Reasons You Want a Strategic Restaurant Advisor in Your Corner

When your business is in its early days, it’s tough to go it alone. Even if you have a new disruptive technology or the solution to an industry’s most pressing issue, companies often still need someone, like a restaurant advisor, to help them develop new scaling strategies, hire the right employees, and facilitate valuable top-to-top introductions.

This is particularly true in the foodservice industry, where many early-stage companies have just gone through the most disruptive event in the history of the industry in the coronavirus pandemic and now face an industry landscape where the largest players have gotten stronger, consumers are embracing alternative formats and delivery options, and new (and often unproven) foodservice technologies seemingly coming to market each day. Even the most seasoned restaurant and foodservice technology management teams are looking for answers about the future of the industry.

Finding the Right Strategic Advisor Depends on Your Company’s Goals

If you’re just starting out, you may want an advisor who has experience developing business plans or fundraising. If your company has had success in one market and you’re considering adding focus to a new segment or geography, you might consider an advisor with regional or national expertise in branding, operations, supply chain, and real estate decisions. International expansion requires an entirely different skillset, so it’s imperative that you find an advisor with specific expertise in those markets. Or you may have just the right technology but are having a hard time communicating its merits to the decision-makers you’re selling to.

We’ve previously outlined why we think investors should partner with an industry insider in the past. Here, we also wanted to highlight some of the cases when foodservice companies (including restaurant chains, technology providers, or suppliers) could benefit by bringing on a strategic advisor:

1. Unique Industry Insights

As we come out of the most disruptive period in the history of foodservice, it’s natural for any management team to have questions about the industry. An advisor with deep industry knowledge can help companies better understand shifts in foodservice industry forces and how consumer behavior is changing. From there, you can work with your strategic advisor to develop a company roadmap that addresses and capitalizes on these changing dynamics.

2. Business Model Tune-Ups

Many restaurants and foodservice technology companies reach a point where competition escalates, and management teams start to question their business plans. A strategic advisor can be a sounding board for companies to walk through situations where simple tweaks are needed or cases where more significant structural changes are required.

3. Building the Appropriate Growth Blueprint

Early-stage foodservice companies have big growth aspirations. Strategic advisors can help to streamline those ideas into a clear vision, structured milestones, and step-by-step value creation plans. Some of the topics that you can address with your strategic advisor include ways to increase transaction frequency, add new sales layers, accelerate new unit growth, create innovative concepts and alternative formats, and penetrate new markets.

4. Laying the Foundation for Sustained Profitability

Most restaurants bleed profits unnecessarily, especially early in their lifecycle. There are usually short-, mid-, and long-term performance solutions for sustaining profitability, but strategic advisors with strong operational expertise can help companies put together the plans that create value, increase cash flow, and enhance a company’s intangible assets, including their brand and intellectual property.

5. Refining Brand Positioning

A foodservice brand that took years to build can evaporate in seconds. A strategic restaurant advisor can help identify and mitigate the risks associated with competitive and disruptive threats while simultaneously boosting the reach and relevance of your brand. Restaurant advisors with marketing backgrounds can also help companies with corporate communication, earned media and publicity, and brand reputation management.

6. Developing Appropriate International Expansion Strategies

Expanding beyond your home market can be one of the most challenging steps in any company’s lifecycle — especially a restaurant or foodservice technology business. Informed by broad, global experience and deep, local expertise, a strategic advisor can help you overcome the challenges of regional supply chains, complying with customers and labor laws, and developing marketing strategies designed to resonate with regional cultures and audiences.

7. Avoiding the Typical PE Playbook

Once you’ve reached the point where your company has attracted interest from, or taking on investment by, private equity investors, you’ve probably had (more than) a few conversations about cost-cutting tactics to boost profitability. While some of these initiatives have merit, a strategic advisor can also offer a second opinion for some of these strategies and help you identify situations where you may be trimming more than fat and actually cutting into the bone.

8. Navigating the Future of Foodservice

In a post-COVID environment, consumers expect foodservice companies to provide them with the same kind of experience that technology companies do. Strategic advisors can help understand what technology is needed to modernize marketing capabilities, improve consumer experiences, and make their businesses smarter. They can also help foodservice companies understand which technologies aren’t a good strategic fit, and which do not deliver on their promises.

9. Industry Know-Who

Experienced restaurant advisors should have a good understanding of the broader industry ecosystem, including competitors, suppliers, technology providers, as well as potential strategic alliances and joint venture partners. Sometimes these introductions can help to catapult your sales trajectories and accelerate valuation step-ups.

10. A Restaurant Advisor as a Trusted Translator

There is a credence of credibility that comes from knowing your way around the kitchen and being able to talk the talk with a wide range of constituents across the ecosystem. Strategic advisors can help to be a translator bridging the gap between foodservice companies and current (and prospective) customers and investors.

How to Work with (and Compensate) Strategic Advisors

Although it ultimately depends on your relationship with the advisor, it may help to have an agreement in place that clearly lays out areas of focus and compensation arrangements (including equity percentage to be allocated, if any).

If you do plan to give your strategic advisor equity, it typically comes in the form of restricted stock agreements (RSAs) or stock options. The level of equity allocated to strategic advisors depends on a number of factors, including company revenue, the scope of the advisory agreement, and the amount of capital raised.

It’s not uncommon for companies to offer advisors between 0.5%-1.0% of the company for more routine advisory relationships but as much as 2%-3% for more transformative situations (including complex value creation plans or introductions to large customers that can exponentially increase sales trends). Vesting schedules for advisor equity compensation typically have short terms (usually less than two years).

Frequently Asked Questions About Restaurant Advisory Shares