Do you guys think it would be feasible and worthwhile to run a restaurant-focused PE fund? Buy up a place, make mainly operational improvements, run it for somewhere under 6 years, maybe franchise it, and then sell it.
What are some challenges and potential upsides?
Also, would this even be considered a PE fund or more of a restaurant operator.
I've found very little discussion on the topic.
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If you raise a traditional fund that is sector focused on hospitality then it would be like any other sector specialist PE fund.
If you start with a restaurant and use the balance sheet to acquire other restaurants or greenfield locations then it is more like a holding company strategy.
That's a simple business and I think nothing new there are some funds specialized in this segment.
Are you raising capital, looking to acquire a restaurant-s or what's the reason you are asking ?
I am just brainstorming about some ideas that I would like to go forward with within 3-4 years. I have two potential partners (I'm near family with them) very interested in something like this. One of them is a recent college grad, like me, and the other is a very successful restaurant veteran. We think we could raise around 1-5 mil.
This would be a dream job for all of us, so I'm just trying to get an idea of how realistic it would be to pursue.
This definitely exists, and from what I’ve seen, the most successful ones are finding concepts and expanding them. It’s pretty akin to a growth equity shop, wherein they will seek out stand alone restaurants, or concepts with 5 locations, explore margin improvement, and then scale them out to similar markets. Typically implement a lot of tech and software improvements as well.
isn't the restaurant business one of the hardest business's to really amass a bunch of profit in? -- I'm sure there are a few genius investors who have pulled it off, but I imagine there is far less of an uphill climb in other sectors.
Super tough.
Expensive to start. Difficult to manage. Fluctuating input costs. Constantly changing consumer trends. Hyper-competitive. Uncontrollable legislative restrictions/changes/zoning/construction concerns. The list goes on.
Is it possible to make a killing? Yes. Hard as fuck? You bet. There are a lot more interesting, sustainable and lucrative places to put $.
where should I put my money
I know guac is extra
Hey! Running a restaurant-focused PE fund could be an interesting venture. Challenges may include the highly competitive nature of the restaurant industry and the need for experienced management. However, the potential upsides could be significant if you identify good locations and implement successful operational improvements. Good luck!
Sounds concurrently like a real and a ChatGPT answer
There are already numerous funds that have do restaurant investing such as Roark, Garnett Station, Main Post, CapitalSpring, etc.
Those are more franchise investments however; I think OP is referring to essentially buying standalone restaurants like I Sodi...
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Currently do this for a living. Restaurant business is extremely difficult to manage day to day and high amounts of operational leverage so things can go south very quickly. A lot of sponsors have been burned in the restaurant space.
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