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Start-up Loans, No Bank Required

Start-up Loans, No Bank Required

Ever think of preselling special meal packages online to help raise cash to open your new restaurant? Chef/owner John Brandt-Lee tried this tactic and got 112 customers to respond, enabling his Avalon Pasta Bistro to open in Downington, PA last week. Could this financing method work for other operators, too?

Brandt-Lee, also chef/owner of Avalon Restaurant in West Chester, PA, turned to website when he sought incremental funds to finish the build-out of sister restaurant Avalon Pasta Bistro. Kickstarter bills itself as “the largest funding platform for creative projects in the world.”

It’s not about investment or lending for the consumers who participate via Kickstarter. Rather, their monetary pledges allow them to support projects they believe in while also paying off in goods and services down the road.

Honoring this mindset, here’s the pitch Brandt-Lee used on the site:

“So many restaurants fail in their first year. This is mostly due to a restaurateur's vision overextending the facility's budget long before the restaurant opens. This forces the restaurant to have loan payments that are too large or investors that only care about a bottom line number and not a quality product.

“So Avalon is taking a different approach. We are asking our community to pledge money and become part of this great neighborhood experience. We are giving our consumers the opportunity to pre-buy some special packages at a discounted rate.

“At this point we have gutted the interior of the building, installed steel beams to secure the second floor dining area, added two new door openings for new French doors that lead onto our new 700-square-foot patio for outdoor dining. We are looking to raise an additional $10,000 to put toward the interior decor, some small kitchen equipment and patio furniture.

“We can't wait to see you at Avalon Pasta Bistro, sipping wine on the patio and saying to your server...’I helped pay for this chair.’"

This appeal worked, with 112 future customers pledging 124 percent ($12,445) of Brandt-Lee’s $10,000 goal. Pay close attention to the list of incentives he offered for the following pledge amounts:

• $10 or more: Receive a “kickstarter” cheese plate ($25 value).
• $25 or more: Receive antipasti platter for four ($60 value).
• $50 or more: Receive a three-course dinner for two.
• $100 or more: Receive a chef’s tasting dinner for two.
• $250 or more: Family style dinner for eight with antipasti platter, lots of pasta and loads of sweets.
• $500 or more: Six-course pasta dinner for eight created by chef John Brandt-Lee.
• $1,000 or more: Private cocktail party in the restaurant for $25 ($1,700 value).

The big sellers were the three-course dinner for two (66 pre-sold) and the chef’s tasting dinner for two (29 sold). Future patrons bought more $1,000 private cocktail parties (two) than $10 cheese plates (one).

We hope other operators recognize how smart Brandt-Lee’s tactic was. It brings in cash at a crucial part of a restaurant’s preopening process while simultaneously creating additional buzz about the pending opening within the community. Not all online restaurant funding projects are as well-thought-out as this one (go to the website, type “restaurant” in the search box and you’ll see what we mean). But if you find yourself in need of some funds for your next restaurant project and the banks don’t want to help, keep this approach in mind.