QSR Columbia 2015

QSR
Inc
Bryan Cowan Andrew Spano
Time Period
Food
Entrep.
Patrons Partners Total
Pre-Class 3 7 8 18
Day 1 4 6 0 10
Day 2 10 2 0 12
Day 3 4 6 1 11
Day 4 2 3 5 10
Total 23 24 14 61
A Fast Casual Restaurant Accelerator focused on finding
the next big concept in QSR restaurants – the fastest
growing segment in the industry at roughly 11% per year
Sarah Drew

Key Partners Key Activities Value Proposition Customer Relationship Customer Segments
• Restaurant equipment
supplier
• Restaurant Consultants
• “Celebrity” Chefs and
Notable Restauranteurs
• Food suppliers
• Restaurant investors
• Food vendor markets
(e.g. Smorgasburg)
• Lawyers
• Restaurant designers
• Food bloggers
• PR firm
• Investors
• Function as full service
fast casual restaurant
• Provide restaurant space
for new fast casual
concepts
• Platform to incubate and
accelerate fast casual
concepts
• Provide training and
resources to restaurant
entrepreneurs
Value to Customer:
• Developing, testing and
refining QSR restaurant
concepts in a low risk
financial environment
• Equipping physical
restaurant space
• Transaction level data
• Connecting the concept
teams with an
experienced support
system network
Value to Consumer:
• Cutting edge restaurant
concepts and high quality
dining experiences
• Providing a platform for
key feedback, allowing
patrons to feel a part of
the development process
• Offering ancillary special
event services
Value to Investor:
• Vetting and testing
concept teams that have a
higher likelihood of
success
Concept Teams
• Dedicated personal
assistance
• Communities of other
concept teams
• Co-creation of new fast
casual restaurant
Restaurant Patrons
• Communities allowing
for reviews of restaurant
concepts
• Ability to co-create on
next new restaurant
concept
Multi-Sided Platform
Concept Teams
• Recent culinary school
graduates who do not
have business
experience
• Food truck or market
vendors who want to
transition into brick and
mortar
• Individuals with a
restaurant idea but no
formal experience
Restaurant Patrons
• Mass market in urban
area
• Work lunch crowd
• People ordering in for
dinner or picking up
dinner on their way
home
Key Resources
Channels
Physical:
• White box restaurant
space
• POS system
Human:
• Skilled restaurant
operators and
employees
Financial:
• Equipment lease line
Intellectual:
• Brand
• Recruitment outreach
• Brand awareness
campaigns via food
blogs, newspapers and
magazines
Cost Structure Revenue Streams
• Rent (equipment and restaurant space) and food costs
• Salaries, advising fees, PR/marketing fees
• POS system fees
• Change-over costs
• Renting fee charged to concept teams for restaurant space
• Revenue share model of restaurant food sales to restaurant patrons
• Equity ownership of concept teams
Business Model Canvas – Day 1

Concept Teams
• Recent culinary school
graduates who do not have
business experience
vendors who want to
mortar
formal experience
supplier
• Food suppliers
• Restaurant investors
• Food vendor markets (e.g.
Smorgasburg)
• Lawyers
• Food bloggers
• PR firm
• Restaurant and Hospitality
Associations
• Function as full service fast
casual restaurant
for new fast casual
concepts
• Hold taste tests and
investor events
accelerate fast casual
concepts
entrepreneurs
• Host consumer forum for
real-time feedback and
interaction
Value to Concept Team:
restaurant space
teams with an experienced
support system network
• Special PR and investor
events (e.g., tastings)
• Get: Restaurant association
• Get/Keep: Co-creation of
new restaurants
• Keep: Dedicated assistance
• Grow: Communities of
alumni other concept
teams
Key Resources
Channels
Physical:
• White box restaurant space
• POS system
Human:
• Skilled restaurant operators
and employees
Financial:
Intellectual:
• Brand
• POS system fees
Restaurant Patrons
• Mass market in urban area
dinner or picking up dinner
on their way home
Restaurant Investors
• Angel, Venture, and
Growth Stage funders
• Get: Ability to co-create
new restaurant concepts
• Get/Keep: Loyalty programs
• Keep: Communities
allowing for reviews of
restaurant concepts
• Keep: Quality product
• Grow: Online forums /PR
• Brand awareness
campaigns via food blogs,
newspapers and magazines
Value to Consumer:
dining experiences
• Providing a platform for key
feedback, allowing patrons
to feel a part of the
development process
• Offering ancillary special
event services
Value to Investor:
• Vetting and testing concept
teams that have a higher
likelihood of success
• Get/Keep/Grow: Network /
Success / Success

Concept Teams
• Recent culinary/hospitality
school graduates who do
not have business
experience
vendors who want to
mortar
formal experience
supplier
• Food suppliers
Smorgasburg)
• Flea markets
• Hospitality schools
• Culinary schools
• Lawyers
• Food bloggers
• PR firm
• Restaurant and Hospitality
Associations
• Function as full limited
service fast casual
restaurant
for new fast casual
concepts
investor events
accelerate FC concepts
entrepreneurs
interaction
restaurant space
support system network
new restaurants
alumni other concept
teams
Key Resources
Channels
Physical:
• POS system
Human:
and employees
Financial:
Intellectual:
• Brand (or track record?)
• POS system fees
• Partner recommendation fee
Restaurant Patrons
• Mass market in urban area
on their way home
• Angel, Venture, and
Growth Stage funders
restaurant concepts
• Brand awareness
Value to Consumer:
dining experiences
development process
Value to Investor:
Success / Success

Concept Teams
not have business
experience
• Fine dining line cooks
vendors who want to
mortar
formal experience
supplier
• Restaurant consultants
• “Celebrity” chefs and
notable restauranteurs
• Food suppliers
Smorgasburg)
• Flea markets
• Fine dining restaurants
• Lawyers
• Food bloggers
• PR firms
• Restaurant and hospitality
associations
• Provide white box
restaurant space and
function as limited service
restaurant for new FC
concepts
resources to entrepreneurs
interaction
investor events
restaurant space
support network
new restaurants
alumni concept teams
Key Resources
Channels
Physical:
• POS system
Human:
and employees
• Access to restaurateur
network
Financial:
Intellectual:
• Brand / track record
• POS system fees
• Renting/upfront/monthly fee charged to concept teams for restaurant space
Restaurant Patrons
• Mass marketDestination
diners in urban area
on their way home
• Angel, venture, and growth
stage funders
restaurant concepts
• Brand awareness
Value to Consumer:
dining experiences
development process
Value to Investor:
Success / Success

Concept Teams
not have business
experience
• Fine dining line cooks
vendors who want to
mortar
formal experience
supplier
• Restaurant consultants
• “Celebrity” chefs and
notable restauranteurs
• Food suppliers
Smorgasburg)
• Flea markets
• Fine dining restaurants
• Lawyers
• Food bloggers
• PR firms
• Restaurant and hospitality
associations
• Local Governments
and function as limited
service restaurant for new
FC concepts
• Large kitchen space for all
teams
resources to entrepreneurs
feedback and interaction
investor events
restaurant space
support network
• Kitchen and office space for
teams
• Fast Casual “Playbook”
new restaurants
alumni concept teams
Key Resources
Channels
Physical:
• POS system
Human:
• Skilled employees
• Food Advisors
Financial:
• Seed funding
Intellectual:
• Brand / track record
• Direct Sales
• Earned/Paid media
• POS system fees
• Change-over / Re-design costs
• Renting/upfront/monthly fee charged to concept teams for restaurant space
Restaurant Patrons
• Destination diners in urban
area
on their way home
• Restaurant angel, venture,
and growth stage investors
• Economic and Community
Development
restaurant concepts
• Brand awareness
Value to Consumer:
dining experiences
• Platform for feedback -part
of the dev. process
Value to Investor:
Success / Success

Key Learnings
Opening a restaurant is a
“lonely” experience
Customers
Offer back office /
kitchen space for
pipeline teams to work
What? How did we find out? Implications
1
Established food
vendors/trucks will
generate their own
publicity and they are
easy to identify
PR Firms, Food Bloggers,
Customers
Focus customer
acquisition / “get”
strategy on market
vendors and food trucks
2
The single greatest
value we can provide is
retail and kitchen space
Customers
Increase the size of the
kitchen such that
multiple teams can
utilize at once
3
Select incubators in NYC
are granted space or
funds
Customers, Advisors
Reach out to potential
investment / economic
development funds
4

Value Proposition
Value to
Customer
Value to
Consumer
Value to
Investor
Problem Solution Features
• Finding and securing attractive
restaurant space
• Need space to prove concept for
investors
• Partnering with credible and
useful vendor and investors
• Challenge of managing costs
• Discovering new and innovative
food options
• Extremely high failure rate of
restaurants
• Desire to enter attractive
investment space
• Leap of faith investment
decisions with little to no
available data
• A white box restaurant space
available to test launch and
refine product / menu
• Community of advisors, experts,
and entrepreneurs
• Access to investors
• A fast casual restaurant which
changes concept every few
months
• A location that is known to
customers as having high quality,
new, and innovative concepts
• Increased deal-flow in an
attractive industry
• Partnership providing first-look
access to vetted restaurant
concepts
• Actual data demonstrating proof
of concept
• Retail selling space and
commercial grade kitchen
• Advisors and business model
assistance
• Vendor and investor
relationships
• Training from experienced
restaurant operators
• Loyalty rewards program, which
incentivizes customer interaction
and feedback on food and
concept
• Meet-up’s and events focusing
on up-and-coming restaurant
entrepreneurs
• Restaurant venture fund

Customer Segments
Food Truck Owners Market Vendors Culinary/Hospitality Grads Aspiring Food Entrepreneurs
Background
• Operating one or several
food truck(s) in NYC
• Already Established brand
• No experience
owning/operating a brick
and mortar restaurant
• Started with a food truck to
mitigate risk
• Focus on savory dishes
Motivations
• Expansion of business
• Diversification into brick
and mortar
Pain Points
• Cost of retail market
• Regulation issues
associated w/ trucks
• Risk associated with
opening a restaurant
• Scale and inventory
management
Background
• Participating in one or more
NYC food markets (e.g.
Smorgasburg, Chelsea
Market)
• Already Established brand
• No experience
owning/operating a brick
and mortar restaurant
• Focus on savory dishes
Motivations
• Expansion of business
• Pursuit of permanent
location
Pain Points
• Cost of retail market
• Risk associated with
opening a restaurant
• Instability and lack of
resources at markets
• Lack of organized
mentorship
Background
• Recently graduated from
culinary school
• Interest in fast casual
market
• Non-pastry chefs
• Interest in the business side
of the culinary industry
Motivations
• Owning a quick service
restaurant
• Business aspect of culinary
industry
Pain Points
• Inexperience with
owning/operating brick and
mortar restaurant
• No brand value
• Lack of connections with
potential partners (e.g.
food suppliers)
Background
• Business professionals who
want to quit their jobs and
start fast casual restaurants
• Spent several years in the
workforce
• Strong business/finance
experience
Motivations
• Pursing their passions
• Opportunistic investments
• Entrepreneurial drive
Pain Points
• Zero culinary experience
• No brand value
• Lack of connections with
potential partners (e.g.
food suppliers)
• Inexperience with
owning/operating brick and
mortar restaurant

Paid and Earned:
Key Influencers
(e.g., Bloggers)
Service Fee
Direct Sales:
Market Vendors
and Trucks
Indirect
Recruit
from
schools
Company
run social
media
Investors
Profit Share Food Sales
COGS / SGA
Direct Sales
Equity Flows
Dollar Flows
Next Stage Flows
Cust. Acquisition Flows
KEY
Channels
Direct
Word
of Mouth &
Referral
QSR
Inc
Channels and Revenue Model – Day 1

Paid and Earned:
Key Influencers
(e.g., Bloggers)
Service Fee
Direct Sales:
Market Vendors
and Trucks
Indirect
Recruit
from
schools
Company
run social
media
Investors
Profit Share
Grants/Seed $/Free Space
COGS / SGA
IntermediationFee
Direct Sales
Equity Flows
Dollar Flows
Next Stage Flows
Cust. Acquisition Flows
KEY
Channels
Direct
Word
of Mouth &
Referral
QSR
Inc
Channels and Revenue Model – Day 5
EDF /
Gov’t $
Food Sales

Revenue Model
Potential Revenue
Stream
Cashflows Amount
Service Fee In $5,000-$20,000
Revenue Share In 1% - 5%
Equity In 5% - 15%
Restaurant Costs Out Variable
Incubator Overhead Out Variable
Service Fee Revenue Share Equity
• Charge up front monthly
service fee to be part of
incubator
• Taka a portion of revenue
off the top to help cover
incubator overhead
• Restaurant revenue will
cover costs of running
restaurant
• Concept teams will take
any remaining profit
• We will taka a percentage
of all concepts equity to
share in the upside
potential of the business
• We also believe, and are still testing the possibility of
taking an intermediary fee from investors for
providing investment opportunities (1% - 5% of deal
value)
• Economic and Community Development Funds (To be
tested)
• GI Education Dollars (To be tested)
Other Potential Revenue Streams

Competitive Landscape
Culinary
Incubators
Fine Dining
Rotational
TV /
Competitions
Restaurant
Groups
Communal /
Commissary Kitchens
Food Markets /
Trucks
Restaurant
Consultants

Critical Next Steps
1
2
3
4
5
Next 2 weeks: Test MVP
Confirm our Hypothesis or Iterate/Pivot
Next 2 weeks: Formalize Get Strategy
Develop both physical and web demand creation models
Next 6 mos: Est. Partner/Vendor Relationships
Sell concept via growth/scale opportunities
Next 2-3 mos: Finalize Cost and Revenue Structure
Deep dive into fixed (rent) vs. variable (switching, food)
costs; Build revenue/fee/equity guidelines
Next 6-12 mos: Customer Validation
Find first accelerator class

Key Customer Interview Insights – Day 1
Key Insights
• Having retail space to test proof of concept is probably biggest aspect of value proposition
– Construction / design issues were main frustration
– Issue of securing angel funding – they wanted proof of concept
• Not much deviation between successful QSR models
– Strict operations and inventory management is key (need to maintain margins)
• Starting a restaurant was all about networking
• Would be helpful to have many resources of opening new restaurant in same place
• Model provides low risk way to break into the space – historically many would choose a truck for
lower risk
• Concept Teams need to have enough time in the accelerator to be able to see a trend
– Determine whether customers like the food with enough time to tweak the menu
• Potential customers revenue streams:
– Food trucks who already have a brand may be more willing to pay upfront than give up equity
– New entrepreneurs without a brand are more cash strapped and will want to give up equity
• Location with good foot traffic and mix of demographics is important
• Food trucks are becoming less attractive because of parking / permit issues
• Consumers would be willing to provide feedback with loyalty programs or incentives
Next Steps
• Speak to market vendors and culinary students to determine if problem exists
• Gain further insight into concept team revenue stream (revenue share vs. equity vs. fee)

Key Insights
• Get out and talk to various markets (i.e., in addition to Smorgasburg, Madison Square Eats, Union Square
Eats, better bets may be flea markets in BK, QNY, etc.)
– ~50% of flea mkt operators are not profitable b/c they don’t know how to manage/operate (need
consistency, sourcing volume and scaling advice, velocity/expediting skills)
– All operators need more/better prep kitchen space
• Get out and talk to hospitality schools
• Confirmation: while culinary students will seek work at fine dining shops, there is interest for FC
• Rent: Tenants/prospects not willing to push much beyond market average (~10% of sales)
• Mkt/flea/truck operators do it for one reason: asset-lite! (*Note on food trucks – output issues,
low/limited resources, and sig. work to operate; thus most QSRs using for catering/events only)
• Issues with central commissary setup and scaling
• Hardest thing in NYC – space/rent
• Rev/equity model:
– Small fee off gross sales (top line); balance of making money and growing
– Offer/recommend different platforms (suppliers, purveyors, dry goods, etc.) => receive fee
– The more owners, the less willing to part with equity (dilution!)
Next Steps
• Speak to chefs, culinary/hospitality students to determine what needs they have
• Speak to PR firms / food bloggers for sourcing concept teams
• Speak to partners (advisers, equipment suppliers, purveyors) to gauge interest and on what terms / cost
structure
• Dig deeper into concept team revenue stream (revenue share vs. equity vs. fee)

Key Insights
• Fixed kitchen equipment: grill, fryer, 6-stove burner, calibrated oven, rice cooker, smallwares (FOH/BOH),
walk-in preferred, reach-ins, heat & holds, steam tables
– If used equipment, then must have warranty
– Short-term equipment rentals  more expensive
– Inevitably concessions on eqp’t will need to be made for most concepts
– Entrepreneurs purchase own eqp’t?
• Chefs attraction to concept: low risk (lower reward) and stable. Chefs need knowledge, training, and
relationships
• Provide playbook on QSRs and provide vendor relationships (2 camps of rels.: basic and specific)
• Time frame: 3-6 mos. Confirmed
• Partner with restaurant svcs aggregator? (The Collective)
• Rev/equity model confirmed:
– Mo. fee / upfront fee + rev. share + skin
– Catering / delivery revs?
• Address: funding needs of concept teams (Kickstarter, soft opening events, etc.)
• End customers (street patrons): destination customers, not mass market or tourists
Next Steps
• Speak to chefs, culinary/hospitality students to determine what needs they have
• Speak to partners (advisers, equipment suppliers, purveyors, capital providers) to gauge interest and on
what terms / cost structure
• Dig deeper into concept team revenue stream (revenue share vs. upfront fee vs. equity)

Market Opportunity Hypothesis (“Share of Stomach”)
Top Down Approach(1) Unit Economics(2)
Total
Available
Market:
$456B
Served
Available
Market:
$35B
Target
Market:
$2.6B
(1) The target market for the top down approach is calculated as follows: $455.9 billion in U.S. FY14 sales projections for commercial eating places (Source:
National Restaurant Association (“NRA”)), $35 billion in U.S. FY14 fast casual restaurant sales (Source: Technomic); $2.5 billion is ~7% of the Projected
FY14 New York restaurant sales ($34.2 billion; Source: NRA, grossed FY13 up by 2%, approx. total industry growth).
(2) Assumes average ticket price is $10 ($1 higher than Technomic’s fast casual average to account for NYC premium). 15% Margin based on discount to
market comparable (Chipotle 20%; Panera 17%). 6x multiple assumes multiple locations and is discounted from larger comps (Chipotle: 28x; Panera: 12x)
Avg. Daily Customers 250
Avg. Check Size $10
Total Daily Sales $2,500
Total Annual Sales $900,000
% Margin 15.0%
EBITDA 135,000
Multiple 6.0x
Store Valuation 810,000
% Equity 10.0%
QSR Inc Value per Location $81,000

Hypothesis Testing – Value Proposition and Customer Segments
Hypothesis Experiment Pass / Fail
Customer Segments
Food trucks / market vendors / recent culinary grads do not
have extensive restaurant operating experience
Speak with potential customers from these
segments to determine their experience and
understanding of what is required to open a
restaurant
Pass: Most self-admit a lack of
understanding
Fail: Most interviewees have managed
brick and mortar restaurants
People in urban areas enjoy the convenience of fast casual
during the work day and as pick up for dinner
Interview patrons about their dinning habits
Pass: Patrons indicate dinning at fast
casuals 3+ times a week
Fail: Majority do not visit fc rest.
Value Proposition
The main reason people are hesitant or unable to open brick
and mortar restaurant locations is because of the risk
involved and financial undertaking
Interview individuals who would potentially
open restaurants (food trucks, culinary
school grads, market vendors) and discuss
their hesitations
Fail: No interviewees demonstrate
interest in opening restaurants at all
Fail: Majority of interviewees express
other reasons unrelated to risk/cost
Interview existing fast casual restaurant
founders / food truck owners and discuss the
process they went through from inception to
launch
Pass: Interviewees express lack of
resources and difficulty finding
investors without proof of concept
Fail: Felt current market possesses
resources necessary
Restaurant customers are eager to participate in the
feedback and development of concept teams
Speak to customers eating at fast casual
restaurants and ask if they would be
interested in providing feedback on their
experience (w/ or w/out incentives)
Pass: Strong interest from some (~10%)
potential customers
Fail: Restaurant goers do not have an
interest in providing feedback, even
with incentives

Value Proposition – Findings
Hypothesis
Here’s what we thought…
We could provide value…to the concept teams…
• Developing, testing, and refining QSR concepts in a low risk
• Equipping a physical restaurant space
• Data
• Experienced support system and network
…to the consumer…
• New & exciting concepts
• Co-creation (feedback platform)
…to the investor…
• Proof of concept
Experiments
Here’s what we did…
Interviewed restauranteurs, market vendors, restaurant
managers, food truck operators, ‘end’ customers, lawyers, and
culinary students to understand their problems and needs
Results
So here’s what we found…
So far, each customer segment largely agrees with our value
proposition. We have had no major pivots, but we have made
iterations as evidenced by changes to our business model
canvas
Iterate (and continued experimentation)
So here’s what we are going to do next…
• Continue to speak to chefs, culinary/hospitality students to
determine what needs they have
• Speak to partners (advisers, equipment suppliers, purveyors)
to gauge terms / cost structure
• Dig deeper into concept team revenue streams (revenue
share vs. equity vs. fee)

Hypothesis Testing – Channels, “Get” Strategy and Revenue Streams
Hypothesis Experiment Pass / Fail
Channels
A large portion of fast casual restaurant patrons go to the
restaurants because of brand value and they have heard
about the food through social media, blog, etc.
Ask restaurant patrons what are some of the
reasons that they would try a new fast casual
restaurant
Fail: Brand and reputation of
restaurants (through blogs / social
media / newspapers) is not a common
reason
Established food markets (e.g. Chelsea Market, Gotham
West) recruit from outdoor food flea markets (e.g.
Smorgasburg, Broadway Eats) for new vendors
Speak to vendors at indoor food market to
determine how they were selected
Pass: A portion of vendors (>15%)
previously operated in one of the
outdoor markets
Fail: Virtually no vendors operated in
one of the outdoor markets
Vendors at established food markets approach these
markets themselves to gain after having heard of the
opportunity through written media and food blogs
Interview vendors at indoor food market
about how they first heard about the
opportunity
Pass: A portion of vendors (>15%)
reached out to the markets
Fail: The majority of vendors were
recruited by the markets and did not
make the point of contact
“Get” Strategy
Vendors at established food markets gain entry via
recruitment outreach by the markets and
applications/expressions of interest from the vendors
Interview vendors at indoor food markets
about their path to opening their shop
Pass: There is a mix of responses
between vendor outreach and market
recruitment
Fail: Only one method dominates
Revenue Streams
Concept teams will be willing to give up equity to participate
in the accelerator
Test appetite for product at various different
equity structures with potential customers
Pass: Teams are willing to part with
equity for the offering
Fail: Some teams believe at least 5%
equity is too high
Concept teams will be willing to pay a service/rent fee or
percent of food sales along with an equity component
Interview potential customers testing
various different payment schemes
consisting of Equity, Revenue Share, and
Service Fee
Pass: Teams are amendable to some
combination of these levers
Fail: Model is too difficult for potential
customers to understand
Fail: Value to customer is below
profitability threshold

Channels, Get Strategy & Revenue Model – Findings
Hypothesis
Here’s what we thought…
PROSPECTIVE CONCEPT TEAMS
• Channels/Get Strategy: Targeted recruitment outreach, PR,
special events, WOM, Social Media
• Revenue Model: Rev share + upfront fees + equity stake
STREET PATRONS (END CUSTOMER)
• Channels/Get Strategy: PR, special events, WOM, Social
Media
• Revenue Model: Arm’s length transactions
INVESTORS
• Channels/Get Strategy: Relationship driven (network-
oriented)
• Revenue Model: Growth/appreciation!
Experiments
Here’s what we did…
Interviewed restauranteurs, market vendors, food truck
operators, culinary students, chefs, ‘end’ customers and
investors to understand their needs and financial flexibility
Results
So here’s what we found…
So far, each customer segment largely agrees with our
acquisition strategies and revenue model. We have had no
major pivots, but we have made iterations as evidenced by
changes to our business model canvas. *Note: the revenue
model needs to be flushed out further
Iterate (and continued experimentation)
So here’s what we are going to do next…
• Speak to chefs, culinary/hospitality students to determine
what needs they have
• Speak to partners (advisers, equipment suppliers, purveyors,
capital providers) to gauge interest and on what terms / cost
structure
• Dig deeper into concept team revenue stream (revenue share
vs. upfront fee vs. equity)

QSR Columbia 2015

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