Where we bought our groceries, was simple...Stop N’ Shop, or Market Basket. Today, add to the mix, the Wegman’s and WalMart super stores. The ever-growing plethora of food operators is staggering...locally and nationally; as fast as one opens, another closes. In the closed space of a failed business another follows with the goal to take a stab at the gold ring. It seems that every major city is seeing a forest of construction cranes erecting apartment/condo high rise buildings..most with retail on the street level. That newly created vacant space soon becomes the face of some restaurant or some general retail concept.
One of the basic tenets of success is the realization that ‘if your business is not growing, it is dying. Your competition is always nipping at your heels, trying desperately to move ahead of you.’
Fortunately, the TRUMP BUMP is reaching far beyond the record highs of the stock market. His influence in removing the storm trooper’s boot from the neck of small businesses, is fueling a new sense of self confidence. M & A activity is at a level not seen in 15 years. Money is pouring into hedge funds and 1031 exchange activity is robust... further evidence that, despite the volatility of the global markets and saber-rattling overseas, we continue to ‘think’ that there is no downside, and everything is all rosy again.
Tell that to the local liquor store owners, cab drivers, and hotels...all severely impacted by TOTAL WINES, UBER, and AIRBNB.
Thousands of families, across the country, earn a living from owning the local liquor store. Whether you’re an owner. manager, or simply work for the liquor retailer, families have survived and prospered on the drink habits of the average customer.
Having the towns, and state legislators controlling the issuance of package store licenses pretty much guaranteed that your purchase price would maintain its value when you sold it and that your operating margins could easily be controlled.
Much like owning a taxi cab medallion, you paid a lot to acquire one, you were a part of a finite supply, and subsequently you could live well. No matter what you paid for your package store license, or taxi medallion, you were assured of getting your investment back when you sold. It’s all about supply and demand. Liquor store owners have always made above-average incomes, lived an enviable lifestyle, and found that there was always a buyer for it when you decided to sell out.
But as the world turns, there are major shifts in our planetary axis.
The liquor store behemoth, TOTAL WINES, has raised its head across the country and is sucking the lifeblood out of once stable liquor markets across Massachusetts and the rest of the country.
With over 150 mega liquor stores across the country, there’ll be few areas not affected in some way by their presence. Touting over 8,000 brands on-hand, and selling some of them cheaper than the locals stores can buy them from their distributors, the hand-writing is on the wall. We recently listed a liquor store in an affluent metrowest community that had seen their annual sales drop from just over $1million to about $750,000. That drop takes a big chunk out of your net profits. To compensate, the owner had to lower his prices and run ‘special deals’ to generate lost traffic. Those moves further cut into net profits.
It’s easy to see how this overall model has carried over into ride-sharing with UBER. Since the beginning we’ve been at the mercy of the cab companies and their drivers. Being able to obtain a taxi medallion was a life-changing event. In essence the taxi union had a monopoly. Sometimes the cabs were old and smelly, sometimes the drivers were rude and smelly, but all the time we felt we were paying too much for that ‘short ride’.
The wise folk at UBER, and LYFTE, have changed the playing field with thousands of new converts to their service every day.
The same entrepreneurial thinking created AIRBNB. The seed was planted 50 years ago with the advent of timesharing. That ‘sharing’ mentality has permeated our entire society. The winners are the vacationing consumers, the homeowners, and the management companies. It appears that the hotels are fighting back to win back the hearts and souls of their customer base with loyalty programs and consistent quality. However, they’re also engaging lobbyist to slow down the spread of their new enemy (“if bed bugs weren’t enough of a problem?”).
Fortunately 2017 will go down as one of our busiest years. With 20 brokers and 37 years of relationships, we’ve been overwhelmed with both buyers and sellers.
We anticipate that 2018 will be even busier.
Dennis Serpone is president of The National Restaurant Exchange, New England Restaurant Brokers, Wakefield and West Yarmouth, Mass.