Tips for investing in the future of restaurants from venture capitalist Amit Raizada

Over the last two months, millions of Americans have self-quarantined in compliance with social distancing standards to limit the spread of COVID-19. While the move marks a critical step to help the United States flatten the curve and win the war against COVID-19, this sudden shift in consumer behavior has severely impacted the hospitality industry – from restaurants to hotels to airlines.

While it’s easy for those in the hospitality industry to feel dismayed right now, there’s no doubt that things will eventually return to normal – or something like normal. People will dine-in at restaurants, book flights to Hawaii, and stay in hotels around the world. During disruptive times like this, it helps to think critically about what opportunities lie ahead, especially for investors like Amit Raizada.

We sat down with Amit Raizada, visionary venture capitalist and CEO of Spectrum Business Ventures (SBV), who shed some insight on what investors should look for when investing in the restaurant industry.

Energy is Key

When devising a business model for any type of hospitality establishment, whether a restaurant, a nightclub or even a gym, one should always strive to create a high energy environment.  Staff should be friendly, inviting, and feel genuinely eager to take customers’ orders. Décor should convey a sense of modernity without feeling overly cheesy. The lighting – often ignored by restaurant operators – should strike a balance that’s neither too bright nor too dark.

“When you walk into a restaurant, the sense of energy that it conveys sets the stage for the dining experience, “said Raizada.

Raizada and SBV were key early investors in restaurants like Tocaya Organica, Catch LA, and Bounce – which all brought innovative new models to age-old cuisines. Tocaya, for example, has expanded to numerous locations across Southern California.

“I learned about the importance of energy from working with night club operators,” Raizada said. “Now, that doesn’t mean Sunday brunch has to feel like you’re at a club, but there’s a certain energy in that industry that is applicable across all hospitality fields.’

Experience

In the age of social media, the best way to appeal to broad audiences is by creating an experience at your restaurant that extends beyond merely the quality of the food. Sure, a Michelin Star will never hurt to draw in traffic, but these days, creating an atmosphere that patrons can Tweet about and share with their friends is just as crucial to success.

Bounce Sporting Club is a prime example of this. With locations in New York and Chicago, Bounce combined bottle service typically found in nightclubs with a traditional sports bar atmosphere. This innovative experience – being able to watch your favorite team in style – quickly became popular on social media.

“In 2020, restaurants really to be centered around a key experience,” said Raizada, who was an investor in Bounce. “You want to leave customers feeling not only like they just had a great meal, but that they also just experienced something unique, and something that they’ll brag to their friends about. That’s how you can really get a restaurant to take off nowadays.”