The stock market keeps reaching new highs every day, except for the blip caused by the unexpected series of hurricanes, oil prices are down, housing sales are up with an abundant number of buyers, the malls are short on parking spaces…at least when I go, and full service restaurants have substantial waits if you’re going out around supper time almost every night of the week.
The economy is buzzing as evidenced by all the new retail projects around Boston with a number of residential & office projects…hundreds of thousands of feet slated for retail. Count all the building cranes dotting the skyline. These projects typically don’t get funded unless the developer has a fist full of Letter of Intents (or signed leases)…Boston’s Seaport District, Assembly Row in Somerville, Market Street in Lynnfield...all expanding again even before the initial phases have been completed. It’ll be interesting to see how the new Wynn casino in Everett affects all these high rent operations.
For us, “restaurant specialists,” in 37 years, the National Restaurant Exchange has never been busier. The strong restaurant operators are benefitting from maintaining their loyal customer base and, in some cases, are taking the opportunity to expand into new markets. The weaker operators who have been able to survive are running out of resources and are selling out or just walking away. As an example, last week, I met with a frustrated and owner of a Chinese restaurant, in a class B shopping center, who was only doing $12,000 in sales per week but had been supporting a $13,000 per month rent. 25% of her sales was going to the landlord. There’s no way that a buyer would take the business over...even given it for free. Further, it seems that everywhere you look there’s a new restaurant chain popping up…Five Guys Burgers, Anthony’s Cold Fired Pizza, Blaze Pizza, Otto Pizza, Ninety-Nine, Applebee’s, Starbucks, ad nauseum.
That said, it’s the independents, the Mom & Pop operators, are under-appreciated. They’re the entrepreneurs who invest their life savings to build a business, they’re the people who are putting people to work, they’re the people who risk everything for that dream of “success,” with that dream comes the nice home, the new car, the family vacations, and the good schools for the children.
Buy a pizzeria for $200,000 with a $100,000 down payment (the seller acts as the bank for the balance). Your cash outlay is back in the first year or two. Then you, like 30% of pizza operators, obtain a beer & wine license…now you’re a pizza pub. You run it successfully for the next 10 years; you’ve been frugal enough to salt away $1 million (yes, a million dollars), and now you call us to sell your business. We have no problem selling your business for the same amount, $400,000 (the business cost you zero... you bought it for $400,000, you sold it for $400,000 = 0). This is an example of what’s happening all over this country. It’s happening to people who want to work to get ahead...the American dream.
The industry standard, the Nation’s Restaurant News, recently reported that 47% of restaurateurs expect their sales to be better than the previous year. When asked why, 40% attributed it to increased consumer disposable income.
However, now that I’ve convinced you to give up your job at Raytheon and chase this dream, understand that for every success story there are 10 horror stories. It can be likened to the home you bought that shot up in value for no apparent reason, and now you’re underwater.
At every level of government from the local legislators and politicians, the highly paid social and environmental activists, and the local inspectors, to the buffoons at the federal and state levels who’ve never held a real job, they make rules and laws to justify their existence ultimately making your life miserable.
It was reported that the three biggest challenges that restaurateurs face are finding and keeping quality employees, minimum wage increases, and food and commodity costs.
Against all odds, the small business owner, the restaurateur, the entrepreneur, will survive and prosper because people have to eat, people need to socialize, people need the hope of a better future for our families. Help your local businesses…go out for lunch and dinner more often…save gas by eating local. Most importantly, prepare your children for success...enroll them in private schools, move your college kids to universities where they’ll learn more than activism and how to protest, and refrain from condoning the use of marijuana in your family. And, of course, ground your children in a religion of your choice...but we all need God in our lives.
Dennis Serpone is president of The National Restaurant Exchange, New England Restaurant Brokers, Wakefield and West Yarmouth, Mass.