Lauren Fernandez on Why Blended Capital is Critical for Emerging Restaurants
Blended Capital Strategies: Fueling Growth for Emerging Restaurant Brands
In the competitive landscape of the restaurant industry, securing the right funding is crucial for emerging brands aiming to expand beyond their initial locations. Lauren Fernandez, CEO and Founder of Full Course, emphasizes the importance of a blended capital strategy—a financing approach that combines multiple funding sources to support growth while maintaining operational control.
Understanding Blended Capital
A blended capital strategy involves integrating various financing options, such as debt, equity, and grants, to create a customized funding mix. This approach allows restaurant operators to leverage the benefits of each source while mitigating associated risks.
Common Funding Sources:
Debt Financing: Loans from banks or private lenders that require repayment with interest.
Equity Financing: Investments in exchange for ownership stakes, often from venture capitalists or angel investors.
Grants and Gifts: Non-repayable funds from government programs, private grants, or sponsorships.
Fernandez advises that relying solely on personal savings, credit, or funds from friends and family can be limiting. Instead, she recommends exploring a combination of financing options to build a robust capital structure.
Evaluating Risk and Reward
When considering different funding sources, it's essential to assess the associated risks and rewards. For instance, while debt financing doesn't dilute ownership, it requires regular repayments and may involve personal guarantees. Equity financing can provide substantial capital without immediate repayment obligations but often comes with a loss of control.
"The biggest risk you could have as a company—besides failing because you’re undercapitalized—is someone coming in to take over your business," Fernandez notes. She emphasizes the need for operators to carefully evaluate their financing options to ensure they align with their growth objectives and control preferences.
The Importance of Regular Financial Assessment
Fernandez stresses that discussions about capital needs should be ongoing, not annual events. Regularly reviewing financial health and funding options enables operators to adapt to changing market conditions and seize growth opportunities as they arise.
Conclusion
For emerging restaurant brands, a blended capital strategy offers a flexible and balanced approach to financing growth. By thoughtfully combining various funding sources and continuously evaluating their financial landscape, operators can fuel expansion while retaining control over their brand's direction.
