Advice for Buying a Restaurant and Selling a Restaurant
Wondering where and who to follow on social media when it comes to news about the industry? The restaurant brokers have a few favorites you should know about. Social media is a great place for find the latest, most up to date information about trends, financial forecasts, traffic patterns and even restaurants for sale and for lease. However, you need to be following the right individuals if you want to get the best information.
Here are the best ten twitter feeds we keep at the ready for industry information based on the restaurant brokers experience.
#1 Restaurant Brokers Resource on Twitter -- Jonathan Maze of Nations Restaurant News.
Jonathan is the Senior FInancial Editor of Nations Restaurant News. Formerly of Franchise Times, he has an amazing resume insight into the industry. His point of view is summed up by his Twitter photo which is a picture of a t-shirt reading, "I Heart (LOVE) EBITDA."
Jonathan can be found online at @jonathanmaze on Twitter. You can also find him on linked in at linkedin.com/in/jonathanmaze. His stories on the industry always contain the latest and greatest information and as restaurant brokers, we rely on his smart and on target approach to the business.
#2 Restaurant Brokers Resource on Twitter -- Jim Sullivan - Sullivision
You may have seen this industry guru on CNN, NBC, ABC, the Food Channel or heard him ... discussing people, performance and profitability in Nation's Restaurant News, but you're missing a daily ingestion of great information to your smart phone if you aren't also following him on Twitter or Linked In.
He can be found on twitter @Sullivision and on linked in on linkedin.com/in/sullivision. Check him out and add him to your feed. Tell him the restaurant brokers suggested him!
#3 Restaurant Brokers Resource on Twitter -- Franchise Times
If you want information on the franchise restaurant industry, you need to keep an eye on the newsfeed from Franchise Times. This magazine is at the top of the chain when it comes to tracking what's happening, what's hot and what's being sold in the industry. Their twitter handle is @FranTimes and it's definitely worth a follow.
#4 Restaurant Brokers Resource on Twitter -- Technomic
Technomic is a research company defined by their Twitter description as "a 360° view of the food industry. We impact growth with consumer-grounded, channel-relevant data and forward-looking strategic insights." Want to learn everything from the useless to the most amazing statistics? This twitter feed leads the way. This morning's insight? 62% percent of consumers say it’s important that they can choose the side that comes with their entrée. ow.ly/u6fF30eG31T. The Restaurant Brokers love this feed!
#5 Restaurants Brokers Resource on Twitter - National Restaurant Association
Not to be confisued with NRA, @WRRestaurants on Twitter is the feed for all things restaurant. Their data insights and latest news is a good feed to be tied into when looking for the latest insights.
#6 Restaurants Brokers Resource on Twitter -- QSR Magazine
The QSR segment of the business has been roaring for the past five years and is currently experiencing a bump or two with crowded competition, fight over market share and declining sales. If you want a pulse on what's happening in the QSR part of the restuarant industry, take the restaurant brokers advice and follow @QSRmagazine on Twitter.
#7 Restaurant Brokers Resource on Twitter - Robert Irvine
If you want to add to your feed with the sometimes funny, sometimes showy and often inspriing charitable feed of a Food Network star, Robert Irvine brings real heart to the industry. His feed is full of outreach to the troops and help for those in need. He's very generous on Twitter and often interacts and re-tweets so this star is on the Restaurant Brokers Twitter feed list for sure. Find him on Twitter as @RobertIrvine and you've got yourself a great guy to follow.
#8 Restaurant Brokers Resource on Twitter -- International Franchise Association - IFA
The restaurant world is definitely connected with the franchise world so you should add the latest tweets from this group into your list if you want to stay up to date on who's franchising their restaurant concept. The restaurant brokers have @Franchising411 (great handle right?) in their feed to stay connected each day.
#9 Restaurant Brokers Resource on Twitter -- Food Network
It just wouldn't be Twitter if we didn't throw in a glam channel like Food Network who manages to make every form of food look delicious in just a single glance of your feed. The restaurant brokers love the food industry and Food Network keeps our feed chock full of fun, flavor and photos of our favorite subject.
#10 Restaurant Brokers Resource on Twitter -- We Sell Restaurants @SellRestaurants
Of course our Twitter feed makes the top 10. We compile information from all over the industry and comment, retweet and share it all. Our Twitter feed includes our latest restaurant for sale and restaurant for lease listings along with our sold listings! You get the latest information in real time when you follow the restaurant brokers online.
Got some favorites of your own that didn't make our top 10 list? Comment below and let us know what we need to add to the Restaurant Brokers feed.
Want to see our latest restaurant for sale listings? Click the link below.
Restaurants sales for most of 2017 have been soft. We are seeing reports for both of the first two quarters trending below expectations. The results are the same for both franchise and independents operators. As a restaurant broker performing valuations on a daily basis we always ask potential sellers the same question we are being asked by the bank and the buyers. Why are your sales declining? The most common answer we receive is, “I don't know."
If you have been reading or even just glancing at the headlines in most trade publications you should know this: traffic is down and there are more options than ever before for consumers when it comes down to prepared food. Are you measuring the decline or working to curb the trend?
Owners will often tell us their plan to grow sales is a “wait and see” strategy. For these sellers, they truly believe, “it will come back on its own; this is a good location." Other reply that they truly don’t have a plan. As a restaurant broker focusing on business valuation neither of these makes me feel good. If you tell this to a banker, don't count on lending any time soon. They will likely shy away from your deal with either answer.
Now that the cat is out of the bag let's try to look at what you can do to curb this trend. Here are three ways you can take control of your business today and improve your sales results.
Review and Refresh your Marketing and Advertising Strategies. Marketing and advertising have changed tremendously over the last couple of years. If you don’t clearly understand how to interact on social media to drive bottom line results, I suggest you hire someone that does ASAP.
Putting your events and daily specials on social media every day is not having a successful social media presence. You need to measure results and look at each offer. Social media is not the magic bullet to turn your sales around. It is, however, one of the ‘must-have’ tools in your strategy.
Community Involvement. Old fashioned community involvement seems to have fallen off the radar but the actual bottom line results are still strong from this tried and true method. Churches, little league baseball, youth football, soccer and civic organizations in your area are great potential loyal patrons for your establishment. Restaurant owners need to go and meet with the leaders of these groups. Then figure out the best way to get involved and ask how you can personally invite their members or participants to your restaurant.
Get Outside Your Walls. In this day and age of technology it is very easy and comfortable to stay behind our screens and interact with others though digital means. You however, chose to be in the restaurant industry which requires human interaction every day with team members and customers. Most of you enjoy the interactions and this why you are a restaurant owner or manager, otherwise you would have become an accountant! In order to gain sales even in slower sales cycle it is imperative for you to reach OUTSIDE of your four walls on a daily basis. If you are not out there in your local market meeting new people, thanking and inviting customers, someone else is doing it for their establishment. You should be outside the store with a strategy every single week to develop new business. Is there a new gym opening? Partner on a coupon for a healthy “side” for free with purchase of an entrée. Fun K run this weekend? Buy yourself a tent and invite the runners to celebrate their success with a sweet indulgence – free dessert with purchase of a meal. There are many ways to get outside the store and develop business.
While we have restaurant sellers trending right on par with disappointing national trends, we have others experiencing double digit growth. The difference in the two? Our growth sellers are using the techniques described above. They are not counting losses, they are making changes. Above all, they recognize the game has changed and it’s time for them to get out there and yes, SELL!!!
Interested in know what your restaurant is worth in today’s market? Contact the Restaurant Brokers at this link for a free valuation
Topics: selling a restaurant
|Summer is heating up across the country. At We Sell Restaurants we have seen some red hot listings that are sizzling with our buyerswho are clicking and calling to learn more. These HOT restaurant for sale opportunities make the Restaurant Broker's Top 10 most active listings for the month.|
Number one on the list is a low price restaurant for sale opportunity in Roswell, Georgia. Fully equipped, this one has low rent and can stay the same or convert to virtually any concept. Full chef's kitchen and long term lease opportunity at rock bottom pricing. This is a great opportunity for any restaurant entrepreneur
Austin Texas has the greatest velocity of virtually any restaurant for sale listings with high levels of interest and some of the shortest days on market efore selling. This low price bar for sale opportunity priced at under $35,000 got buyers calling, clicking and inquirying. This Unique concept in Austin, Texas has seen lots of action in the short time it has been on the market. Austin is the perfect place to own a quint market and cafe combo.
The Austin market is on fire in the hot summer days as they headline the Top 10 list. They had three out of the top four slots in Restuarant Brokers Top 10 list this month. On the market for less than 30 days, this one has high cash flow for an owner operator and low rent. That make sthis sub shopw for sale in Austin Texas a winning opportunity and it's priced to move.
Continuing with the red hot Austin Texas market, this Bistro restaurant for sale with six figure earnings was also red hot for the month. The price was recently reduced and the restaurant brokers are expecting offers any day!
Florida sure is HOT in the month of June, but that is not stopping buyers from want to know more about this bar for sale in Fort Lauderdale. Currently operated as a tap room that features live music and a small menu, but can be easily converted to any concept. Priced to move, the plentiful of buyers are looking to move it off the market.
A second sub shop for slae in Austin also brought lots of buyers to the table. This location has been open in the Austin Texas market for over 23 years. An owner that operates this location every day will take home around $65,000 and it's priced to move quickly. With limited hours, this sub shop for sale location, like many other Austin locations are moving quickly.
Location, Location, Location! That is what everyone is looking at in this restaurant for sale. Located in Smyrna, Georgia near the New Braves Stadium this location comes with plenty of parking for patrons. Keep the current concept or make it yours! Buyers are clicking and calling the restaurant broker to find out more about what the can do to scoop up this location.
Franchise opportunities for sale in the Atlanta Metro market always drive traffic to our website and this location offered by Restaurant Broker Cyndi Weinbaum is no excepction. Open and opertating, this business opportunity is turnkey. Don't buy a franchise brand and start from scratch when you can buy a unit already up and going. This franchise for sale is qualified for an E2 visa and ready for a new owner.
Buyers took advatange of their slice of the pie by already putting this Austin, Texas listings into contract! On the market for less than 60 days and soon it will be heading to the closing table. The common theme this month is that Austin restaurant for sale opportunities are burining it up in the hot summer heat!
Bar are a way for some to cool down on those HOT summer days. Add some profit and a great location and buyers are pouring in to find out more about this Sport Bar in Georgia earning over $200,000. Get into this profiatble location before the fall bar season really picks up.
The summer will keep heating up and buyers are flocking in to see these Top 10 restaurant for sale opportunities. The Hottest markets are Texas and Georgia. While the temperatures are still going up, the market is too.
Ready to Buy?
Ready to Sell?
A recent transaction for buying a restaurant reminded me of the two ways that we see deals most frequently fall apart. Here's a hint -- it's just like all the TV shows where the criminals stop talking once they "lawyer up". The restaurant brokers see deals to buy a restaurant hit the same impasse when attorneys enter into the equation.
The first killer technique of attorneys is time. The time between offer and acceptance is the most critical part of the negotiation. Attorneys that draw out deals while they draft the perfect contract blow them up.
In one recent transaction, a standard purchase contract provided by We Sell Restaurants (which has been subject to lots of scrutiny in the hundreds of deals where it's been used) went into review with a buyer and seller who both had an attorney. Two months later, the only progress on the deal was that the two attorneys billed their clients over $8000 and nothing was inked.
Here's how the transaction began.
A very experienced restaurant operator started talking with the restaurant brokers about buying a franchise restaurant in Chicago. Paperwork was signed and he provided us with bank statements showing he had sufficient liquid assets to both qualify for the franchise approval and meet the equity requirement for SBA lending.
For the next six days the restaurant brokers set up meetings between the clients, forwarded financial materials and negotiated the deal terms. After the first meeting, buyer and seller were happy. Both parties were in agreement on the price, the closing date and most deal terms. This restaurant broker prepared the purchase contract and that's when things went sideways.
The seller decided his attorney needed to review the contract. This is a very common request and should have been relatively painless, except it wasn't. The seller's attorney demanded proof of funds and a resume on the buyer. We sent the materials to the attorney with a caveat that the buyer's bank account information was for his eyes only and not to be forwarded.
At this point, the wheels came off as the attorney began having an email meltdown stating he was not willing to "hide things" from his client. We courteously advised him he wasn't asked to "hide" anything but simply to treat the information securely and not forward via a free email service or otherwise expose the client's private financial data to disclosure.
The second way that lawyers kill deals is with money and the charges they hit clients for while deals spin sideways.
Returning to my earlier story, I should have realized this deal was going to remain off the rails based on the initial reaction of the attorney but I'm an optimist -- what can I say? I worked to move this forward. The attorney for the seller then began to advise his client on a number of matters directly related to the transaction (such as calling the franchise and calling the landlord). Are these typicaly attorney functions? Absolutely not. What's the cost of that effort? Roughly $250 - $400 an hour to blow up a deal. The restaurant brokers would normally do this as part of their process.
Ultimately, as expected, this deal blew up. The unfortunate part of the story is that both the buyer and seller were motivated to make this happen but their attorneys, in their efforts to protect them (or if I'm being cynical - charge them) led to total deal killing destruction. The fee for both parties topped out at over $8000 with no deal ever inked. The only money made in the transaction was by the law firms.
Are the restaurant brokers telling you not to use an attorney? Absolutely not. Hire an attorney but here are some tips to be sure they don't waste both your time and your money.
Tips for Using an Attorney
- Agree on deal terms before engaging with an attorney. They aren't negotiators. They capture deals, they don't make deals.
- Use a business attorney who commmonly closes business transactions. There are different skills used by Uncle Louie the lawyer who wrote your will and a business attorney who closes deals for a living.
- Don't "over-lawyer." For most deals under seven figures you do not need the largest (most expensive) law firm in town. This is basic business law. They should specialize in transactions however. You don't want them learning on your dime.
- Where possible, start with a purchase contract from your broker so the lawyer is not building from scratch.
- Don't expand the attorney's reach. They should not be (in most cases), working with your franchise, your landlord and other third parties. Your restaurant broker should be. The only exception to this is a landlord that is dragging his feet on an assignment.
We are not saying it's not a good idea to use an attorney. We just recommend you manage them so they don't waste both your time and your money.
Are you wondering about the process for selling a restaurant? The steps are actually very straightforward. Here's a guide from Certified Restaurant Broker Ken Eisenband on selling your restaurant - step by step. It's a blueprint from start to finish. Let us know what you think.
Step 1 - Preparing the Listing
Seller agrees that We Sell Restaurants has the exclusive right to sell the business at the agreed upon listing price and financing terms contained in the listing agreement. This includes any other terms the seller agrees to.
Seller furnishes We Sell Restaurants all the necessary financial documents and data required like tax returns, lease, payroll records, etc.
We Sell Restaurants values the business by analyzing the data and in some cases, touring the facility. A comparison to previously sold restaurants and current listings will be used to make sure we get the right listing price. That’s critical in making sure we sell your restaurant for the most money in the shortest period of time.
Step 2 - Marketing the Listing
We Sell Restaurants will write the listing copy and search engine optimize your listing to get the greatest possible response. The listing is then email blasted to the most current database of buyers. That buyer count now exceeds 65,000 and is growing daily.
Step 3- Maintaining Confidentiality and Working with Buyers
We Sell Restaurants will require buyers to sign a confidentiality agreements and pre-qualify prior to releasing the name and address of the business.
The Buyer will visit the location as a secret shopper.
We Sell Restaurants will set up a meeting with theSeller, Buyer and Broker to tour the faility and answre any questions.
Step 4- Purchase Agreement
We Sell Restaurants will prepare an Asset Purchase Agreement and collect the good faith deposit in escrow.
Your restaurant broker will provide buyers with third party lending resources.
Offers will be presented by We Sell Restaurants to sellers.
Step 4- Due Diligence
We Sell Restaurants will set up any meetings to tour the facilities and answer any questions.
Your restaurant broker will work to coordinate inspections or any other due diligence items.
Step 5 – The Closing
For the final step, the We Sell Restaurants Certified Restaurant Broker will work with the closing agent to insure all material necessary will be provided to ensure a smooth closing for both the buyer and the seller.
All the steps taken during the process of buying and selling a restaurant run smoothly with the help of a Certified Restaurant Broker. Are you ready to meet a broker in your area? Contact us today!
Topics: selling a restaurant
The International Franchise Association or IFA in conjunction with Morning Consult has released a dynamite new survey about the high level optimism in franchising. The restaurant brokers have been seeing general research about small business optimism hitting eight year highs, but this is the first survey we’ve seen that focuses on the franchise community.
The survey was conducted online between May 22 – June 5, 2017, among a sample of self-reported franchise owners and potential franchise buyers/investors. Twenty-one percent of their sample was comprised of current franchise owners. The results are powerful.
The survey asked how likely prospective buyers are to invest in a business. Three in 10 (31%) are more likely to buy or invest in a business than six months ago while 4 in 10 (36%) are as likely as before. Combined, that means 62% of prospective buyers are as likely as or even more likely to buy business than six months ago. Since roughly 30% of all the franchise units are in the restaurant segment, that's good news for those of us selling restaurants today. Only two in 10 (19%) are less likely.
Those surveyed believe the economy is improving. Fully 38% of franchise owners and potential buyers say the economy is improving while half that number (19%) believe it is not. Of the ones that own franchises today, the result is even more bullish. 52% of those who own franchises today, says the economy is improving. Does that translate into actual spending to buy a restaurant franchise? The We Sell Restaurants results for the first half of the year say yes. We are seeing overall improvements in both unit counts and size of restaurants sold.
What about millennials? The survey found younger franchise owners and potential buyers/investors show high levels of optimism. Almost half (45 percent) of 18-34 year olds report being more optimistic, while only 15 percent of this age cohort is less optimistic.
While they may be ready to buy, they also had a few things on their mind that the government could do to help. A series of policy questions were posed for feedback. The data indicates on a policy level that two items are on the minds of franchise owners – taxes and regulation.
Two survey items reinforce the need to a reduction in regulation. 78% said we could improve the economy and the business prospects of the respondent by “Reducing red tape to make it easier to start a business.” 75 percent of franchise owners and potential buyers believe reducing regulations on small businesses would improve the economy.
72 percent believe lowering taxes would improve the economy.
That’s in line with what the restaurant brokers are hearing from the industry. Eric Gagnon, President of We Sell Restaurants said, “We are seeing growth in the first half of the year and optimism by buyers, lenders and sellers. Despite some soft restaurant sales data at the unit level, the fundamentals of owning a business have never been better and our buyer inquiries reflect that, in particular for franchise brands.”
We Sell Restaurants is a restaurant brokerage franchise and the largest firm specialized in selling restaurants. All listings can be found online.
Topics: selling a restaurant
First quarter restaurants sales in Atlanta turned in a negative trend of -.7%, only slightly better than the national average for one of the few times that the restaurant brokers can remember in tracking history. That's the findings from Robert Wagner, CPA and president of NetFinancials who monitors and reports the market's sales with his quarterly report. .
Wagner measured 118 independent Atlanta restaurants and fully 59% reported negative comparable sales trends. That's before we even get to quarter two of 2017 which we anticipate to hold further bad news for the market. The closure of I-85 based on the alleged actions of Basil Eleby and two other people -- all believed by investigators to be homeless, when they torched the bridge led to businesses entirely cut off from traffic, large numbers of never before telecommuting professionals and traffic snarls that made getting to and from your home a main priority - not stopping off for food or drink. The actions brought much of Atlanta to its knees and the impact on restaurant sales in quarter two with the I-85 closure from March 30 to May 12, (most of second quarter), has yet to be calculated.
While Atlanta licked it wounds with down trending sales January through March of 2017, things were worse on the national level. TDn2K’s Black Box Intelligence, a restaurant sales and traffic- tracking company, reported national restaurant Q1 2017 revenues declined by 1.6%. This was the fifth consecutive quarter of negative sales results nationally. Restaurant traffic declined 3.6% nationally in Q1. TDn2K has a massive pulse on restaurant sales. They publish the The Restaurant Industry Snapshot based on weekly sales from over 26,000 restaurant units and 145 brands, representing $66 billion dollars in annual revenue.
What's Impacting Restaurant Sales for first quarter? There are several schools of thought but here's what these restaurant brokers think.
1) Competition. The fast casual segment in particular has been ever expanding on at least a three to four year cycle. Now it's time for some players to shake out and we're seeing that occur across the country at record levels. It's not a new trend to see concepts grow and contract. We have seen ebbs and flows for wholescale parts of the industry over time whether it was a specific type of cuisine (pizza comes to mind) or type of service (full service used to be a thing - before the recession of 2008). Over time, the strongest will emerge, survive and thrive.
2) Shopping Trends. A report by a national real estate firm indicated that 9000 Mall locations closed in the first quarter of 2017. That's not a typo --- that's four digit closures of retail stores, 9,000 of them in three months. More online shopping means less trips to the mall. If customers aren't out shopping on Saturdays and Sundays, does that mean they also aren't eating two or three meals out that day? Is it easier to order up what you want and eat a sandwich at home? We think so and ultimately this may drive more business back to restaurants as we are also seeing amazing growth among delivery services.
3) Easter Shift. Back in my retail planning days, a shift in Easter seriously moved dollars around for clothing and footware purchases. 2016 numbers for first quarter included Easter as it fell on March 27th last year, a relatively early Easter. It was a massive shift in 2017 of two weeks, pushed out to April 16. At the national level, some pickup may show in the second quarter numbers when this shift is realized though Atlanta will be feeling the effects of I-85 so expect no improvement there. Customer buying habits are consistent and holiday sales affect the numbers, particularly independent concepts like those cited in the report from Wagner on Atlanta sales. His group includes only independent operators, not franchises. .
What does the future hold for restaurant sales and what's an operator to do? It's the same conclusion we always reach. The restaurant business is a tough master and those within it face challenges each day. Never stop improving. You must be laser focused on sales and attuned to the customer's patterns. While tough, the restaurant business is a robust and amazing part of the nation's economy and Americans love to eat away from home. The smart operators will figure it out. This is one quarter, not a lifetime.
What happens in May? It's time to celebrate Memorial Day and kick off the summer! Most kids are out of school and the line at the local ice cream or yogurt store seems never ending. It seems like it's also the month for buying restaurants if this top ten report of restaurants for sale by the restaurant brokers is any indication.
We rank our top ten list of restaurants for sale based on page views, signed confidentiality agreements and calls to our expert restaurant brokers with requests for more information.
|Our number one most trafficked listing for the month is a restaurant for Sale in Fort Lauderdale Florida that's priced to move! The great opportunity offered by restaurant broker Ken Eisenband features low rent for a 1700 square foot fully equipped location.|
Are we seeing double? Nope, that really is another South Florida listing under $30,000. This location is decorated nicely and set up for fast-casual service. If you are ready to get into the restaurant location is place is a steal! Our buyers were looking at both of these and driving up activity.
Sports Bar are always a home run. Add a location in a happening Marietta, Georgia and you have a grand slam! This location was such a big hit that it is already off the market.
Six Figure Earnings! That is why the buyers are clicking to find out more about the downtown Atlanta location. Add a great new lease term and this Bar for Sale will not last much longer! Restaurant Broker Steve Weinbaum has all the details and has been fielding the calls on this bar for sale.
On the market for less than 30 days and this HOT listing has made the top 10 list of restaurants for sale. Located in Roswell, Georgia. Pricing is a factor as this one is well below market. This location has been open and operating and is ready for a new owner!
Summer is the season for easy living and it seems kicking back in a bar is on the mind of a lot of our buyers. Bars for sale drove strong action ont he month including this one in Austin Texas. This location has more views than days on the market and will fly off the shelf soon.
South Florida is a happening area for this top 10 list. Adding to the list is another sports bar that has done over $2 million dollar in sales for the year. The Broward County location is driving clicks, views and calls to the Restaurant Brokers for more information. Opportunities like this don’t come up all the time so buyers are trying to find out more by visitin gour website.
With nearly 300 restaurant and bar for sale listings on the market, hitting the top ten means these were truly special! The activity generated indicates most will be in the hands of a new owner/operator before long. Want to check out the hundreds of listings online offered by the restaurant brokers? Check them out at this link.
One of our favorite writers at Nation's Restaurant News, Jonathan Maze has published a thought provoking article on the five reasons he believes independent restaurants are winning. His position highlights some recent industry research that shows that independent restaurants, not franchises are expected to gain market share in the coming years, and will grow at a higher rate. What's driving the growth? How are the David's of the business (independents) beating the Goliath's (franchises and chains)?
In these restaurant broker's opinion, it comes down to a concept made popular in the 1980's from the best-seller, Megatrends. The author, John Naisbitt, coined the phrase high tech, high touch. In high tech, the franchises or chains win every time. They have the social media departments who can tweet up a storm, keep their photos on Instagram and fill the overall social media feeds of the average consumer dozens of times a day. On the other hand, the independent restaurant has the upper hand on high touch. They don't fill your social media feed, just your coffee cup, over and over again without being asked. They also commit to their communities, not as part of a corporate plan but as part of their personal sense of belonging to the area. Is this paying off with consumers? You bet.
Research from Pentallect Inc., foodservice consulting firm, in conjunction with research partner Critical Mix, weighed the factors in the drive toward independents and their data is shown below. Independent restaurants are shown in blue on the chart against the grey for chains and independents. When asked to rate the following aspects as excellent or good, independents win on almost every metric including: Community Oriented, Is Special, Personalized Service, Shares my Value, Food Quality, Good Service, Innovative Menu, Decor/Atmosphere, Consistent Quality, Value for Money, Menu Variety. The two are tied on delivery. Where do the chains win? It's on use of technology, social media use and convenient location. Wow, no wonder David is stomping Goliath. They won on 11 out of 15 High Touch attributes, tied on one and were beaten on just three. Franchises/chains won only on High Tech - they get the win for social media, locations and the use of technology.
In Jonathan’s article, he posits five reasons this trend will continue including:
- Millennial buying power and their choice for local over chains
- Pressure on Profits
- Television shows that highlight the independent restaurant and chef driven concepts.
- Social Media.
We agree on most of these points but believe the dial can be shifted with five ideas:
- Franchises need to act local. The International Franchise Association (IFA) has launched a website with materials to refute the position that franchises are big business. They are making resources available at a new website atourfranchise.org to share the message that these businesses are owned locally. It's unfair to paint the local owner/operator with the same broad brush as a huge corporate store. Individual units need to take on individuality at the local level to connect with the community.
- Franchisors may need to rein in their National Marketing Spend and apply more at the local level. Just as there will always be a big government (collective approach) versus a small government (local approach) battle, it seems the time is here to redirect funds, take pressure off spending and allow local units to make decisions about ad dollars.
- Ownership is for Owners. Too many of the franchise resales we broker are based on operators who went into the business thinking that franchising was all they needed to succeed and if they built it, they (customers) will come. Today’s competitive environment is a fight for market share – share of your street, share of your neighborhood, share of the catering pie and share of delivery. Owners have to get outside their doors to ask for business.
- Ownership isn’t just for Owners. Everything starts at the top. The restaurant brokers have written on the topic of training for years but it bears repeating. A fully engaged and well trained team approach means everyone takes an ownership approach. Sally at the local restaurant doesn't want to disappoint her Sunday school teacher who owns the business so she hits the tables running and serves up great service. If you buy a franchise, put the name on the door and believe that's enough to engender loyalty and the computer training is all they need to succeed, you're going to be disappointed. Get out of the back room and onto the floor to make sure the community and staff knows you're a local owner and catch your people in the act of doing their job well. Within the four doors, act like owners and introduce yourself to your customers.
- Get them Young. Jonathan's right that young people like local but before Millennials are Millennial aged, they are school age and that's a place to target. Local restaurants sponsor the peewee baseball league, contribute to school events and have walls of photos with their local engagement on the wall. Franchises need to stop seeking out corporate causes and let the owners grab these kids before they age into Millennials that won't darken your door. Breed familiarity and love of the brand early.
It seems daunting but it can be done. High touch isn’t just for independents. The human touch can be integrated into any restaurant. Years ago in our book, Appetite for Acquisition, we wrote about the reason people enter the restaurant industry saying, “From biblical times until today, nothing on earth has connected people to one another like the act of breaking bread. Your restaurant becomes the catalyst for this human contact, and you share in the experience.” These survey scores show we were right. Build your restaurant into a local and high touch community gathering point and the sales will follow.