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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

Before starting that startup, consider these factors

(ENTREPRENEUR) Building your own startup and being your own boss sounds tempting, but be sure you make these considerations before starting out.

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Man at a whiteboard outlining his startup plan.

A lot of people, myself included, are looking for different options for new careers. Maybe it’s time to place some faith in those back-burner dreams that no one ever really thought would come to fruition. But there are some things about creating a new startup business that we should all really keep in mind.

While you can find any number of lists to help you to get things going, here’s a short list that makes beginning a new business venture a monumental effort:

  • You need to have a unique idea with an impeccable execution. Ideas are a dime a dozen. But even the goods ones need the right business-minded person behind it to get things going for them.
  • Time, time, and more time. To get a startup to a point where it is sustainable and giving you back something that is worthwhile, takes years. Each of those years will take many decisions that you can only hope will pan out. There is no quick cash except for a lottery and you have to be extra lucky for those to get you anything. This whole idea will take years of your life away and it may end in failure no matter what you do.
  • You have to have the stamina. Most data will show you that startups fail 90% of the time. The majority of those are because people gave up on the idea. You have to push and keep pushing or you’ll never get there yourself. Losing determination is the death of any business venture.
  • Risk is a lifestyle. To get anywhere in life you have to risk something. Starting a business is all about risking your time and maybe your money to get a new life set up. If you can’t take risks for the future then you can’t move up in the business world.
  • Bad timing and/or a bad market. If you don’t have a sense for the market around you, which takes time and experience (or a lot of luck), you won’t make it. A keen business sense is absolutely necessary for you to succeed in a startup. Take some time and truly analyze yourself and your idea before trying something.
  • Adaptability is also a necessity. The business world can be changed at the drop of a hat, with absolutely no warning. Rolling with the punches is something you have to do or every little change is going to emotionally take a toll on you.
  • Lastly, not all of this depends upon your actions. If you start something that relies on investors, you’re likely going to get told “no” so many times that you’ll feel like it’s on repeat. Not everything is dependent upon your beliefs and whims. You need to be able to adjust to this and get people to see things from your point of view as well. But ultimately, it’s not all about you, it’s also about them.

These are just a few ways that starting a startup could stress you out. So, while the future could be bright, stay cautious and think twice before making any life changing decisions.

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Business Entrepreneur

LA-based, Armenian-born Style Coach discusses female entrepreneurship

(ENTREPRENEURSHIP) Style Coach discusses starting her own business, becoming an international female entrepreneur, and lessons learned from Armenian culture.

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Two women shopping, with one being a style coach.

About the author: Anaïs DerSimonian is a writer, filmmaker, and educator interested in media, culture, and the arts. She is Clark University Alumni with a degree in Culture Studies and Screen Studies. She has produced various documentary and narrative projects, including a profile on an NGO in Yerevan, Armenia that provides micro-loans to cottage industries and entrepreneurs based in rural regions to help create jobs, and self-sufficiency, and stimulate the post-Soviet economy. She is currently based in Boston. 

Varduhi Movsisyan–an LA-based, Armenian-born, London-educated certified Style Coach–is on a mission; to help folks everywhere gain the confidence they need to achieve their greatest goals. And to look good while doing it.

So, what exactly is a Style Coach?

“A Style Coach is a lifestyle professional that combines personal styling with life coaching.” Says Vard–known professionally as VARD/MOV.

“A Style Coach helps people to select and style clothes and accessories that work for their body, coloration and personality AND helps individuals gain the confidence and skill set to dream big and achieve their goals.

Her multifaceted approach encompasses everything from color analysis, body shape styling, and closet audits to deep, intimate conversations that uncover a client’s true self-image and motivations. Sometimes, Vard says, her work is more counseling than it is styling.

But the two are more connected than you might think.

Vard, who decided to move to London and change careers a few years ago, started her professional journey as a teacher in the capital city of her homeland of Armenia. Soon, she opened her own teaching center–and got her first taste of the entrepreneurship thrill.

“All the time I spent listening to and empathizing with my students, focusing on building productive habits and a sustainable wellbeing, has actually worked to my benefit as a Style Coach. It gives me a leg up on my stylist counterparts, who can tend to think they know what’s best for a client before truly getting to know them.”

While the school teacher to personal stylist entrepreneur pipeline isn’t particularly common, Vard says switching careers to fashion without losing the aspects of teaching that made her feel fulfilled has given her the motivation as an entrepreneur to hit the ground running.

“I’m not exaggerating when I say that you could spend 24 hours a day building your own business and you still wouldn’t have enough time in the day. That’s why it’s so important to find a career path that you are not only good at or you care about, but one that provides deep fulfillment–you need that deep connection to your craft because it will undoubtedly also become your personal life. “

While Vard operates virtually out of Los Angeles, she also doesn’t mind meeting clients in-person in Los Angeles, London, and Armenia–to name a few. In addition to her cosmopolitan travel habits, she also incorporates this mindset into the philosophy of her work.

Instead of shedding her home culture to blend in with the rest of the LA fashion circuit, Vard leverages aspects of her heritage that she sees as “transferable strengths” to inform her work as a Style Coach.

When asked about what Vard sees as “transferable strengths”, she has a lot to say:

“From the Genocide, to Soviet rule to modern wars, Armenians have been through a lot–and as a people, they are beautifully resilient. Throughout my travels, I still maintain that Armenians are some of the most generous, hospitable, welcoming people you will ever meet–and more importantly, they know how to enjoy life’s happy moments to the fullest. An Armenian will bring a bouquet of flowers and a box of chocolate to every outing, even if it’s just to their friend’s house down the road.”

As an Armenian myself, it made me happy to hear that the traditions of my culture were being leveraged by Vard to help folks from a variety of backgrounds.

“As a Style Coach, I love bringing this philosophy to my work–teaching clients how to make a sweet event out of every moment you can. We can all learn a lot from the Armenian mentality, like seeing the beauty in everything and not sweating the small things. You can be tough and resilient without losing the softness and charm that make you YOU.”

A hardworking, self-made, and philosophically-unique entrepreneur, VARD/MOV truly blends style with innovation–and shows that you don’t have to have a background in business or management to follow your passion and launch an exciting new business.

The official launch of VARD/MOV–her 2.0 rebranded business–launches on June 1st.

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Business Entrepreneur

3 types of clients to fire as a freelancer (without feeling guilty)

(ENTREPRENEUR) Being a freelancer, it can feel like a luxury to fire a client, but there’s a few clear signs they’re not worth your time.

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Freelancer woman with her head down on the laptop in front of her.

Freelancers often bend over backward to accommodate clients, many times to the detriment to the freelancer. Bad clients are toxic. It’s never easy to say “you’re fired” to anyone, but as a freelancer, sometimes, you need to weigh the cash value of a client against your time, mental health, and sleepless nights. Here are some reasons you can fire a client without feeling guilty.

Clients who aren’t paying on time

Clients who don’t pay or avoid you when there’s a problem need to go. You waste a lot of mental energy chasing down payments and juggling your bills. I know it can look like a bird in the hand kind of situation, but if your client isn’t paying your bill, the bird isn’t really in your hand. My best clients have been with me for over five years. Both consistently meet the payment schedule. Not to say there haven’t been glitches, but they’ve always taken the initiative to explain and got it fixed right away.

Clients who become more demanding without offering more payment

There are always jobs that need to be done right away or need more work. A client who puts demands on your time without compensation is hurting you. When you say yes to one thing, a short deadline, you’re putting other work off. You may be able to deliver to other clients within their deadline, but if you’re tired and grumpy, will it be your best work? High maintenance clients who want to micro-manage are another type of client you may want to kick to the curb. At the very least, raise your rates to account for the extra time it takes to mentally deal with them.

Clients who don’t act professionally

You need to set good boundaries with clients who may be your friends. It’s hard to find that line, but if you don’t set up good professional rules at the onset, you’re going to find yourself doing more for a client out of “friendship.” You’ll become resentful because you’re doing favors and not getting anything in return. Clients who violate contracts aren’t any better, regardless of any outside relationship.

It isn’t easy to fire a client. It’s your paycheck on the line. If you’ve got a bad client, think about the hours you waste worrying about them. Believe me, they are not spending the same energy. Use your energy to find better clients who appreciate you and your work.

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