Making Customers Investors

Crowdfunding and crowd-investing, as an alternative form of finance for start-up companies, is taking off particularly in the service sector in Europe. In 2015 the Europe-wide volume grew by 92% to €5.4 bn, as documented by a report from the University of Cambridge and the accountancy firm KPMG. By far the greatest proportion of this crowd funding volume comes from the UK (> €4,412 m), followed by France (€319 m), and Germany in third place (€249 m). The benefits which this alternative financing tool can bring to the catering sector are shown by the example of the new British-Mexican food chain Chilango, London.

- Jutta Pfannschmidt-Wahl

“How to raise £5,500,000 from your on-line friends and family and why I think crowd funding is a fantastic alternative source of financing,” co-founder Eric Partaker spoke about this exciting chapter in the growth of his fast-casual formula Chilango at the last European Foodservice Summit hosted by FSE & ME and GDI in autumn 2016 in Zurich.

Strong and rapid expansion thanks to ‘burrito bonds’: with this catch line the two founders of Chilango, Eric Partaker and Dan Houghton, sketch their vision of growth for the UK and beyond. In the short term their strategy is to double in size. They were running twelve outlets under their own management last autumn – eleven in London and one in Manchester. “Several more in major UK cities are in the pipeline,” says Partaker.

Chilango is also looking at international sites. Partaker and Houghton have trademarked the brand in thirty markets throughout the world now. “Long term we believe that what we are creating is a multi-billion-pound global power brand,” is how Partaker puts it casually. The first steps on this track: by 2020 alone they intend to be running around 50 restaurants under their own management in 20 UK towns and cities, plus further outlets to be opened via franchising in other national markets are on the agenda. The quick service formula intends to attain these ambitious expansion goals by using the capital which it has amassed through successful crowd funding campaigns: a total of £5.5 m of investment cash was garnered through two ‘back-to-back record-breaking capital-raising campaigns’, the so-called burrito bonds, in 2014 and 2015. In July 2014, before its crowd funding campaigns, Chilango had seven outlets in London and earned around £4.3 m in sales revenue.