Is it common practice for restaurants to sell for cash only?

Question

Why is it a lot of listed restaurants in the Portland area say cash only purchases?

Jay Hinrichs · Answer

agreed when my banker and I were floating the Bitterroot a few weeks ago we got on that subject .. from a bankers perspective he said show me any restaurant in Portland that has been in the same location under same ownership for 10 years..  when you do that you find out that maybe 10% of restaurants qualify the rest come and go.. and usually mini fortunes are lost as well.  My aviation partner opened one and dropped about 500k before he had a enough and it was one block off of PIoneer square..  Prime location..

Jay Hinrichs · Answer

that I would agree with for sure..  restaurant is a tough tough business.. the only one I would consider is something like Biscuts.

eggs and potato's and bacon for 12 bucks light lunch close at 2pm.. the margins are in breakfast.. not 50 dollar steaks that cost you 20 bucks to buy..

Leo McDonald · Answer

@Joel Owens it's not my preferred method but may be the only option we have before we can go that route.

Joel Owens · Answer

Own restaurant you are WORKING for yield. I would rather be the landlord and have the tenants pay me rent on commercial retail and make higher returns without all the headache of lots of employees for each business that cycle in and out.

Leo McDonald · Answer

@Nik S. That was the initial idea is to save oney from the investment and invest into multifamily homes. If we like the income of the restaurant we will select and vet a person out to manage it for us so that we can continue forward but check in on it from time to time.

Nik S. · Answer

@Leo McDonald

I prefer semi-passive investing to fully passive investing. Restaurant biz is generally FULL ON, HANDS ON! It's a grind, long hours and employee turn over etc...Take that capital and invest into something that doesn't require ALL your time and energy so you can continue to focus on additional opportunities.

Just my .02 cents.

Ben Patel · Answer

stay away from the restaurant business, intensive labor-inducing high turn over. This is not an absentee business model.

Leo McDonald · Answer

@Greg Dickerson so what is considered high end business?

Joel Owens · Answer

Make sure you have extensive restaurant experience before buying one to run. There is a lot to it. People often have no clue how intensive it can be. Owning one absentee owner with existing and established proven managers is a different model all together.

Lien Vuong · Answer

A lot of those businesses cannot be financed because they don't show a lot on the 'books' so it is hard without a solid PNL for any sort of commercial lender to give them an SBA loan. In addition to finances, you have to have experience in the field which not a lot of people have in mom and dad pop stores in order to qualify for lending per financing guidelines.

Is it common practice for restaurants to sell for cash only?

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