Funding your pop-up restaurant
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Running a food business can mean substantial financial rewards. But opening a restaurant demand large scale funding. A pop-up restaurant can be a more affordable alternative
The restaurant sector is highly competitive, and the costs of premises in the right location can be impossible for most people starting a business. However, there is a solution that many new business owners are using to get a start in the industry - a pop-up restaurant.
Pop-up restaurants are temporary in nature. They can last for an evening, a week, or as long as the premises are available. It all depends on the purpose of the pop-up.
Of course, the ultimate purpose of the popup is to make money. But testing a new restaurant concept can be daunting. Opening a pop-up restaurant can let you showcase your talents to a wider audience, perhaps proving your profitability and potential for a permanent restaurant in the future.
It is also a great way for operators and chefs to test out new menu ideas and different locations for their business. If a pop- up isn’t thriving in one area of the town or city, it can easily be relocated.
It means you are already running a successful food business - and that makes it easier for lenders to make the decision to lend to you base hen you want to go permanent Having a small business that has already proved itself means they can provide the funding you need to grow it into a larger one.
At Rangewell, we work with restaurant owners across the UK. We have an expert team with specialists in the dining industry, and our clients range from those with Michelin starred restaurants to fast food franchises.
It means we understand the challenges of setting up a popup restaurant business - and the ways to provide solutions to them.
These could include:
- Paying for premises for your popup restaurant
- Equipping your popup restaurant
- Insuring your popup restaurant
- Cashflow funding for your popup restaurant
Paying for premises for your popup restaurant
Premises will be one of your highest costs of setting up a restaurant. In the UK, to serve hot food on the premises you need an A3 planning licence. These are in very high demand and will command a premium, especially in a good location with many passing customers.
However, if you can find premises with the necessary planning permission in place, have already seen use as a restaurant or cafe. This may mean that it may have some of the necessary fittings and fixtures already in place.
You may need solutions for rent or lease costs – a deposit will be required, and rent is usually paid monthly or quarterly in advance. You will also have to pay business rates and arrange a waste management contract.
As a new business, you may find that is difficult to secure funding for the property needs of your popup business. However, solutions do exist, with Secured or Unsecured Loans - at Rangewell we may be able to help you secure them.
Equipping your popup restaurant
The cost of kitting out a professional kitchen can be another major hurdle.
Asset finance might provide an answer, with the equipment itself used as the security for the loan itself. This means that if you were unable to repay, the lender would simply repossess it, reducing the risk to them and the cost to you.
Asset funding can include both hire purchase and lease arrangements, and you might be able to make further savings with pre-owned equipment. It is possible to arrange Asset Finance for used equipment
Find out more about how asset funding can cut your costs. <link>
Operating finance for your popup restaurant
Your popup restaurant may have been designed to test your business concept, but you may find that even if things go well and you bring in the diners you are looking for, you may have problems with cashflow.
With large setup costs, you may find it difficult to pay suppliers and staff, even if your popup is generating profits.
One solution may be to arrange a short term loan to provide working capital, designed to be paid back as soon as your business becomes profitable.
An alternative may be Revolving credit, which can replace the traditional overdraft facilities which were offered by banks. These can bring a line of credit, with an agreed limit which you can dip into as you need to. You only pay for the money you take out, so it can be a cost-effective way to raise funds for the short term.
Another solution to bring in funding may be Merchant cash advances. You will probably take an large proportion of your payments from your customer’s cards through a card terminal or PDQ machine. With a Merchant Cash advance a lender can work with your payment company, and make a cash advance based on your projected card takings.
This would be repaid by deducting a proportion of the payment every time that a diner pays by card.
Operating finance can be difficult to secure for what may be a temporary business, but solutions exist. We can work with you to help you find them.
Insurance cover for your popup restaurant
Setting up a popup restaurant will require the same level of insurance cover as a permanent business.
Cover for your staff is a legal requirement, while cover for your equipment and for your liability to customers and the wider public will all be essential. There are a number of ways to provide for the costs. Find out more about funding for the premiums of insurance cover for your popup restaurant.
Helping if your popup runs into problems
A cashflow problem can mean that you cannot meet your immediate commitments could mean that problem escalates.
At Rangewell, we know the solutions which can help your business deal with this kind of challenge. We can provide funding solution if your business has run into difficulties - and even if you have a damaged credit history or CCjs, we know the lenders which can help.
Find out more about finance in difficult circumstances.
Why you need Rangewell to help capitalise your popup restaurant
Setting up a popup restaurant will mean a range of financial challenges.
At Rangewell, we have the expertise to answer those challenges, calling on our expertise in the restaurant sector. Whether you have a straightforward finance need, or require a complicated ‘Jigsaw’ funding plan made up of a combination of products, we can work with you to find the answers that are right for you. We want to work with you now to the most of your popup - and when you decide to make your restaurant permant.
Call us now to get our experts working for you.
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Download Rangewell’s free and detailed guide to Finance for Catering Businesses
What are the types of finance available to catering businesses and which do you need?
What is Asset Finance and how does it give your business an advantage?
Why it’s important to find the product and lender that’s right for your circumstances
The hidden costs of 0% finance and how we can help you pay less for your equipment
What you need to know about debt finance to make the right decision for your business
How to arrange finance - what paperwork will you need?
Key business finance terms explained
Getting the right funding arrangement is essentialThere are many forms of business finance available. Getting the most appropriate type for your particular needs is essential to avoid excessive costs.
The costs of Asset FinanceAsset Finance will mean repayments from month one. If your business does not take off you may experience a cash flow issue.
Long-term financial commitmentsYou may not be able to exit a finance arrangement once it has been set up.
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