Is Anyone Buying a Restaurant? The Answer May Surprise You

Posted by Robin Gagnon on Jan 4, 2021 11:36:36 AM

 

The year is over and for many in the restaurant industry it was beyond horrible. Local government picking winners and losers while restaurants tried to stay afloat may have you wondering if anyone is buying a restaurant. There are three trends driving strong activity these restaurant brokers are seeing. They include: multi-unit owner expansion, franchise resale growth and relocation by out of state buyers. Here are stories from last week’s closings at We Sell Restaurants that support these trends.   

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Multi-Unit Owners of a Franchise Brand –

A pizza franchise owner in the St. Louis market learned that one of his counterparts was selling his store and made a full price offer to close within days. Why is he buying a restaurant now? The fundamentals of this store are excellent. The business has strong earnings on the books and rising sales amidst the chaos of 2020. He is getting a top performing store with six figure earnings at less than it would cost to build a new unit.

Why are the owners selling their restaurant? They are Project Managers and Engineers by trade. Their real passion and strength is managing projects and building stores. Now that the unit is open and operating, it is not as much fun as bringing a project off the ground. It was a perfect marriage of two parties by the restaurant brokers at We Sell Restaurants.

A second closing last week was for another multi-unit owner seeking expansion. This will make his 24th store. The seller had two locations and this one was more 50 miles from his home. The buyer had 23 units and sees the downtrend in the industry as a time to grow, consolidate operations and acquire more units. Both were happy to see this closing occur on December 30th.

We see this trend continuing as multi-unit owners in the fast casual world have cash on hand and are ready to invest in growth. Meanwhile, those that were not as passionate about the business are seeing COVID as a reason to exit.

Closed Franchise Location Getting New Life

A Wal-Mart manager set to retire was looking for his next big thing. He contacted us about buying a restaurant and found a closed Moe’s Franchise in Harrisonburg Virginia. Did he have the right skills to re-open this store? It was beautiful and fully equipped and had only operated a few months before the seller shut it down. He has an amazing background at a multi-million dollar location, scheduling employees, running operations and managing expenses. He is an ideal candidate for buying a restaurant. His talent will pay off when he re-opens this location and puts his expertise to work.

The seller was invested heavily in real estate that included theater locations. He owned the building and land. He was not a primary restaurant operator, so he was looking for someone to come in, take over the restaurant operations and become his tenant. It was a match for all parties who left the closing table excited for their future.

Is this an ongoing trend? You bet it is. Franchises in general are the hottest segment of the restaurant for sale market right now. The brands have delivered amidst the chaos of 2020 with support, assistance, marketing and more to position themselves for growth. Restaurant franchise sales will increase this year.

Out of State Buyers Relocating

One closing last week featured a buyer taking a chance on an independent location and relocating his family from Georgia to Florida. An experienced operator, he is bringing his restaurant concept to the Sunshine state. He sees the benefits of business in Florida versus Georgia (including no state income tax and less shut-downs) as a real win.

Meanwhile, the seller is going north where aging parents and sick family members require that he return to New York.

Is this trend to continue? It absolutely will. Now that the vaccine is available and states are still using draconian measures to keep restaurants locked down, this restaurant broker foresees dramatic movement from locked in and locked down states to others where they can make a living. On the flip side, aging parents need greater support and that will force moves as well.

Overall, count on these three trends to continue and the market for buying a restaurant to remain hot in 2021.

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