It’s no secret that the food and drink industry has a high failure rate, a fact that has propelled Paul Schell and Dean McEvoy to launch IconPark: the world’s first food and drink crowdfunding initiative.
Crowdfunding in itself is no new concept, with sites like Kickstarter.com having raked in billions of dollars worth of capital already. Even President Obama is a fan; he’s trying to get regulatory framework passed to grow crowdfunding in the US.
“Basically, it’s forward-purchasing,” explains Schell, a local hospitality industry stalwart who once owned Sydney celebrity drinking haunt De Nom and Ruby Rabbit.
“So, as opposed to a restaurateur having to go out and get finance from traditional lenders, they are forward-selling inventory, so they don’t have to dilute their shareholder base or anything.
“Great ideas and capital don’t always live under the same roof,” he says.
A panel of industry specialists (including Three Blue Ducks chef Darren Robertson and Inside Out Magazine Editor in Chief Claire Bradle) along with Schell and McEvoy, sifted through over 100 applications from budding restaurateurs to shortlist six finalists, which were whittled down to four after IconPark set up a tent at the recent Taste of Sydney festival (where they were the second most successful tent in a mix of the city’s biggest food and drink outlets). Now, it’s over to the public to vote for the restaurant they want to see open at the IconPark site on 78 Stanley Street – where they will have a fully-funded 155-seat restaurant for 12 weeks – by pre-purchasing from their chosen venture and in the process, voting them in.
“We were surprised by the response from the public and the turn out ,” says McEvoy of their Taste of Sydney success. “For the new guys on the block, we definitely punched above our weight.”
“Some people might ask ‘why would I pre-purchase? I’ll wait until it opens and make a booking then.’ But the reality is that if that restaurant only exists for 12 weeks, then it could well be booked out by then,” explains McEvoy, who previously launched Australia’s first group-buying site, Spreets.
A means of accelerating innovation, crowdfunding raises external funds (in the form of pre-purchases) online from a wider audience.
“You can purchase a meal, a cocktail flight, wine flight, a cooking class with celebrity chef Matt Stone… there’s a whole different range of awards you can buy.”
“It can be as small as a $10 coffee rewards card, or as big as a $10,000 event,” says McEvoy.
But IconPark’s point of difference is in their support and mentorship throughout the competition process.
“The problems we identified with other crowdfunding sites, is that there’s lots of different project creators putting up their ideas but there’s no one really following through to make sure they execute their idea the way they said they would. So there’s a little bit of disappointment when someone backs something and doesn’t get what was promised.”
“We don’t want the child star ‘where are they now’ story from this,” says McEvoy.
“Our goal is to have a ‘restaurant of the year’ and they started at IconPark. And I think we can do it with the talent we have.”
With so many restaurants shutting up shop in recent years due to their lack of consumer knowledge, IconPark’s direct-to-consumer approach hopes to bypass this by going straight to the customer to vote for exactly what they want – with money, that is, for an extra vested interest.
“I think the recent high failure rate has been because when a person has an idea and they birth it, they naturally think everyone is going to love it, but in this industry more than others, they figure out they’ve got it wrong and what they wanted wasn’t what the consumer wanted, and that’s usually after they’ve mortgaged their house, and spent hundreds a of thousands of dollars on a fit-out.”
“Nowadays, given how competitive the industry is, you need more than just good food and good service to succeed,” says Schell. “We know from experience that you need a bigger package than that: the design of your space is such a crucial part of telling the narrative of what your product is about; the marketing tone and voice…
“It’s crucial that teams have that diversity of skill-set,” adds McEvoy.
“The music industry has shown us that if you market a talentless hack enough, the whole world will buy their record,” says Schell.
Now down to four finalists, Schell and McEvoy maintain that even the contestants who don’t bag the keys to IconPark have already had doors opened for them.
“This might sound trite, but there are no losers in this scenario,” says Schell. “They have all had exposure to media, consumers and mentors – tutelage that they would never have had before.”
“And all without spending a dollar,” adds McEvoy. “Even the opportunity to exhibit at Taste – the ‘Fight Club’ of the hospitality industry, is a big plus,” he says.
“If I had a dollar for every bartender, chef or maître d who talk about ‘when they get their restaurant open…’ we’re hoping to accelerate that process for them.”
From the fun Korean K-Pop Min Joo Social, to Brookyn-inspired Sedgwick Ave, to local food hero Matt Stone’s Stanley St. Merchants, and the Creole tastes of Ruby’s BBQ – it’s now over to the public to get behind their favourite dining concept.
The winner of the keys to IconPark’s Stanley Street site for three months will be announced on Tuesday 25 March.
And with interest already peaked by three-hatted chefs the country over for the second season, this looks to be just the beginning.
Have your say and follow the action over at www.iconpark.com.