Restaurant owners finally see some light at the end of the COVID-19 tunnel
It is not an illusion, the good weather has become a must and the memories of the last 16 months slowly slip into oblivion. Fewer restaurants means less competition for those who survived the pandemic. Even though the lines have returned, people seem friendlier and more tolerant, with waiters obviously happy to see us. Conversely, if you watch the news, you know that restaurateurs face significant staffing issues, which exacerbate operating costs and directly affect their bottom line.
In addition, the rise in the price of gasoline and the not-so-subtle intrusion by government regulators has affected all aspects of the food and beverage industry. Before COVID, a restaurant owner could estimate, depending on the type of restaurant, an average food cost of 35% to 40% of sales, a payroll of between 25% and 30%, an occupancy cost of less than 10%, which made it difficult to find an annual net profit of 10-20% of sales. I fear the post-COVID numbers will decimate these expectations until the stimulus money wears off and people are forced to return to work. That being said, who can guess what other socialist mandates are on the horizon.
On Cape Cod this past weekend, I was delighted to see the large number of people obstructing the roads, people cycling to the beach, seemingly full restaurants and bars, and friendly smiles everywhere. Yes, you can see the smiles with 90% of tourists dropping their masks and breathing unobstructed. There are literally no houses to rent. Motels and hotels are suspended FULL signs everywhere. I have walked through a number of beaches in the Mid-Cape area… Hyannis, Yarmouth, Dennis, Harwich and I have seen more SHARK WARNING signs that I never had …DO NOT FEED SHARKS!
As food service professionals, we can see first-hand the positive and negative effects of the myriad of changes this painful pandemic has imposed on both our industry and the population as a whole. This medical disaster was the tipping point for many restaurants struggling to survive. So many people are strapped for resources. However, we have found that there is a plethora of well-heeled and savvy restaurateurs ready to take advantage of the opportunities that abound to grow their brand. Subsequently we increased our staff of brokers to twenty … and even that we find it difficult to answer all the calls we get to sell and those who want to buy a business.
Whether buyers are taking out equity loans, cashing out their CDs at low interest rates, or making profits at these daily record highs in the stock market, the demands of serious individual buyers or groups of buyers have increased dramatically. Like the stock market, every trade is made up of a seller who is sure their stock will not go higher … and a buyer who is sure the stock is bound to continue to rise. There is no shortage of qualified and experienced buyers.
Interestingly, a business listing site, Businesses For Sale, listed the Top 10 businesses that interest buyers:
TOP 10 COMPANIES BY SITE IMPRESSIONS
• Fast food – Not franchised
• Convenience stores
• Marketing companies
• Advertising companies
Six out of ten are our core business, which is why our agents are so busy.
It seems certain that the level of confidence of the general population has accelerated over the past two years, the level of confidence of retailers has increased significantly, with online sales being the engine of sales growth. Successful independent operators, associated with local and regional channels, fuel increased competition for the right locations. “Our relationship with the developers and managers of regional shopping centers and lifestyle centers gives us the opportunity to bring new concepts to our region.” The industry is posing for a solid recovery, varying slightly across market segments.
By the way, I was asked to find a qualified restaurateur to take over the catering, catering and hospitality operations of a top hotel in Boston. This hotel is one of 140 international establishments which are gradually abandoning their restaurant activities. After completing the Boston contract, the company was hired to replicate its efforts in Minneapolis, Nashville, and Orlando.
Like ants emerging from an anthill, people leave the confines of their homes for restaurants, shops and vacations around the world. With the anticipation that cruise ships will depart Boston again, the Black Falcon Terminal will join Logan Airport as vacation portals.
Dennis Serpone is the founder of National Restaurant Exchange and The Hotel Exchange, Wakefield, Mass.