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Thursday, March 6, 2014

Are Resturants a Good Idea in This Economy? by Marc Charles

7:22 AM

Hi Gang:

I receive hundreds of emails a month from entrepreneurs asking my advice on business ideas and companies.

I try to answer every one of them. 

I received the enclosed question the other day and I thought you guys would enjoy it.

Marc Charles



Question: We have a successful restaurant in a busy metropolitan area. However, we’ve seen a drop off in year-over-year sales. We’re nervous about the economy and have considered selling the business. But this is the only business we know. Would you sell the business and start over in a new business, in a new area, in THIS economy?                                          
A.B. Fort Collins CO

Answer Marc Charles: There are too many variables for me to comfortably recommend selling or keeping your business in this economy. You’ve seen a drop off in sales. I think the drop off will continue.

If we enter a full fledged depression the businesses with massive overhead, debt loads, and declining sales will be the first to go. I’m sorry to say but restaurants are always the hardest hit.

However, I took my kids and two of their friends to dinner last night at a fun family restaurant in Rockport Maine. The restaurant was packed to the gills! People were laughing (maybe quietly crying inside) and kids were playing video games in a small arcade, and running all over the place.

It seems restaurants with a passion for great service and reasonable prices always find a way to make money in difficult times.

Six restaurants in the same geographic area have gone out of business the past 18 months.

I know you said your restaurant was successful but is it profitable? Is the overhead manageable? Do you own the property outright? If not, you may be headed for trouble.

The bad news is there are probably hundreds of restaurants (maybe a thousand) for sale in your city.  Will you be able to sell your restaurant? That is the question.

The good news is you can always start a business on the side and get it going until your restaurant is sold.

Another thing to consider is starting a restaurant in an area with fewer encumbrances and expenses….like small town America, the exurbs or even outside of the US.

 

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