each key person trains a number of potential successors and that the ethos and ambience of your business continues, even if that super-popular person moves on.

As many businesses are now experiencing problems in recruitment, a good training programme may also help with staff retention.

Julia Weeks is an associate in the corporate team at London law firm Goodman Derrick LLP