Advice for Buying a Restaurant and Selling a Restaurant

Restaurant Sales in a Trump Economy -- What's the Impact?

Posted by Robin Gagnon on Feb 16, 2017 8:24:51 AM

The new White House is making a number of changes that affect the restaurant industry.  What will this mean to restaurant sales?  Here are key areas where the restaurant brokers see impact for the industry.   

President Trump2.jpgNew Labor Secretary was In and now he's Out

If you haven't been living under a rock, you've heard that Andy Puzder, the CEO of CKE Restaurants was nominated to the Trump cabinet as Labor Secretary.  As of yesterday, that nomination was withdrawn.  That's a shame since having someone from the industry was seen as a win for those of us in the restaurant business.   

At a recent apeparance at the Restaurant Finance & Development Conference Puzder told the crowd, “We have a government-mandated restaurant recession."  He went on to say, “The government did not intend this result. But it shows what happens when government tries to manipulate the economy. You cannot mandate the benefits of economic growth without actual growth.”

The overall concensus from the industry was that his nomination was a powerful one and most were cheering the decision to bring him onto the cabinet.  Now we'll take a "wait and see" approach to see what background the next nominee has and hope that will bring good news for restaurant sales.  There are several "hot button" restaurant issues in the pipeline for this administration including:  joint employer issues for franchisors, minimum wage laws and of course, Obamacare. 

Supreme Court Pick 

President Donald Trump recently nominated Judge Neil Gorsuch to fill the vacant seat on the U.S. Supreme Court.  If approved, Gorsuch, who has served on the U.S. Court of Appeals for the 10th Circuit since 2006, would replace Justice Antonin Scalia, who died in February 2016.  

The nomination was applauded by the National Restaurant Association, which recently asked the Supreme Court to hear a challenge to existing laws that prevent cooks and dishwashers from sharing in tip pools. 

Angelo Amador, executive director of the NRA’s Restaurant Law Center, described Gorsuch as “an experienced and knowledgeable judge who had extensive bipartisan support when he was confirmed to the 10th Circuit unanimously. We look forward to again having a full bench in the U.S. Supreme Court to decide cases of critical importance to our industry and the economy in general.”

Hospitality attorneys see the choice of Gorsuch, if confirmed by the Senate, as generally positive for employers. Since this pick is pending approval by the House and Senate, we'll sit back and see if he's able to make it through an increasingly divided Washington.

Corporate Tax Rate

All signs point to reduced corporate taxes under President Trump.  If he keeps his word on this promise, which was reiterated last week, we could be looking at serious growth in bottom lines for corporations which are mostly, small businesses like your local restaurant owner.  The stock market has moved into uncharted territories on the strength of this committment from the commander in chief.  With more money in the pockets of Americans, we are sure to see higher restaurant sales.

Immigration

Those fighting the new administration and its resolve to protect the borders are trying to bring the fight direct to the restaurant scene.  Today there is a nationwide "sick out" called for with illegals failing to come to work aimed at closing the doors of restaurants.  There are several celebrity chefs who are voluntarily shuttering today in solidarity (Rick Bayless for example).  This hot button issue seems to have reached a fevered pitch for a President most Americans elected based on a law and order approach.  The complextities of this one and its ultimate affect on restaurant sales is yet to be seen.

Obamacare

President Trump has already advised the IRS not to levy the Obama Care imposed $2500 fines against those filing 2016 returns that don't include health insurance.  The Congress will be addressing a repeal (according to some) or a revision (according to others). Either way, the industry is in critical need of a new look at legislation that brought tremendous new costs onto their books and into the households of most Americans over the course of its implementation. 

Small Business Optimism

Optimism on Main Street has soared in the President Trump's election.  The National Federation of Independent Business' survey said small-business sentiment for December hit its highest level since 2004.  That was an increase of 7.4 points in December to 105.8, up from November's 98.4. That was the largest month-over-month index change since it began in 1986.

How will the same index look today?  That's an unknown with President Trump facing an intrangient Democratic party and collusion among some long time government employees and hold-overs from the Obama administration.  Let's hope the good news from this report continues since members' perceptions were that business conditions would improve and that accounted for 48 percent of the month's increase.

What about restaurant sales?  The same survey said sales expectations also increased by 20 percentage points, as did the percentage of owners who believe now is a good time to expand, which is up 12 points.  The National Restaurant Association also reported optimism in December's Restaurant Performance Index. The industry expanded in December, albeit at a slower rate than in November. The association said that the index, a monthly measure of the state of the industry, closed out 2016 at 100.5, down slightly from 100.7 in November.  The association considers the industry to be in expansion mode when the index reaches above 100.

Operators are also “cautiously optimistic” about business conditions, with 33 percent saying they expect conditions to improve in the next six months. Only 15 percent expect conditions to worsen.

Restaurant Sales

What will restaurant sales look like under a Trump economy?  We have to see how much of his agenda is actually permitted to proceed and if he can truly get through the impasse being created in Washington.  It's clear that America sent him to Washington to make changes to the status quo.  At only three weeks in office (really just three weeks?), heads are spinning from his attempt to move forward on an aggressive agenda that includes all these points affecting restaurant sales.

All of these items will have implications for buying and selling a restaurant but if January and early February are any indication, the number of buyers in the market ready to get into the business are hitting record numbers and transaction counts for restaurants sold will hit record heights.  The restaurant brokers are setting new records with transactions for this year more than 65% ahead of last year.

Topics: buying a restaurant, selling a restaurant

Top Ten Restaurants for Sale in January 2017 by the Restaurant Brokers

Posted by Robin Gagnon on Feb 6, 2017 1:49:08 PM

The New Year is here and buyers across the nation are looking for new careers. The first part of any year has people looking to reach their New Year's resolutions. Many want to lose weight, get more organized, work on a promotion. It looks like our buyer’s resolutions have been to start new careers by working for themselves. From Georgia, Florida, to Colorado, and Texas buyers are motivated to fuel their New Year's resolution of owning a restaurant for sale.  

Price do not seem to be intimidating this year’s buyers. The listings with the most signed confidentiality agreements range in price from lease space with no key money to $599,000. Buyers are wanting to earn more this year which means they are looking to invest more in their futures.

 
Starting the list of the top ten restaurants for sale it this one that has it all. This listing was popular to buyer looking for a  downtown Atlanta location with a bar and 6 figure income. No wonder it  was on the market for less than 30 days and this location already has a contract with a backup and multipe offers. 
Listing ID:5245 Restaurant Broker Cyndi Weinbaum    
Million Dollar Bar for Sale in Atlanta - Unmatched Profits Owner Financing
Lease: 3 years left with 5 year option
Monthly Rent: $4727.81 including CAMS
Inside Sq. Ft. 3000
Outside Sq. Ft.
Price:$599,000
City:Atlanta

Cyndi Weinbaum

That Atlanta market is feeling the love with another listing on the top 10 restaurants for sale list.  This vegan concept come fully equipped with super rent and great location for under $50k. This listing won't last long.

Listing ID:5193 Restaurant Broker Steve Weinbaum    
Inman Park Atlanta Restaurant For Sale - $1000 per Month Rent!
Lease: 3 years with 2+ years remaining
Monthly Rent: $$1000 plus $1400 annual property taxes
Inside Sq. Ft. 1000
Outside Sq. Ft. n/a
Price:$49,990
City:Atlanta

Steve Weinbaum
(770) 714-4552

This Moe's franchise restaurant for sale by Restaurant Broker RObin Gagnon not only had some of the most clicks, it made the phone ring off the hook! This popular franchise is driving buyers to find out more. This franchise restaurant for sale has been on the market for less than 30 days and it is destined to have a contract shortly.  Six figure earnings and a great brand!  Who could ask for more in satisfying their dream of buying a restaurant? 

Listing ID:5251 Restaurant Broker Robin Gagnon    
Franchise for Sale - Moe's Southwest Grill Nets Over $120,000
Lease: Expires July 2017+ 3-5 year options
Monthly Rent: $4130
Inside Sq. Ft. 2400
Outside Sq. Ft.
Price:$399,995


Robin Gagnon
(404) 800-6701

Coming in from the west, this cafe for sale located in Texas is ready for a new owner. This fully equipped location is emphasizes made from scratch dishes and is turnkey ready.  Restaurant broker Dominique Maddox is fielding the inquiries on this one. 

Listing ID:5183 Restaurant Broker Dominique Maddox    
Cafe for sale in Texas has the recipe for success. Ready for new owner!
Lease: Negotiable
Monthly Rent: $2000 including CAMS
Inside Sq. Ft. 2971
Outside Sq. Ft.
Price:$125,000


Dominique Maddox
(404) 993-4448

Texas makes the list of top ten restaurants for sale again with this unique drive thru location that's rolling with buyer interest. This location is offered at an incredible price of under $50k and is sure to roll off the market soon.

Listing ID:4958 Restaurant Broker Dave Duce    
Purchase this Restaurant for Sale with Drive-thru and Outdoor Patio in Austin, TX!
Lease: expires August 2020
Monthly Rent: $3675
Inside Sq. Ft. 1000
Outside Sq. Ft. 250
Price:$45,000
City:Austin

Dave Duce
(512) 773-5272

The sunny state of Florida is dishing up buyers  that are ready for a quick casual concept. This sandwich shop for sale location  in Cocunut Creek Florida comes with a busy shopping center and plenty of hungry shoppers at a low price of $50,000.

Listing ID:5238 Restaurant Broker Ken Eisenband    
Sandwich Shop for Sale in Coconut Creek Florida has Prime Location
Lease: Expires March 31, 2019
Monthly Rent: $5438
Inside Sq. Ft. 1600
Outside Sq. Ft.
Price:$50,000
City:Coconut Creek

Ken Eisenband
(561) 350-3365

Football season may be coming to an end but the party has just begun for this sports bar and grill for sale in Denver.  Buyers love the idea of a sports bar and a grill and this includes an entertainment venue.  Located in the greater Denver Metro area, this location is ready to score a buyer!

Listing ID:5244 Restaurant Broker John Kesterson    
Sports Bar and Grill - Entertainment Venue for Sale in Denver Metro Area!
Lease: New lease to be executed by buyer
Monthly Rent: $6197
Inside Sq. Ft. 3610
Outside Sq. Ft. Approx 400
Price:$114,900


John Kesterson
(720) 473-3726

This restaurant space for lease is one of the hottest locations in the Atlanta, Georgia market right now.  Second generation space is hard to find! This restaurant space for lease has the buyers with their own concepts clicking away.

Listing ID:5274 Restaurant Broker Cyndi Weinbaum    
Restaurant Space for Lease in Johns Creek, Georgia - Great Location
Lease: Negotiable
Monthly Rent: $$20.00 PSF + $4.43 CAM
Inside Sq. Ft. 1200 (Adjacent site can be added bringing total to 2400 Square Feet)
Outside Sq. Ft.
Price:$0
City:Johns Creek

Cyndi Weinbaum

This profitable restaurant for sale location is ready to swim off the market from the coast of Florida with buyers clicking to see more. This already established sushi location has a ready client base. If you have your own concept it can be converted. This one is priced to move.  The unheard of low price listing will not last.  

Listing ID:5087 Restaurant Broker Ken Eisenband    
Profitable Restaurant for Sale in Tamarac Can Easily Convert to Any Concept
Lease: Expires April 14, 2020
Monthly Rent: $2037.50
Inside Sq. Ft. 1200
Outside Sq. Ft. 0
Price:$49,000
City:Tamarac

Ken Eisenband
(561) 350-3365

Our restaurant buyers love sandwich franchises for sale by the restaurant brokers.  This location is in a great area with established hungry clients.  The minimal hours and fantastic lease have buyers looking at this hot listing.

Listing ID:5255 Restaurant Broker Robin Gagnon    
Sandwich Franchise for Sale in Dunwoody - Highest Growth Area
Lease: 5 Year Lease with 5 - Year option to renew
Monthly Rent: $7119
Inside Sq. Ft. 2621
Outside Sq. Ft.
Price:$155,000
City:Sandy Springs

Robin Gagnon
(404) 800-6701

January has proven to be one of the busiest times of year. It is a great time for buyers to fulfill their resolutions to work for themselves and sellers to move their business. All across the United States, We Sell Restaurants has seen an increase in interest and listings moving to contract fast. Now is the time to fulfill that resolution! Don't ait because it may not be there for long.

 

Ready to take a look at some of the latest offerings?  Click this link for the latest listings online.

Visit Our Listings Online!

 

Ready to Sell? We have buyers ready!

Free Restaurant Valuation

 

Topics: buying a restaurant

Who's Buying a Restaurant?  We Compare a Recent Survey to our Restaurant Buyers

Posted by Robin Gagnon on Jan 31, 2017 10:00:00 AM

Want to know who's buying a restaurant?  Guidant Financial just published a great infographic that shares all kinds of useful information about business owners.  While it is not specific to the restaurant community, it represents a lot of information that aligns with our restaurant buyers and sellers.  We compared their data to what we know about restaurant buyers to see how closely they lined up and the results are very similar.  Guidant-Infographic-Survey-That-State-of-Small-Business-in-2016-4.png

For example, 77% of the business owners in the Guidant survey are male.  That's spot on the We Sell Restaurants demographics for both our website traffic and our buyers.  

The top states for buyers on their report include:

  1. California
  2. Texas
  3. Florida
  4. Washington
  5. North Carolina

Okay -- we definitely don't align with this since we don't work in California but Texas is one of our largest states and it is number two on the list.  Florida is also a stronghold for the restaurant brokers and showed up in the power possition of number three.

It is interesting to note that two of the top five states do not have state income tax which may account for where businesses owners choose to live.

The age of most business buyers according to the Guidant infographic is right on target with our restaurant buyers.  A combined 88% of the buyers are either 40-49 or 50-59. Now we don't ask our buyers their age but we estimate pretty closely and this is on the money.

Where are business owners coming from? Fully 37% are opting out of corporate America, a phenomenon we referred to as "Corporate Refugees, Restaurant Wanna' Be's" in our book Appetite for Acquisition. We field calls every Friday afternoon as those stuck in cubicles determine there has to be a better way of life!

Only 19% of those in the survey were laid off and looking to replace income as business owners and that aligns with our restaurant buyers too.  While it's a healthy number at roughly 1 in 5, we find those laid off aren't as willing to risk their next career by moving into restaurant ownership.

When you look at the most popular industries, restaurants top the list!  Fully 15% of all business owners identify with Food/Restaurant as the industry they are part of while the next closest competitor is Health/Beauty/Fitness which is 50% less attractive coming in at 10% and tied with Business Services and Retail.

39% of the buyers surveyed are looking to buy an existing business or open and operating franchise.  That defnitely includes all the restaurant buyers coming to our website.  

The Guidant survey reveals that 35% of the small businesses purchased were under $175,000.  Only 7% are over 1 million.  As "Main Street" brokers, we see similar numbers for most transactions. 

What are the top challenges for business owners?  The Guidant survey indicates that recruiting and retention of employees are at the top of the list while capital and cash flow come in second.  In third place is time management.  

This one's interesting since most of our sellers point to quality of life and time management as reasons they want to sell. 

Overall, this infographic is a spot on guide to the motivations and demographics of not just general business owners but our restaurant buyers as well. 

Looking to buy a restaurant of your own? Check out all our listings online at this link or contact the restaurant broker today for more information. 

For more information on lending options for buying a restaurant including Roll Over 401K plans, visit our GuidantFinancial  prequalification page at this link.  Let them know the Restaurant Brokers sent you!

Visit Our Listings Online!

Topics: buying a restaurant

Professional Athletes Buying Franchise Restaurants - Trend Spotting

Posted by Robin Gagnon on Jan 26, 2017 5:07:42 PM

Can we still call it a trend when it's been going strong for some time now?  The Restaurant Brokers just read about the latest acquisitions by New Orleans Saints Quarterback Drew Brees.  It appears he's going for records both on and off the field!  A recent post in Franchise Times reveals that in addition to his interests in Jimmy John's and Walk-On Bistreaux & Bar agreement, he's now in a partnership to develop up to 69 new Dunkin' Donuts in New Orleans, Baton Rouge, Shreveport, Monroe and Alexandria, Louisiana.

Athletes.jpgSeems like this guy likes calling plays both on and off the field and his calls all include quick casual at this point!  He's partnering with an existing franchisee which is a smart move.  The franchise partner already has five existing stores which will be "co-owned" with Brees as part of the deal. HIs name is Vik Patel and he is the CEO of Tampa-based Purple Square Management Co.  He heads up Bourbon Street Donuts, LLC and has been a Dunkin' Donuts franchisee for 10 years.  He currently operates 46 restaurants in Alabama, Florida and Louisiana. Purple Square also has plans to open an additional 26 units in 2017.

The Bourbon Street Donuts group also includes former New York Giants offensive lineman and current FOX Sports broadcaster, David Diehl. How do professional athletes move from calling plays to quarterbacking franchise restaurant deals?  It's much more common than you may know.

What drives athletes to the restaurant industry? The restaurant brokers interviewed some pro athletes turned restaurant owners on our radio show and here's what we learned.

George Tinsley Sr.,, an icon in the industry who opened the first African-American owned T.G.I. Fridays® in the U.S. where it became the "No. 1 T.G.I. Fridays® in the U.S. for nine consecutive years, and continues to be a top performer,”  owns and operates more than 50 Florida franchises, with most locations in Miami and Tampa International Airports.  He told the restaurant brokers that "teamwork" and "competitive spirt" led to his success. 

We also interviewed Tye Hill and James Butler who together own three Golden Coral Restaurants.  Hill played in the NFL for five seasons for among others, the Atlanta Falcons, Tennessee Titans and Detroit Lions.  Hills says this of the restaurant industry, "Definitely go through training."  His partner James Butler played for the New York Giants when the team won Super Bowl XLII. He also played professionally for St. Louis Rams.   He told the restaurant brokers he got interested in the business because of "We know how to build a team.  We know what a successful team looks like."

The restaurant brokers were also joined on our radio show by Carlos Emmons, a former American football linebacker in the National Football League.  Emmons was drafted in the seventh round of the 1996 NFL Draft by the Pittsburgh Steelers and played for the Steelers until 1999. In 2000, he began playing with the Philadelphia Eagles and was named team Defensive MVP in his final year. He signed as free agent by the New York Giants in March 2004 and was released by them on February 12 2007, after having career ending back surgery. He is now the owner of the Wet Willies franchise in Atlanta Georgia.  When asked about the business, he says, ", “As soon as the star fades, the restaurant fades."  He goes on to say, “You can’t rely on the roar of the crowd.”

Some of the big name athletes involved in restaurant reads like a "who's who" of the superstar world.  "Magic" Johnson has an ownership interest in over 100 Starbucks as well as multiple TGI Fridays locations.  Cincinnati Bengals veteran Max Montoya traded in his Super Bowl rings (2 of them!) for franchising in 1995 and owns five Penn Station East Coast subs.  

Wingstop has been attracting investment from the entertainment world recently with a big buy from a known rapper but before Rick Ross went for this brand, Three-time Super Bowl winner Willie McGinest bought two stores.  He also owns a frozen yogurt franchise.  

Those on the gridiron aren't the only ones in the mix.  Jamal Mashburn, an NBA start and part of 1994 Dallas Mavericks now owns 71 restaurants including 34 Outback Steakhouse franchises and 37 Papa John's franchises.

The attraction for athletes to the franchise restaurant business includes a success rate higher than other industries.  Also, the ability to partner with existing franchisees such as the deal Brees just cut for the Dunkin Donuts units is also an added benefit.  Lastly, the International Franchise Association or IFA has been hosting events and working to market the benefits of franchise restaurants with this group.  After all, it's better to be in business with those who are already experienced rather than starting from scratch.  Want to listen to the full We Sell Restaurants interview with some professional athletes owning restaurants?  Download from iTunes at this link.

 

 

Topics: buying a restaurant

What to Expect at Discovery Day when Buying a Franchise Restaurant

Posted by Robin Gagnon on Jan 12, 2017 9:05:00 AM

If you're buying a franchise restaurant, you are sure to encounter a requirement to visit with the brand, meet the principles and in essence, undergo a job interview to join their brand.  

Discovery Day.jpgSomewhere in the history of franchising, "Discovery Day" became the common terminology for this first meeting or size up between a prospective franchisee and their future franchisor.  Some brands have retitled this to fit their culture more aptly with names like "Day of Discovery" or "Leap Day".  While this is booked as a day for you to learn more about the brand, you should count on the franchisor also gaining important intel on you that day to gauge whether you're a fit for their concept. 

What exactly happens at Discovery Day? What should you expect?  As restaurant brokers, we have attended many discovery days and here's what you can count on.  

We will ignore the basic advice here which says arrive on time, dress professionally and be prepared.  We’re assuming that anyone who is buying a franchise restaurant already gets the basics.  Depending on the life cycle of the brand and how many territories are available in the U.S., remember that this is a sales day.  The franchise is going to try and show you all the reasons that you should join their brand.

For starters, the agenda will almost always include a very senior executive, in most cases, the brand President, sharing his or her take on the vision for the brand, the culture, where it's been an where's it's going.  Take your cues from his style and if he's open and engaging and invites questions, serve them up.  If not, know that there will be functional areas trotted out in front of you to explain in detail the operations of the brand and some questions may be a better fit for them. 

You will always, always, as a candidate to buy a franchise restaurant, be served the food.  In large discovery day groups, this may be in the form of catering or at a nearby store.  For smaller, more intimate discovery days (held one on one or in small groups), you may go to a nearby "corporate" store or training store for lunch. 

If you are seriously considering buying a franchise restaurant, you should have already been a customer of the brand long before Discovery Day. It is easily a black mark on your candidacy if you show up and ask when they started serving wings when they added the item six months ago.  As a buyer of a franchise restaurant, the restaurant brokers recommend you visit multiple times during different day parts (breakfast, lunch and dinner) depending on the service hours before you ever make it to Discovery Day.  If you're visiting from out of country where they don't have the concept, fly into town a day early and visit the stores in the market multiple times before you show up.  

You can also count on hearing a lot about corporate culture.  This is where you figure out if the brand is a buttoned up corporate entity, a millennial workforce inspired laid back environment, an operations Phenom or some hybrid of these.  Don't overlook the importance of culture in deciding to move forward in buying a franchise restaurant.  If you’re attitude is not the least altruistic, you would not fit with a brand like Firehouse Subs whose foundation and commitment to community are at the forefront of their marketing and public face.  That type of culture disconnect will eventually breed dissatisfaction on one side or the other.  Use the Discovery Day to "discover" if this brand feels right for you. 

Most of the functional areas will also appear before you on Discovery Day.  Plan to meet and greet those from marketing, real estate, supply chain management and more.  That’s your time to ask questions specific to your purchase of the franchise restaurant for sale.  If you’re buying a franchise restaurant resale, evaluate where the brand is now and understand what is needs.  Then target your questions to those needs.  If food costs are too high, ask the supply chain management group how to save on costs. If sales are declining, ask the marketing department what type of support you can expect.  The restaurant brokers encourage you to have some form of questions during this time period.  If you sit back, it could appear to the franchise that you are disinterested or not as passionate about their brand as they are.  

The day will typically end with one on one interviews and this is the portion that is very much like a job interview.  You will be asked your motivations for joining the brand, the level of commitment you are prepared to bring to the table and other items that get to the heart of why you are joining them.

Within two days you will generally be awarded a franchise by the brand. Ultimately, that’s the goal of the Discovery Day, your acceptance of the brand and their approval of you.   Do you have other questions about Discovery Days when you are buying a franchise restaurant?  Call or email us and we'll be happy to respond. 

Topics: buying a restaurant

A Colorado Restaurant Broker's Take on the New Minimum Wage & Tipping Law

Posted by John Jordan on Jan 10, 2017 8:22:00 AM

As a restaurant broker and restaurant owner, I've examined the impact of Amendment 70 (Colorado’s minimum wage ballot initiative) on the industry.  In this restaruant broker's opintion, this is going to severely impact the way restaurants, bars, and food service related businesses run their establishments in the future.  What does the future look like under the new law?  Here's the implementation from 2016 through 2020.

 

 

                              Minimum Wage         Tip Credit            Tipped Wage       % increase     Tipped wage % increase

                                                                                                                                 From 2016                From 2016

2016                          8.31                             3.02                       5.29

 

2017                          9.30                             3.02                       6.28                       11.91%                     18.71%

 

2018                         10.20                            3.02                       7.18                       22.74%                     35.73%

 

2019                         11.10                            3.02                       8.08                       33.57%                      52.74%

 

2020                         12.00                            3.02                       8.98                        44.40%                     69.75%

 A restaurant using 800 tipped minimum wage hours per week is going to spend about $3500 extra dollars per month in 2017, $7000 per month in 2018, $10,000 per month in 2019, and $13,500 per month in 2020.  On an annualized basis, that means an extra $ $41,000 in 2017, $79,000 in 2018, $116,000 in 2019, and $154,000 in 2020 in real labor costs.  

How are restaurants going to cope with this?

From this restaurant broker's opinion and the owner's I have spoken to in the industry, it's clear.

Price Increases for Consumers Leading to a Reduction in Sales

About 95% are first going to raise prices.  What's the economic outcome of that?  Sales will be hurt while the restaurant business is still recovering from the great recession.  Chain restaurants have been seeing massive year over year sales decreases and are closing many locations across the USA.

Staffing Level Changes

Many restaurants are going to cut staffing levels and this will also hurt both the employees and customers. Employees will get fewer hours and customers will get reduced service. 

Change in Tipping

Some full-service restaurants may go to a “no tipping” policy but institute a “service charge” on customer’s checks. This is something I will consider and would welcome feedback from any restaurants that have tried this to offset the increased costs.

Restaurant Expansion

Some locations will close or choose not to expand.  This will hurt both employment and consumer choices.

Technology Replacement of Employees

We have seen some of the fast food chains and casual dining chains going to ordering kiosks and tableside ordering systems and payment systems. This trend will continue. 

As a restaurant broker with more than 30 years of experience in the restaurant industry the math is simple.  The average bottom line profit in a restaurant doing $1,000,000 in sales is around 10% to the bottom line. The Federal Reserve tells you there is no inflation, but that is because they exclude food and energy out of their CPI (Consumer Price Index) projections. So, if you do not eat, drive, or heat your house they are correct that there is no inflation.

Bottom line:  Restaurants have had to deal with increased food and beverage costs over the past 8 years and have been unable to pass the increases on to consumers as the fragile economy made it very difficult to do. Now with the tipped wage set to increase by 44.4% over the next three years it is going to cause a lot of pain to both operators and consumers.

We will see many marginal operators both large chains and smaller independents closing their doors as this is going to take away the profits that they had. It is going to hurt consumers as the restaurants will have no choice but to cut staffing levels, increase prices, and cut costs across the board. This is going to lead to sales decreases and drive many operators out of business.

There are going to be many changes in how a typical restaurant conducts business in the future and we will try and bring some answers as to what we can do to continue to help the restaurant industry in Colorado and the many exceptional operators continue to run high quality, profitable businesses.

                                               

Topics: buying a restaurant

Top Ten Restaurants for Sale by the Restaurant Brokers - Dec. 2016

Posted by Robin Gagnon on Jan 5, 2017 8:01:00 AM

The Holidays have come and gone in the month of December, but the gift of owing a new restaurant was still on buyer's minds. The warm weather in the southern region has shown that the buying market is not cooling down in any way. Here are the top listings in the Restaurant Broker's portfolio for the month of December 2016.  These are the most inquired about listings and had the most signed confidentiality agreements from restaurant buyers this month.  

 

This Florida restaurant for sale proves you should never linger if you want to buy a restauarant!  This restaurant priced at under $100,000 in Fort Lauderdale made it to the top of the list with activity, despite only being on the market for less than 20 days.  Offered for sale by Franchise Partner Ken Eisenband, this amount of activity signals a quick sale so bring those ofers! 
Listing ID:5228 Restaurant Broker Ken Eisenband    
Restaurant for Sale in Ft. Lauderdale Can Convert to Any Concept
Lease: Expires July 31, 2017 with options to be negotiated
Monthly Rent: $2980
Inside Sq. Ft. 1700
Outside Sq. Ft.
Price:$99,000
City:Fort Lauderdale

Ken Eisenband
(561) 350-3365

Hot Area, Hot Brand, Hot Price! This Atlanta Metro Franchise for Sale has buyers clicking for a new career in 2017. A franchise for sale priced by the restaurant brokers at under $90,000 in metro Atlanta won't last long.

Listing ID:5216 Restaurant Broker Robin Gagnon    
Fast Casual Franchise for Sale in Metro Atlanta Ready for New Owner
Lease: 2-5 year Options Remain
Monthly Rent: $2811.50
Inside Sq. Ft. 1200
Outside Sq. Ft.
Price:$85,000
City:Cumming

Robin Gagnon
(404) 800-6701

Located in one of the most desirable and high income areas, Alpharetta, Georgia, this restaurant includes a must see build out! Keep the currenty concept or make it your own. Turn your New Year into a New Career!

Listing ID:5198 Restaurant Broker Cyndi Weinbaum    
Well Known Mexican Restaurant for Sale in Alpharetta Georgia
Lease: 3.5 years left
Monthly Rent: $7132 w/CAMS
Inside Sq. Ft. 3900
Outside Sq. Ft.
Price:$129,000
City:Alpharetta

Cyndi Weinbaum
 

Georgia makes it mark again with this space for lease in Roswell. This 6000 square foot space give endless options on any concept. Bring you creativity to life with this blank canvas.

Listing ID:4832 Restaurant Broker Robin Gagnon    
Restaurant Space For Lease with great bar and patio in Roswell!
Lease: To be negotiated
Monthly Rent: $To be Negotiated
Inside Sq. Ft. 6000
Outside Sq. Ft.
Price:$0
City:Roswell

Robin Gagnon
(404) 800-6701

Another second generation space has buyers clicking to find out more. Located in a Norcross shopping center this 1850 square feet space can expand a current concept or create a new one!

Listing ID:5186 Restaurant Broker Cyndi Weinbaum    
2nd Generation 1850 Sq. Ft Restaurant Space for Lease in Norcross!
Lease: Negotiable
Monthly Rent: $1800
Inside Sq. Ft. 1850
Outside Sq. Ft. N/A
Price:$0
City:Norcross

Cyndi Weinbaum
 

Live the dream of living in the Sunshie state and serve yourself great hours! This breakfast location serves up short hours and an owner/operator will net over $70,000.

Listing ID:5156 Restaurant Broker Ken Eisenband    
Breakfast and Lunch Cafe for Sale in Broward County is close to the Beach
Lease: Expires December 31, 2020 plus five year option
Monthly Rent: $4918
Inside Sq. Ft. 2160
Outside Sq. Ft. 500
Price:$159,000
City:Pompano Beach

Ken Eisenband
(561) 350-3365

Second generation restaurant spaces for lease are creating lots of intrerest in the Georgia area! This location at $12 per square foot.  It's a great value for the very hot Alpharetta area. Some fusrniture, Fixtures and Equipment are already in place and ready to go for a new owner.

Listing ID:5191 Restaurant Broker Steve Weinbaum    
Fully Equipped Restaurant Space for Lease in Roswell Georgia
Lease: to be negotiated
Monthly Rent: $$4320
Inside Sq. Ft. 4319
Outside Sq. Ft.
Price:$0
City:Alpharetta

Steve Weinbaum
(770) 714-4552

This sandwhich franchise for sale under 90,000 has interest of restaurant buyers.  Located in an area with household incomes averaging $57,491, this location is ready to take on a motivated new owner!

Listing ID:5188 Restaurant Broker Robin Gagnon    
Franchise Sandwich Shop for Sale - Million Dollar Location!
Lease: Valid through May 1, 2020 with additional 2 5 year options
Monthly Rent: $12000
Inside Sq. Ft. 3805
Outside Sq. Ft.
Price:$89,995
City:Peachtree City

Robin Gagnon
(404) 800-6701

Another Franchise for Sale under $100,000 is making its way to the Top 10 restaurants for sale in December.  The trend continues with this six figure location.  This unit is looking to take on a owner that wants to grow a desired brand even more!

Listing ID:4971 Restaurant Broker Eric Gagnon    
Franchise Bakery for Sale - Atlanta Bread Company 6 Figure Earnings
Lease: Valid thru Feb 1, 2023
Monthly Rent: $9572
Inside Sq. Ft. 4800
Outside Sq. Ft.
Price:$99,000


Eric Gagnon
(404) 800-6704

Rounding out our top 10 list is another second generation space that  has curb appeal. Ample parking, beautiful patio, major reatailer near by can take your restaurant ready dreams and kick them off in 2017.

Listing ID:5187 Restaurant Broker Cyndi Weinbaum    
Restaurant for Lease in Suwanee, GA! 2nd Generation Lease Space
Lease: negotiable
Monthly Rent: $4000 1st 2 years, add cams of $3,50 psf for years 3-5
Inside Sq. Ft. 3500
Outside Sq. Ft. 400
Price:$0
City:Suwanee

Cyndi Weinbaum
 

Georgia was at the top of the listing heap with most of the activity in December 2016.  That means the market is gearing up for a delicious new year.  The two big winners in the top 10 for this month -- franchise concepts and second generation space!  All listings are getting strong activity however with page views and requests for information topping our continuing growth in traffice.  Ready to sell your restaurant?  January is typically the busiest month of the year and we are burning through inventory at unprecedented rates.    Free Restaurant Valuation Contact us to Sell Your Restaurant

 

 

Topics: buying a restaurant

What does the new SBA Amendment Mean for Restaurant Buyers?

Posted by Robin Gagnon on Dec 27, 2016 6:05:40 PM

New rule changes for SBA lending are effective as of January 1. If you're not familiar with the updates, take this opportunity to learn a little more. 

What do the new rules mean?  Study up now as everyone on all sides of the transaction will be affected.  This includes franchisors, franchisees, restaurant brokers and landlords.  WhSBA.pngat will the changes mean?  Will these rules make it tougher to borrow?  What about timing?  Are we looking at a longer or shorter lending cycle?  We may have to experience a few deals to get answers to all these questions but at the outset, it appears the new rules will streamline lending for franchise restaurants.

Here's the short version of the SBA rule changes along with some perspective from the restaurant brokers.  The three big changes look relatively simple on the surface but may cause some concern depending on whether you’re a franchisee or franchisor.  We attended one webinar where the host stated that “for most brands who have used SBA financing in the past, things will remain relatively the same.”  Let’s see if you agree. 

What are the big changes?

First and foremost, Franchisors no longer have to submit their franchise agreement for SBA review.  This process is sure to shorten the cycle since the franchise review process was relatively cumbersome.

Secondly, franchises will no longer be required to be listed on the Franchise Registry. This is a dramatic departure from business as usual since prior to this, all franchise brands had to have audited financials, submitted to a national clearinghouse and then uploaded to a site accessed by SBA lenders.  Removing this step will reduce expense and regulatory burdens on franchisors.

Lastly, under the new rule, both the franchisee and franchisor must sign a two-page addendum to the franchise agreement that covers four provisions: change of ownership; forced sale of assets; covenants; and employment.  The SBA lender can NOT make a loan or disburse any loan proceeds unless this addendum is signed.  It is an all or nothing scenario so it can’t be negotiated.

What the franchise must understand is that this addendum takes priority over the Franchise Agreement in the event of a conflict.  That means that franchisors must now subordinate their interest to the standard agreement. 

What are the issues covered by the addendum?  It’s basically four areas and this is the specific language of the addendum.

Transfers – SBA Loan New Language

If Franchisee is proposing to transfer a partial interest in Franchisee and Franchisor has an option to purchase or a right of first refusal with respect to that partial interest, Franchisor may exercise such option or right only if the proposed transferee is not a current owner or family member of a current owner of Franchisee. If the Franchisor’s consent is required for any transfer (full or partial), Franchisor will not unreasonably withhold such consent. In the event of an approved transfer of the franchise interest or any portion thereof, the transferor will not be liable for the actions of the transferee franchisee;

The Restaurant Brokers Call Outs on New Transfer Language

On this point, we feel this really helps with individuals who are transferring an interest within a family situation. It’s our position that franchisors should not be collecting a transfer fee or using a family change to force someone out.  We are big fans that for the new language that franchisors shall not unreasonably withhold consent.  This is new language and we feel this is advantage – franchisee!

Option to Buy – SBA Loan New Language

If Franchisor has the option to purchase the business personal assets upon default or termination of the Franchise Agreement and the parties are unable to agree on the value of the assets, the value will be determined by an appraiser chosen by both parties. If the Franchisee owns the real estate where the franchise location is operating, Franchisee will not be required to sell the real estate upon default or termination, but Franchisee may be required to lease the real estate for the remainder of the franchise term (excluding additional renewals) for fair market value;

The Restaurant Brokers Call Outs on this new provision - Option to Buy

This is interesting language from our viewpoint.  The point that a Franchisee will be required to be the landlord for the franchise brand (even if they are no longer under a franchise agreement) introduces a new dynamic to the process.  Imagine that you own your real estate and open a Dunkin Donuts franchise.  At some point, you decide (or they decide) to terminate the relationship.  Under this constraint, you may be required to lease the real estate so it can remain a Dunkin Donuts even if you are no longer the franchisee at “fair market value.” 

The restaurant brokers see a lot of ways this could go sideways if a franchise is terminated.  It might be a smart idea (if you own the property) to consider selling this to a non-related group over which you have control (and doing a lease back) before entering into amendment.  In our mind, this is advantage – franchisor!

Real Estate Control – SBA Loan New Language

If the Franchisee owns the real estate where the franchise location is operating, Franchisor may not record against the real estate any restrictions on the use of the property, including any restrictive covenants, branding covenants or environmental use restrictions; and

The Restaurant Brokers Call Outs on this provision - Real Estate Control

It has been a relatively common industry practice for a build to suit scenario where the franchisee owns the real estate for the franchisor to place restrictive covenants and/or branding covenants restrictions.  This language appears to remove their ability to do so by not allowing restrictive covenants or branding covenants.  We see this one as advantage – franchisee!

Employees - 

Franchisor will not directly control (hire, fire or schedule) Franchisee’s employees.

The Restaurant Brokers Call Outs on this provision - Employees

This is a win for franchisors who rightly, should not have their franchisees considered as employees.  There has been an unheard of amount of language written on this topic in 2015 as the Obama administration worked to bring into play ‘joint work” scenarios whereby franchisees were viewed as employees.  This one is advantage – and rightly so – Franchisor.  

This is our initial reading of the new rules and provisions in the amendment.  As we see these play out in actual restaurant lending situations over the coming year, the restaurant brokers will continue to weigh in with updates.   

Want to see our restaurant for sale listings already approved for SBA Lending? Check them out at this link.

Topics: buying a restaurant

We Sell Restaurants Opens Latest Office in Florida

Posted by Robin Gagnon on Dec 19, 2016 11:49:14 AM


 

We Sell Restaurants, the restaurant brokerage firm selling more restaurants than anyone else, announces the opening of their latest office in Florida.  The new office will host most corporate activities as the firm increases centralized operations from the sunshine state.

New FL Office Door.jpgThe new office, approximately midway between St. Augustine and Daytona Beach Florida is less than a mile from Interstate 95 and easily reached from this major roadway.  The location includes executive offices for the growing corporate staff as well as an enlarged training facility with the audio and visual support needed to train each new group of Certified Restaurant Brokers. 

Eric Gagnon of We Sell Restaurants said of the new operation, "The central Florida market is easily accessible from multiple airports, experiences year round great weather and allows us to offer training to our franchisees and team members nearby amazing beaches and great family resorts. When considering a new location, this one made perfect sense."

We Sell Restaurants, established since 2001, opened the Atlanta headquarters in 2010 and has franchisees in Colorado, Tennessee, Florida, Texas and North Carolina.  The new Florida office replaces many of the operational functions of the home office including management of the B.O.S.S. (Broker’s Operations and Sales System Platform), centralized marketing and lead generation for the franchisees. The We Sell Restaurants brand has expanded from a localized Georgia brand to a nationwide practice operating in 32 states in the years since the original headquarters was established on Centennial Olympic Park Drive in Atlanta Georgia. 

WSR Florida Interior.jpgThe new location in Florida is located at 2561 Moody Blvd, Suite B in Flagler Beach Florida.  Robin Gagnon, co-founder of the brand says of the move, “As we continue to expand through franchising, each strategic move for the firm includes conversations about that growth.  Our Atlanta footprint is strong and is home to many franchise brands.  Florida is another very large franchise development market offering tremendous opportunity.  It is also the state where we are looking to grow our franchise presence, particularly in the Orlando and Miami markets.”

The first Certified Restaurant Broker training class will be conducted in the new offices in January of 2017.  That class will see four graduates of the brand move into franchise territories across the nation.

About We Sell Restaurants

We Sell Restaurants is the nation’s largest restaurant brokerage brand, specializing in the sale of restaurants.  The firm began franchising in 2012.  For more information on franchising, visit us online at wsrfranchise.com.  For more information on restaurants for sale, visit our listings at this link.

Visit Our Listings Online!

 




 

Topics: buying a restaurant

Restaurant Broker Eric Gagnon Named to Mulit-Million Dollar Club Again

Posted by Robin Gagnon on Dec 7, 2016 12:09:18 PM

Eric Gagnon of We Sell Restaurants has been named to the Georgia Association of Business Brokers Million Dollar Club as a multi-million dollar producer again for 2016.  

Eric GABB.jpgGagnon is the Past President of the Georgia Association of Business Brokers (GABB) and Lifetime Member of the Million Dollar Club.  He is also the recipient of the prestigious Phoenix Award which is presented only to those GABB members who have been named to the Million Dollar Club for more than ten years.  Gagnon served on the board for the group from 2002 to 2012 and was President for the 2011 term. 

Eric is the founder and President of We Sell Restaurants, the restaurant brokerage franchise selling more restaurants than anyone else nationwide.  His company, found online at wesellrestaurants.com was formed in 2001 and began franchising nationwide in 2012. 

The Georgia Association of Business Brokers or GABB is the only statewide organization dedicated to those serving the industry in buying and selling businesses.  According to the GABB website, “GABB members have signed a comprehensive Code of Ethics and actively participate in co-brokerage transactions for superior service to business buyers and sellers. GABB is the only professional association and MLS in Georgia dedicated to the business brokerage and M & A markets. Through monthly educational/informational meetings, the annual Conference, and periodic courses, all members strive to achieve and maintain the highest levels of professional qualification.”

Gagnon received the award at the annual awards banquet and holiday party held in Atlanta Tuesday evening.  Fifteen members of the Georgia Association of Business Brokers (GABB) were named to the 2016 Million Dollar Clubs for helping to broker the sale of small-, medium-sized and large businesses in 2016. Gagnon said of the honor, “It is very exciting to see many members of the GABB join me in receiving not only a million dollar but a multi-million dollar award for 2016.  It speaks to the overall health of the business brokerage industry and the strength of the brokerage community in Georgia.”

Greg DeFoor, GABB’s President in 2015 and 2016 is quoted online saying, “We are the go-to organization for business sales and acquisitions as a result of our dedication to the profession and our members being among the best in the state at what we do,”

In addition to his participation in GABB, Eric Gagnon is a speaker and member of the International Business Brokers Association (IBBA), The Business Brokers of Florida (BBF), the International Franchise Association (IFA) and the Southeast Franchise Forum (SEFF) where he serves on the membership committee.  Eric is licensed as a broker in Georgia, South Carolina and Florida.  He graduated from Frances Marion University and the University of Montreal. He has been designated a Business Industry Expert by Business Brokerage Press.

Eric is the co-author of Appetite for Acquisition, penned in 2012 and immediately named “Best of” by Small Business Book Awards. 

Topics: buying a restaurant