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Thousands of restaurants close: Are you ready to sell the inventory?

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Over 5,000 restaurants across the United States closed their doors in the past 12 months. Most of them were independents, not chains. After you get over mourning the demise of your favorite Friday night spot, thoughts turn to how are we going to sell these properties?

The statistics from this week’s news shouldn’t surprise anyone. Early on in the recession Americans started cutting back on their dining out. Some cut out restaurant meals completely to save money. Those those who still ate out regularly moved to less expensive joints. Fine dining became a luxury for most Americans the past few years.

Restaurants cut expenses and adapted to the new economy (blue plate specials and coupons), utilized creative marketing techniques (Facebook and Groupon) or hung on for dear life.

Now it seems like in 2009-2010 that line snapped. With no more ways to cut costs and record level unemployment numbers thinning their dining crowds to a trickle, many independent restauranteurs threw in the towel.

In my area, there’s one restaurant that has changed hands three times in the past four years. Driving by today it looked dark at lunchtime, and someone commented to me that the location must be the kiss of death if it’s closed again.

(Question: are some locations truly jinxed or just so poor nothing could succeed there? This particular location is the middle of a small strip mall with frontage on a very busy road. It’s got easy access and visibility. What gives? Just three owners in a row who don’t know what they’re doing? Or something more?)

How do you sell this thing?

If you’re a real estate broker and you list a closed restaurant, what’s the best way to sell or market it? Obviously the best and easiest solution is to find another restauranteur (or chef who always wanted to own his own place — see prior paragraph for that downside). If the kitchen and equipment are in good working order, perhaps you can find someone who just wants to step into the prior owner’s shoes and turn the business around. That’s your dream deal.

If leased equipment has been returned and the place is a mess, one solution is to clean it out and perhaps even gut it. Make it a plain vanilla shell so that any business could see themselves there, not just as a restaurant. If it’s got a good location, plenty of parking, what else could use the building? What is the location best suited for?

Survey the neighborhood

What is missing in the neighborhood? Do a survey of local businesses and see where the gaps are. Ask people what they’d like to see in the spot. What kind of retail or services are out of the area, that they have to drive to find? What do locals wish was there?

I had a closed restaurant property with a large vacant lot that was next to a retirement development. The building itself probably should be torn down, so I was marketing a location really. Locals had to drive several miles to go food shopping. I was convinced a small grocer should move in and would make it there. There was no grocery store for miles!

Unfortunately, the large chains decided that the demographics would not support their stores. And the smaller local chains I approached were struggling themselves, and not in expansion mode. I couldn’t sell a single grocery store on the idea.

I surveyed the residents of the retirement community and found they wanted a dollar store, a crafts store, and a pharmacy. I tried approaching these kinds of developers and I got a dollar store interested. Unfortunately they didn’t want my lot and built a dollar store next door on a lot another broker had listed! It was a good idea, but didn’t sell my property.

Selling a closed restaurant is not easy, especially with financing these days. Even when you find a buyer, if it’s another entrepreneur who wants to open a restaurant, it’s going to be an uphill battle to get him to the closing table.

If the seller can handle the risk, perhaps the only way for the buyer to take over would be with seller financing — part of the deal or even the whole transaction. That only works if he isn’t so far into debt that that he’s underwater.

It’s certainly a challenge, but many real estate brokers in 2010 and 2011 had better learn how to handle these kinds of properties. There’s going to be more of them coming on the market in the immediate future.

Flickr image courtesy lindsayloveshermac

Erica Ramus is the Broker/Owner of Ramus Realty Group in Pottsville, PA. She also teaches real estate licensing courses at Penn State Schuylkill and is extremely active in her community, especially the Rotary Club of Pottsville and the Schuylkill Chamber of Commerce. Her background is writing, marketing and publishing, and she is the founder of Schuylkill Living Magazine, the area's regional publication. She lives near Pottsville with her husband and two teenage sons, and an occasional exchange student passing thru who needs a place to stay.

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17 Comments

17 Comments

  1. Joe Loomer

    July 30, 2010 at 7:20 am

    There is a location in my town that has also had three separate owners in recent years, and just acquired it’s fourth. All restaraunts, all failed. One – The Upper Crust – was a fantastic pizza joint that was consistently the “Choice of the Town” in the local paper. I think it’s a combination of business sense and the things you state. If the traffic count isn’t there, if people can’t even see your store or park easily, you’re toast.

    In another area – a national franchise shut down, only to be gobbled up and re-opened as a sports-pub. It is doing extremely well.

    Navy Chief, Navy Pride

    • Erica Ramus

      July 30, 2010 at 6:00 pm

      Joe–I confirmed it today. Owner #3 has shut down in that location. What a shame.

  2. BawldGuy

    July 30, 2010 at 10:03 am

    Erica, I don’t envy you a bit. Been there, done that with residential income property, in previous bad times. What outsiders think is ‘creative’ doesn’t make the ‘A’ list of the real creativity pros like you generate.

    We’ve all had those ‘D’oh! Why didn’t I think of that?’ moments when a situation such as yours is suddenly and spectacularly turned around by a new tenant/business. A recent example in my neighborhood was a vacant, failed Taco Bell. It’d been vacant for literally over two years. In my opinion it was the location, as it was in the middle of a street with decent traffic, but if you were on the wrong side, you had to hang a u-turn and come back. So what do ya think has finally replaced Taco Bell and is doing incredibly well?

    A taco shop! But a typical San Diego taco shop, which means just about everything they make is wicked good. In other words, the anti-Taco Bell. It’s been almost six months now, and it’s still ‘the’ neighborhood taco shop destination. Who knew?

    • Erica Ramus

      July 30, 2010 at 6:02 pm

      That just shows that people WILL go out of their way for wicked good food, or service, or whatever you produce. If it’s a tough destination, make it worth their while!

  3. Property Marbella

    July 31, 2010 at 12:10 am

    In finances crisis are bars and restaurants the first who close down. Over here in Spain is the situation the same, your local favourite is one day gone and a new one try with a “new” concept and 3-4 months later a new one…

  4. mike

    July 31, 2010 at 6:35 pm

    I miss Pizzaria Uno.

  5. Beth Anne Grib

    August 5, 2010 at 12:15 pm

    I don’t know of any lender who wants to get within reach of a buyer trying to buy a restaurant. This is one of the toughest commodities to sell right now because the lenders know that restaurants are going under and having a tough time of it and they are either not permitted to take that risk due to stringent regulations or just simply refuse to do so. We have contacted almost 200 retailers within the last 6 months for new market areas and they all say …”Call back in 6 months”. Everyone’s waiting for that evading “light at the end of the #CRE tunnel”

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Business Entrepreneur

Freelancers, this new social site will enhance your networking experience

(BUSINESS ENTREPRENEUR) Contra promises freelancers a new way to flex their experience by leveraging professional relationships in a bold take on networking and – at its core – hiring in general.

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Birds eye view of two women networking at a table with colorful interconnecting pattern on a concrete floor.

In the modern technical world, freelancers act as nomadic one-off hires that come aboard to complete a job and then are released back into the void. The rise of the gig economy and similar services has delivered new opportunities for those who need work and those who want to provide it, with entire platforms built around this idea of temporary employment. This is certainly viable and has given individuals more reach than ever before across networking systems.

However, these services tend to have some limitations – each job is isolated and usually cannot guarantee follow-up work with the same company. Workers may not be building themselves up meaningfully – lasting relationships with businesses aren’t guaranteed, interactions with colleagues might be brief, and long term freelancing might be viewed negatively. It can function alongside a career path, but is not necessarily a replacement for it (or at least is more difficult).

Maybe this could be blamed on the status quo and attitudes regarding employment, where extended tenure at the same company connotes loyalty and merit. There’s been some push against this in recent years given the way widespread platforms have enabled job seekers, but the hesitancy remains. Corporations want to hire quality candidates, but favor in-house employees that have proven themselves.

This is where Contra comes in, aiming to improve how freelancers function in the greater context of their industries. Based on their pitch, it does this by first placing a larger emphasis on networking, and then uses this as a way to reframe how we think about freelancing’s efficacy. Contra suggests that professional relationships hold more significance than traditional metrics. After all, referrals are king.

Put another way – people are your best bet to securing continued and new jobs, so let’s turn away from things like how long you’ve been somewhere and instead favor referrals, offering a path to focus on what you’ve done. As co-founder Gajus Kuizinas says, “…We are giving people the tools to describe their proudest career moments, publicly thank the people with whom they’ve worked with, and begin accepting inquiries for future opportunities.”

The hiring process might need a modern refresh

Maybe Contra isn’t saying it in so many words, and perhaps this is a harsh way to think about it, but maybe our current models for evaluating employment are misguided. There’s an emphasis placed on working at the same place for an extended period of time and at prominent companies. Those aren’t bad indicators by any means – there is something to be said for working at well known and established corporations.

But this can be hazy and gloss over what exactly someone did, which can hurt or diminish their contributions. If we focus on the positive, proactive question here of hiring qualified individuals, then what is the best thing to look at? The work.

Nothing is as accurate as looking directly at the results someone has produced – that is what matters. Quality outweighs where you were or how long you were there. Turn the attention away from “this is a series of one-off projects all over the place” and instead zero in on how all of those things best represent someone’s skill set.

This brings up a second problem – how can you best show this when trying to get new gigs? Sometimes a portfolio can’t speak primarily for itself, or legal contracts prevent divulging assets, or someone may not be the best at selling themselves. Even with a killer inventory of projects, there are still hurdles to overcome.

A one-two punch: Looking directly at what matters

Contra has a solution for this – flex those high profile relationships you’ve made. If you’ve got people eagerly talking about what you’ve done, they absolutely will show off your work. And they’ll do it with a level of excitement that will make a solid and lasting impression. After all, they’ve already received the fruits of your labor, and they’ll happily talk it up.

It’s a brilliant approach that puts a bigger emphasis on reinforcing your experience through the use of those around you. Contra’s solution is elegant – let’s allow our users, contributors, makers, and freelancers have access to a platform where they can build out a network of people who can vouch for them, and then actively utilize that social aspect. Keep your resume and portfolio, sure, but use it in tandem with those who will elevate you.

It’s a move toward something more alive.

Contra’s Community Lead explains, “Before joining the Community team at Contra, I was a freelancer who desperately wanted to make new connections with clients and other freelancers. Though — don’t get me wrong, I didn’t just want to network for the sake of networking. I wanted to make relationships with people who I could learn from and be inspired by. When using other freelancing sites, I realized I needed more from these platforms, not a quick one-off project with strangers (I don’t dig transactional interactions).”

It’s like a supercharged LinkedIn – instead of just listing out a bunch of static bullet points and hoping that coworkers drop by for a kind word, Contra’s hope is to take that latter part and make it the central focus. It’s a one-two punch of having a network of willing hype people alongside a portfolio and/or resume. This can include other freelancers, established employees at respected companies, or even well known veterans striking out with new startups.

The benefits don’t stop there – now a freelancer has greater access to mentors and inroads to bigger companies. Contra is providing solutions to things that plague the independent consultant route by creating support during all parts of the networking process – education, securing relationships, building upon past successes, improving a portfolio, and creating a network of reliable, helpful colleagues. It is empowering a freelancer to realize their true potential.

Voice over text

By providing a social backing component to the networking, job hunting, and freelancing process, Contra effectively resolves many of the shortcomings such a career path might adversely afford. It helps build out a way to repeat contracts, levels the playing field by projecting experience and results, and provides ways toward self improvement. It gives voice to someone by building up a support team – there’s safety and strength in numbers.

In a way, this feels like a modern and refreshing take on the freelancing process – something a bit more real and personal in the business world. We are social beings – let’s let others speak for us at times, even when it comes to our professional lives.

In a new world where there are dozens of communities, why shouldn’t there be one more devoted to the job search and hiring process? Contra’s platform may deliver just that to networking as a freelancer. It will be exciting to watch.

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Business Entrepreneur

Small businesses must go digital to survive (and thrive)

(BUSINESS ENTREPRENEUR) A study at Cisco reveals how digitizing small businesses is no longer optional, but critical to success, thanks to the pandemic.

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Black woman working on a laptop on a couch, running her small businesses' needs digitally.

As digital transformation efforts ramp up due to the COVID-19 pandemic, a new study released by Cisco has highlighted some key insights into how small businesses will need to adapt in order to survive in the “new normal.”

The study, conducted by International Data Corporation (IDC), analyzed more than 2,000 small businesses across eight different markets, including the United States, Canada, Germany, Mexico, United Kingdom, Brazil, Chile, and France. Using a four-section index to assess a small business’s digitalization efforts, the research found that 16% of companies said they were “thriving and feel their businesses are agile and resilient.” While 36% stated they were in “survival mode.” Regardless of where they were ranked in the index, the study concluded that 70% of firms were in the process of ramping up digital transformation within their company due to the coronavirus pandemic.

“The COVID-19 pandemic has exacerbated the digital divide that was already present in the small business market, and it is forcing companies to accelerate their digitalization,” said Daniel-Zoe Jimenez, AVP, head digital transformation & SMB research at IDC. “Small businesses are realizing that digitalization is no longer an option, but a matter of survival.”

The study also highlighted several challenges associated with digital transformation. The three biggest obstacles that businesses seem to face during the process were digital skills and talent, budgetary issues (lack of funds or previous commitment of funds), and cultural resistance to change. Despite these roadblocks, 45% of companies surveyed stated that they expect over 30% of their business to be digital by 2021. And 32% responded that they are planning on developing a digital strategy. This included investing in talent with the right set of digital skills moving forward.

Those decisions fall in line with Cisco and IDC’s recommendations. These include creating a three-year technology road map and building a workforce with the right skills to succeed in a digital world. Other suggestions include finding the right technology partner, and keeping up with industry trends. Leveraging financing and remanufactured equipment can aid with cash flow and budget requirements.

As small businesses continue to adapt to consumer behavior and the whirlwind of ever-changing rules that have come with the coronavirus, digital transformation will continue to play a major role in the post-COVID world. According to the report, if half of the small businesses surveyed can reach the second-highest tier of the index by 2024, those companies could end up adding an additional $2.3 trillion to the eight markets’ gross domestic product (GDP), contributing to the global economic recovery.

As we approach the six-month mark of the pandemic, just when and how the “new normal” will emerge is still uncertain. But there seems to be a light at the end of the tunnel for small businesses — even if it’s faint green and contains zeroes and ones.

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Business Entrepreneur

Product Hunt is putting their money where their hunt is

(BUSINESS ENTREPRENEUR) Product Hunt is putting money where their hunt is by announcing a new Maker Grants service to boost small and independent creators.

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Meeting of product creators making their pitch for Product Hunt.

Product Hunt – a technology centric site that aggregates new products daily – recently announced a new Maker Grant program that is designed to identify and help startups get their products started with a $5,000 grant.

Since its inception in 2013 by Ryan Hoover, Product Hunt has been a success vehicle for numerous products and companies by giving them access to a large audience of potential customers and investors. Available as an app across multiple formats, it allows groups to post their ideas and get feedback from a number of sources through comments and an integrated voting system. Everything from books, podcasts, hardware, and games can be found on Product Hunt, with dozens of new entries every day.

And now, Product Hunt’s new venture is to give 3 promising products their own substantial grant each month in an effort to give back to its community by placing money into the hands of its followers.

In a statement in its press release, Product Hunt announced that, “We know that building products can be expensive work, and passion doesn’t always pay the bills. As a way of saying thank you to the community, and to encourage makers to keep building, this year we’re offering cash gifts of $5,000 to three makers each month.”

Users will be able to nominate Makers that they feel deserve the investment by filling out a form. Product Hunt will take these suggestions and make decisions from there. In terms of how this will all be done, the official word is, “We’re reviewing makers who launched in the previous month who we believe are shining examples of innovation, grit, and engagement with the PH community. We’ll also be prioritizing those who are bootstrapping their businesses or working on their side projects without the help of venture funding.”

The big takeaway here is that Product Hunt is championing its support of its Makers through direct monetary help. By giving back into their own users, it strengthens and encourages them to put their best ideas forward and believe in their own innovation. Whereas more standard and traditional methods of grants may require several layers of arbitration, paperwork, and other hurdles, Product Hunt is providing a fast track to capital by leveraging its existing group of passionate users. Even knowing where to look can be intimidating and overwhelming.

At a time when banks may not be the best option for grants and loans, seeing a company choose to instead redirect its own money into the hands of its users is uplifting (and even more so given the turbulent market in a pandemic-choked world). Product Hunt maintains that it will do this each month, and will listen to feedback as it continues to build out the program.

Product Hunt’s userbase has reacted with incredible enthusiasm and praise, with repeated posts expressing a huge level of excitement and gratitude. While there are still some questions to be answered, Product Hunt’s flexible and community-driven approach is poised to potentially change the lives of many Makers. It will be exciting to see how this all plays out, and hopefully will encourage other companies to follow suit in creating positive outcomes through financial support.

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