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Atlanta, Georgia – June 9, 2024 – Are restaurants looking to sell because the economy is holding people back from spending, or is it due to the ever-rising expenses these businesses are experiencing?
Cliff Bramble, a Restaurateur turned Broker for Bramble Realty in Atlanta says it could be a combination of both. He says, “the last five calls I have received have had similar conversations: “Less people are dining out, my expenses continue to rise, and the employee costs are out of control.” Cliff knows that even before the call, the commitment to sell the business has already been made. The call just seems to be the hardest and final thing to do. He also knows that behind every restaurant selling, there’s another person interested in buying. Here's why: The restaurants that are thriving nowadays have changed with the new consumer demands. Technology has advanced in restaurants along with perception of value. Now, the customers demand online ordering. (which costs a restaurant fee’s) Plus, in order to build a new restaurant from scratch in 2024, the costs are twice as high, and the time it takes to build out takes twice as long. This means it may cost up to $450 per square foot to build a restaurant compared to $250 psf five years ago. The result is a highly expensive cost to build a new restaurant, which means it may take twice as long for a return on investment. But for the buyer, it’s cutting their build out costs in half. For example, if there is a 2000 square foot restaurant being built, the initial capital expense may be up to one million dollars. Savvy restaurateurs know that consumer tastes and dining habits continue to change, so now, instead of the high-end restaurant, there seems to be a trend for everyday restaurants which will allow casual clothing, a relaxed atmosphere, and quality food. And, based on the number of chain restaurants planning closures, (although they haven’t been updated in years) new restaurants with updated menus and new atmospheres will take their place. At the recent National Restaurant Association show in Chicago, Cliff got a firsthand glimpse of future restaurants in a take-out formula. One vendor had walk up kiosks where the diner can order their food (If they hadn’t already ordered it on their phone) and then walk up to the kiosk, scan the QR code from the order, and a locker door pops open and the food that has been ordered is ready for the guest. The entire restaurant was walk up only, and one thirty-foot cooking line was the only needed area of space. Other areas that stuck out were the robotic espresso / coffee maker: The fully automatic robot makes the espresso-based drinks after the customer has ordered it from the app or the kiosk. Upon arrival, the customer scans their code, and the robot begins making the drink, and then calls out the customer’s name. In San Francisco airport, these coffee robots are already in place. Cliff says, “We have become a demanding society that wants everything now and demands to be in control. They can do this by ordering their own food too!” As for the expenses for the restaurants, they continue to rise. Healthcare is now an everyday thing for restaurants to offer, and if a certain percentage of the employees don’t choose to opt in for insurance, the restaurant could be fined. Additionally, restaurants continue to have the burden of finding high quality staff members, paying a triple net lease which means they have to pay for pretty much everything for the building, even the real estate taxes. Add to that is the additional rent per sq foot paid to the landlord, and the next thing one knows is the restaurant is not profitable any longer. If one is building a new space, the intro rent continues to increase because insurance and real estate taxes keep increasing. The landlord simply passes it onto the tenant. But for a buyer, if the seller has a great long-term lease at a great rate, it’s advantageous to buy a second-generation restaurant. Cliff says, there is an old accounting saying out there for restaurants. Ninety percent of the restaurants make less than five percent profit. The goal for a restaurateur is to be in the top ninety-five percent. For more information, please contact Cliff Bramble at 678.488.9918 or via email at [email protected] ### Comments are closed.
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