It’s easy to identify problems in this business. So easy, in fact, that consultants and operators have formed camps around what they perceive are the core issues.
Our main issues are people problems. The real problem is lack of communication. Every problem is really a revenue issue. There’s too much competition because of shifting consumer behavior. The labor pool is populated by far too few desirable candidates.
Whether revenue or guest counts can claim the Top Problem throne, it’s unlikely any owner, operator or manager would say no to increasing either. Scratch that—they wouldn’t say no to boosting both.
Regardless of which combination of problems are affecting various operators, there’s no denying that shifts in consumer behavior necessitate changes in operator behavior. Mindsets must change.
In other words, maybe it’s time for operators to blow shit up.
That was the overall message of Tanisha Robinson’s keynote during the 2019 Nightclub & Bar Show in Las Vegas. Moderator David Kaplan of world-famous cocktail destination Death & Co. started off the keynote by greeting Robinson thusly: “I wanna blow shit up!”
This wasn’t just a crass introduction intended to elicit laughter or cheers from the keynote audience. Robinson was promoted from CEO of BrewDog USA to chief disruption officer recently. Her mission, figuratively speaking, is to blow shit up. Literally, she eschewed the use of a shovel for a traditional groundbreaking and opted to blow a hole in the ground at least once. She’s the perfect person for the job and an ideal role model for anyone looking to succeed through disruption.
Robinson swears with abandon. She has problems with authority. She’s a serial entrepreneur because she self-identifies as unemployable. When she met with BrewDog’s founders she wasn’t sure that she was interested in working for them. Within two weeks of taking her first role in the company, she was promoted to CEO. The founders saw something valuable in Robinson’s disruptive approach to the beer and hospitality industries, and owners, operators and managers can learn from her too.
In particular, they can learn about raising funds in the era of crowdfunding.
A bar owner doesn’t need to be BrewDog to leverage the phenomenon that is crowdfunding or the crowdsourcing of capital. BrewDog reached a $1B valuation in a little over a decade ago and they operate 75 bars across the globe. But that doesn’t mean operators can’t emulate BrewDog’s Equity for Punks investment model.
At its core, crowdfunding is investing. There’s no reason for anyone to be confused or intimidated by the terms “crowdfunding” or “crowdsourcing.” Crowdfunding is most closely associated with members of the public coming together online and raising money for a person, people, product, service or cause in a short amount of time. Using today’s jargon, the investment opportunities are referred to as “campaigns,” the investors are “supporters,” and any ROI is called a “perk.” In many—if not most—cases, perks are tiered. The better the perk, the larger the investment required.
In theory, an operator could set up a campaign online to raise the capital to add a kitchen to a bar (or improve an existing) one. With enough supporters, they’d get the necessary capital and be able to update their operation.
But that’s smaller thinking than blowing shit up, raising business- and life-changing funds, and creating rabid brand supporters.
The disruptive maneuver would be to create a loyal following of investors who feel they have some semblance of ownership. This transforms the standard guest into a supporter who feels true engagement with a bar, nightclub or restaurant brand. Give someone a great drink and meal and they’ll probably come back. Develop an authentic relationship a with a guest and they’ll definitely come back with friends and family.
When BrewDog first engaged with this type of capital raising, they offered a minimum investment of $50 per share. The number was approachable (it still is) and it gave the brand and its investors room to scale up investments. It’s important to note that BrewDog didn’t just throw their investment opportunity out into the world and hope for the best. The brand purposely sought to serve an unserved audience of introverts, feminists, punks, people who believe in aliens… They have an ethos, they have a story to tell, and they weren’t just looking for a quick score. BrewDog wanted to create a community.
They’ve certainly turned that desire into a reality. The brand has over 100,000 investors all over the world who have invested the minimum to tens of thousands of dollars. As Robinson told the keynote audience, BrewDog investors are their biggest fans and harshest critics. They’re loyal and that means they deliver actionable feedback, good and bad. If they love something, they let BrewDog know. Hate something? They’re not afraid to make their opinions known.
So, how can an operator go about crowdsourcing capital? BrewDog created Equity for Punks but Robinson suggested that a couple sources of underutilized capital are potential suppliers and distributors. A brand’s “tribe,” as Robinson refers to, is obviously the core crowdfunding source. The tribe needs to be identified and their focus needs to be narrowed to motivate them to invest.
In some ways, identifying crowdfund sources is simpler than the keys to raising capital: a compelling story and the offering. BrewDog has mastered the keys of crowdfunding. When they opened their first run of crowdfunding, 9,000 people invested. The story and offering were so compelling that 7,500 of those investors returned for round two.
As far as Robinson and Kaplan are concerned, much of asking people to invest comes down to culture and storytelling. So, be an open book and show people who you are at every point. As far as ROI, a crowdfunding opportunity doesn’t have to bring investors massive monetary gains to be perceived as valuable. BrewDog makes it just plain fun to be an investor in the brand.
Read this: Putting the Cult in Brand Culture
Investors are part of a real community. They earn perks like a free beer on their birthdays. All Equity Punks, as BrewDog investors are called, enjoy a 15-percent discount in the brand’s bars on weekday afternoons, and that discount stacks with their 5- or 10-percent shareholder discount. They get swag and the opportunity to vote on beers. There’s an annual shareholder meeting called Annual General Mayhem that turns the meeting into an exciting gathering. Some shareholders have turned their investment into pensions.
The point is, crowdfunding represents a cultural shift and the shift in how consumers support the brands they love. This method of raising capital does more than just provide funds, it creates communities and loyal brand evangelists. Operators with an authentic approach to community, brand culture, and offerings can increase guest counts and revenue through this modern-day form of investment. On the strength of a brand-centric community, a savvy operator can build an empire through non-traditional funding.