Buying a Restaurant Amidst the Hype of the Coronavirus Scare

Posted by Robin Gagnon on Mar 12, 2020 8:20:44 AM



A steady drumbeat from the media about the dangers, risk, and overall hype of the Coronavirus is bound to give anyone pause when considering a financial decision.  Should it keep you from buying a restaurant?  We don’t think so.  Here’s why.

The media hype of any bad news serves only one master.  Just as rates go up for advertising on the Weather Channel during a hurricane, the more clicks, views and eyes they have on their channel during a crisis, any crisis, benefits only one group in the extreme, financially – the media.

Their very business model is dependent on hyping something – ANYTHING, to get people sitting home and staring at the TV screen or clicking on the online news to see the latest and greatest, or in this case, worst news they can possible put together. The more views they get, the more money they make. It’s a self-serving model.  It may not serve you well.

That’s the first reason it shouldn’t keep you from buying a restaurant.  You can’t believe everything you see.

Buying a restaurant

In his inaugural speech, Franklin Delano Roosevelt told a nation facing the Great Depression that, “The only thing we have to fear is fear itself.”  The science is complete and settled.  For most healthy Americans, the Coronavirus COVID19 – is the 19th iteration of a virus we’ve seen for years.  For many, the impact on their bodies will be minimal.  The impact on their spirit is even now, much larger. 

Yes, it spreads easily.  Put it in perspective.  The Centers for Disease Control estimates that 56,000 people die from the flu each year.  That's out of 31 million Americans who caught it this year.  As of today, March 11, the U.S. has 1278 cases of the virus and 38 people have died, most from a nursing home where they were older and had complicating health issues.

Like the flu, with warmer weather, this too shall pass.   Allowing the irrational fear of the unknown to keep you from buying a restaurant is a forever decision based on a small data point in time. That’s the second reason the hype of a virus shouldn’t keep you from buying a restaurant.

The United States response to the virus has been swift, strong and unprecedented.  Stopping travelers from infected nations from hitting our shores early was effective.  The newest travel ban to keep it from spreading from European nations who did not take early precautions, will also, stem the influx of the virus to our borders.  The government response to the virus with more funding for the Small Business Administration, a proposal to stop payroll taxes and other economic responses demonstrate that in the U.S., as always, business still happens. We are the most prosperous, economically developed nation in the world and business will be advanced and protected with assistance from the government.  That’s the third reason a talking head on TV hyping something for their own benefit shouldn’t keep you from buying a restaurant.

Delivery as a business model for restaurants has grown exponentially in the past five years with the growth of UberEATS, DoorDash and other models.  Someone in contract for a pizza restaurant group asked us yesterday if they should move forward.  Are you kidding me?  If all these people responding to the hype of this virus stay home, what’s the one thing they will need outside of the toilet paper it appears they’ve been stockpiling?  The answer is food.  Where are they going to get it?  They will want it from you. 

Restaurants should be prepared to capitalize immensely on the delivery model already in place amidst the crisis.  Every event creates opportunity.  Buying a restaurant with a high delivery percentage is a no-brainer.  The more people stay home, the more food they will need delivered.  That’s the fourth reason for buying a restaurant. They won't want just pizza, they will want and demand delivery from all types of restaurants as they are bored and hungry and sitting at home.  

Opportunity is created in crisis or as some say, “never let a good crisis go to waste.”  Those in the market for buying a restaurant won’t close and settle on that restaurant placed in contract for generally 60 to 90 days.  While sellers are seeing a drop off in traffic may be the best possible time to negotiate pricing and a deal for yourself.  You ride out the crisis while in contract and close on a transaction in the best possible timing, when customers return to the market.  That’s the fifth reason for buying a restaurant amidst a health scare like this one.

Finally, what goes up must come down.  It’s the rule of gravity.  The inverse is also true.  What goes down, always comes back up.  For every postponed event, every person working from home and every delayed gathering, there is an inherent need in humans to gather, connect socially and interact.  That pent up demand will be there when this short term crisis fails.  Americans are social animals.  They won’t forget how to congregate, break bread, share jokes, love each other and gather in restaurants over a glass of wine.  That pent up demand will result in a bounce to sales as the customers return in force and the crisis passes.  That’s the final reason for buying a restaurant.

Stay safe.  Be cautious and careful.  Practice good hygiene and take care of your health.  That’s all the stuff you’ve known since kindergarten and nothing new as an approach to this virus.  Putting off buying a restaurant?  For these reasons and more, that’s just not the right decision.  

For a look at our restaurant for sale listings, visit this link.

Topics: Buying a Restaurant

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