I own a restaurant that is on the MLS for sale. Once it is sold I am going to get into real estate investing. The restaurant is still in operation and must continue to operate until it is sold. My whole staff is fully aware that I am selling my business. A few of my regular customers know as well. The question of the day is I am wondering if it is a good idea or not to put an available sign in the corner of the property. Will this hurt my business? Or will it help as a form of marketing in real estate? My broker is strongly suggesting I should put a sign up. But I would like to hear opinions or facts from other fellow members. Please share your thoughts.
Hard to say but friends of mine ended up closing a successful restaurant (they had no interest in selling it). When they did so, they posted a thank you message on their social media and basically announced that they would close by a certain date. Foot traffic increased since many customers wanted to visit before it closed. Not sure if it would be the same for you and your restaurant.
In terms of marketing for real estate, it probably helps.
Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.
Yeah it is hard to say Chris K. This has been an ongoing debate between me and my family for quite some time. It would be ideal to find someone that actually put up a sign and find out what results they had.
As a broker I’ve sold a few ongoing restaurants. Just my opinion but a sign gives your current customers a feeling that maybe the restaurant isn’t as good as they thought if it’s going out of business. It doesn’t need a sign however it does need a real estate broker who will get on the phone and call on local successful owners who may want to expand, food reps and local bankers who have restaurant owner clients etc. Just taking a few pics, putting it on MLS and a sign is the lazy and ineffective way to market this property.
You have a good point Brant. I really need to sit down and meet with him and find out what he is doing up to this point. Perhaps light a fire and motivate him a little!
There was an Italian restaurant by me that went out of business about 2 years ago, and they had a "going out of business" sign on the door for about a year prior to that.
While initially I think they had increased business because their customers wanted to make sure they got to go there an additional time or two, as time went on I think their traffic went down significantly. I know I was less willing to go out of my way to go there in case they had closed (they never advertised when their last day would be, and their website was kept updated), so I would only go if I happened to be driving down that street already.
Before you close you should let your customers know, but I wouldn't advertise it more than a month or two in advance.
I was in the restaurant business for over a decade before commercial real estate. There is no way I would put a sign for sale in the window. Consumers want reliability and are creatures of habit. Why would a buyer purchase from you if you are basically putting a (going out of business new owner taking over sign) for all to see?
If someone is just buying your equipment that is different but expect to get 10 cents on the dollar.
Thank you for your reply. How did you get out of the restaurant business? If you sold it, what steps did you or your broker take in marketing the sale? Any information would be a tremendous help!
Does your broker have it on www.bizbuysell.com ?
That is Loopnet's sister site where people go to buy businesses. If your guy does business brokering they should have lot's of contacts already.
Did you qualify this business broker? How many years have they been in business? How many businesses have they sold over the years?
First is to determine if you have the right person for the task at hand of selling your business. About 80% of businesses out there are owner/operator making profit of 100k a year or less after expenses. Those businesses are hard to scale and really need an owner/operator who is happy making a decent living working a job.
Sellers generally want a 3 times multiple of profit so if 100k profit they are selling the business and asking for 300k. Buyers try to purchase for 1 to 2 times multiple or 100k to 200k. If you own the building or land etc. along with the business then that is a different valuation method.
The purchaser could get an SBA loan possibly or they might ask you to owner finance the business with some down. Going after retirees looking to do something in retirement can make sense as well. Your business broker needs to be hitting the phones calling other business brokers to see if they have a potential buyer. It should be a single unit operator wanting to buy your business or a multi unit operator for various brands that is local and has structure to absorb your business in their portfolio.
If your business has been there for a long time and you have multi-generational consumers that is a positive. Example over 20 years grandpa eats there, his son, and grandson for a lineage of consumer repeat business.
I actually put my restaurant on www.bizbuysell.com. But no leads from there. My broker has been doing commercial real estate for 30 years. I got his name from a referral. I am a single unit operation. We have been in business for 31 years. It's been through two generations. My father founded it, then handed it over to me. We make about 500k after expenses. I also own the land and the building. I just feel like I'm chasing more leads than my broker is. They might be tire kickers, but at least I'm getting people. I just need to figure out how to light a fire under his *** without burning any bridges.