As an investor in some of America’s most iconic brands, I’ve identified some key elements that every food brand can focus on in 2023 to grow and scale their business.
When looking to invest in a food concept, we look for these seven elements:
1. Strong Unit Economics and Profitability
In 2023, investors are looking for businesses that have their fundamentals down and are disciplined in their operations. Ensuring your business has strong unit economics and profitability gives investors reason to be optimistic that their capital will help accelerate scale, building on a solid, profitable foundation. Prior to the challenging environment we currently find ourselves in, the significant availability of capital led to more of a “growth at all costs” mentality for businesses where profitability took a back seat.
2. An Interested Network
Not all businesses should be considering external investment. It might be too early, but even if you’re not ready for growth capital, there is no substitute for networking. Meet with as many investors as you can, simply as a form of due diligence. It will help you get a better grasp of what investors are looking for, as well as identify gaps in your own business that need improving before raising capital. Building relationships before you need capital will make fundraising a significantly easier process because you will have already formed the meaningful connections that can help take your business to the next level.
3. Founder-Led Strategy
At RSE, we back strong, passionate founders. The founder is often the face of the company, and their passion and commitment are key to scaling the business. The team behind the founder is equally important. With TV shows like Netflix’s unscripted "Chef’s Table" and FX’s scripted "The Bear" – there’s a clear appetite in the market for stories about the chefs behind their favorite dishes – as well as the full ensemble of team members behind a restaurant’s success.
4. Consumer Resonance
Product-market fit cannot be overlooked. In Silicon Valley with consumer tech products, it’s one of the first questions an investor will ask: “who’s using this product, and can they live without it?” In the food world, we ask similar questions. Has your product developed a cult-like following? Are there organic social media posts about your hero menu item? We always look for resonance. Does your brand speak to the customer in a way that few other food brands can? Don’t get lost in personal tastes or those of only your team but think about what would appeal to your broader target market.
5. Scalability Potential
In 2023, the ability to scale your business is vital. This became even more apparent during the COVID-19 pandemic when the “growth at all costs” mentality reared its ugly head and founders were left scrambling with bloated org charts. Investors are now more interested in disciplined growth and tactical decision-making backed by sound data. If you’re expanding into four new cities, there should be a defined logic behind these choices, instead of the “hypergrowth” days of the past. Slow and steady often beats out the brands that put the cart ahead of the customers.
6. Team Evolution
As investors, we understand that the team that starts a business may not be the one that scales it. Founders can sometimes romanticize their “ground floor” Day 1 team, but as a company grows, it’s an inevitability that you may need to bring in outside members with different skill sets and experience to accelerate the growth of your brand. The key to evolving the team is to onboard new team members that still echo the North Star of the brand that was defined on Day 1. The faster you grow, the quicker your brand’s core ethos can dilute, so evolve at a pace that you can sustain, without losing sight of what makes your brand truly unique.
7. Lean Into What Makes You Special
In the restaurant and food world, trends move fast. The hip dish you see on one menu today will soon be on every menu in six months. TikTok and Instagram Reels ensure that any new trends are widely dispersed faster than ever before. Rather than trying to keep pace with the latest and greatest trend, find ways to lean into the “OG” that made you special to begin with and harness that IP.