Who Are The Potential Restaurant Buyers In 2021?
Robin Gagnon is the Co-Founder of We Sell Restaurants, the nations largest business broker franchise focused on the sale of restaurants. getty  As the dust settles following a tumultuous year, there is perhaps no better example of resiliency in business than the restaurant industry. But it has not been easy. Simply put, many restaurant owners are exhausted from a year of constant struggles. There were forced shutdowns and a loss of customers and revenue. Nationally, sales were down nearly 20%. There was a shift from in-house dining to take-out, curbside and delivery. Restaurant owners had to apply for Paycheck Protection Program loans and Restaurant Revitalization Fund grants on top of enacting new safety and cleaning protocols. Lastly, they struggled to fill open positions as the workforce lagged the consumer in returning to the marketplace. For some, enough is enough, and now selling is on the table. Perhaps for good reason. According to the National Restaurant Association, restaurant and food service sales were $240 billion below the pre-pandemic forecasts for 2020. Years of constant growth in the industry came to a screeching halt when the pandemic hit. Restaurants were holding on by a thread, and as many as 110,000 establishments temporarily or permanently closed out of approximately one million food service operators in the country. Not surprisingly, quick-service restaurants or fast food fared better than most, largely due to the growth in take-out and curbside since there were limited options for consumers. The quick-service restaurant model was already positioned to provide for customers changing needs and easily embraced electronic ordering, quick make-to-order menus and closed dining rooms. Interestingly, according to Datassential, food trucks were the hardest hit, with nearly 23% going out of business. Full-service restaurants also faced challenges as dining was paused and their more elaborate menus adapted less easily to delivery and curbside models. While 2020 was historically the worst financial year for the foodservice industry, on the flip side, 90% of restaurants were able to stay in business. Although 2021 will be a year of transition, the numbers are already climbing (paywall). As more of the country reopens and consumers become comfortable returning to a normal routine, short-term numbers are promising, with hope for long-term recovery. For savvy investors, it may be just the right time to buy a restaurant. Potential buyers are an interesting array of people. Heres who we are seeing:   Unemployed Job Seekers: Many who lost positions due to the Covid-19 pandemic are looking for a job to offset their loss of earnings. Many are professionals who have available funding or could qualify for a loan.  Remote Workers Buying a Side Gig: There are many remote workers who have always wanted to try business ownership and are buying businesses while remaining employed.  Families Relocating: Individuals who considered business ownership before the pandemic may have been stopped by a spouses role in a traditional job. Now they have worked from home for a year, taught many of their children through Zoom and are reassessing whats best for their families overall. Some believe that now's the time to act and may be more willing to relocate, especially if that spouse will be able to continue working remotely. These thoughts are motivating them to pull the trigger and invest in a restaurant business. The stock market has remained very strong, so they have the money to invest in their business ownership.  Growth Operators: Franchise owners looking to grow additional locations are reaching out to buy more stores as they see the timing as opportune.  Consolidators: Large groups are looking at consolidation opportunities to add multiple units at one time.  Opportunistic Capitalists: These are people who see opportunity in the restaurant business since there has been a downturn and the businesses available show strong results. Potential buyers need to understand, however, that with foodservice industry numbers on the rise, the purchase price may not be a steal. For sellers, the decision to close and put the for sale sign out did not come easily, as a lifelong dream of business ownership reluctantly came to an end. Sellers know the value of purchasing a turnkey opportunity that's producing cash flow today and lending is readily available, so they will price it accordingly. Professionals who understand the restaurant industry are seeing pricing at or above values paid two years ago. They see the sophistication of buyers and sellers in todays market and advise on the appropriate values for the business. Restaurant pricing may vary from market to market. Trends show some depression in pricing in northern markets where people are leaving, while southern states like Texas and Florida are seeing bidding wars with multiple offers and higher multiples. As for restaurant operators, its a year of Rs.  1. Reevaluate the game plan. 2. Rebuild and possibly expand upon the market share. 3. Restaff because many employees were laid off. 4. Reflect on business ownership and customers. 5. Relax after a year of unprecedented challenges. As the restaurant industry begins the 2021 comeback, it's important to note that this industry isn't only resilient but also vital to the U.S. economy and important to its consumers. It's often said that food brings people together, and that has never been more true as vaccinated Americans are returning in droves to enjoy meals with family and friends. Forbes Business Council is the foremost growth and networking organization for business owners and leaders.