Second Quarter 2003 Volume 5, Issue 2

Some Of The Major Challenges In Close The Deal

Restaurant Realty Company has sold over 265 restaurants, bars and/or clubs since 1996. There were a number of other businesses that we could have sold over those years but ran into the following major obstacles. Here is a list of specific challenges that can be stumbling blocks in closing your deal.

1. LANDLORD ISSUES – a) landlords value their space at rates that are higher than the existing market rent, b) landlords won’t give adequate time on the lease to give the tenant enough time to obtain a reasonable return on their investment and to give them enough security to make it worth their time to build the business at the space, c) landlords won’t give the tenant a predictable future of what their rent will be (i.e. on an option the landlord has the rent tied to market rent rather than a predictable future rent such as rent based on the Consumer Price Index or a fixed rent schedule etc.), d) landlords won’t give the tenant free rent during the remodeling period which ultimately results in improving the landlords building at the tenant’s cost and e) landlords won’t give reasonable use clauses or reasonable assignment rights for the sale of the business.

2. SELLER’S BOOKS & RECORDS ISSUES – Not keeping good books and records frequently results in a deal going south. Some sellers claim that they are doing a certain level of business while their books and record show they are doing significantly less than what they are claiming. To minimize this problem, we get the sellers tax returns for the past two years and sales tax returns for the current year when we list the business for sale.

3. HEALTH DEPARTMENT INSPECTION REPORT ISSUES- Most sales require that the seller give a buyer a health department inspection clearance. Most sellers assume that this is no problem as their past health department inspections have been no problem. However most sellers don’t realize that there are more stringent criteria imposed by the health department on a sale versus a normal health inspection during the course of operating the business. The reason for this is that there is new money coming into the deal which gives the health department the opportunity to have the business brought up to current standards (i.e. they require the following on a sale: 3 compartment sinks, mop sinks, hand sinks, smooth washable surfaces on all floors, walls and ceilings and replacement of all domestic appliances with commercial appliances, etc.)

Restaurant Realty is adept at working through these situations and can guide you in selling your business.

 

The Best Way To Keep Up With Restaurant Realty Company's New Business For Sale

The best ways to keep up with our new restaurant, bar and/or club opportunities are as follows:

1) look at our website, www.restaurantrealty.com, Current Listings Section which is updated daily,

2) register on our website, www.restaurantrealty.com, home page where it says Buyers Register which will put you in our data base and you will receive an email from us every two weeks regarding our new, price reduced, featured and coming soon listings, and

3) if you don’t have access to internet call us at 415-945-9701 periodically and ask us to send or fax to you our new listing sheet which comes out weekly. All restaurant, bar and club owners receive a mailing from us at least three times a year which includes our current listings.

Restaurateurs of the Quarter - Scott Howard & Charles Low Of Fork

Chef/Owner Scott Howard and General Manager/Owner Charles Low founded FORK (located at 198 Sir Francis Drake Boulevard, San Anselmo, open T-Sa 5:30p-10p, 415-453-9898) after combining talents and reaching a fork in the road of their personal careers. Scott’s extensive background in both the Bay Area and South Florida restaurant scene motivated him to partner with Charles to do a unique small plate restaurant showcasing local food growers and wonderful wines. Charles Low has management experience in many Bay Area restaurants and has a strong foundation in creating the wine list for FORK. After opening in October 2001 they realized a need to expand the dining room and will open that expansion in May 2003.

The unique flair to the menu at FORK is the wonderful small plate format. The seven course tasting menu provides an array of local influences paired with exceptional wines offering a excellent value. Some of their unique menu items include as follows: Pistachio Crusted Lamb – spinach & raisins, sweet & sour sauce; Grilled Beef Tenderloin – smoked bacon, English peas black trumpet; Duck Confit – baby beet salad, green peppercorn, braised beet greens; and Seared Halibut – brussel sprouts, artichokes, hazelnuts, tarragon cream.

We congratulate Scott and Charles on their new expansion and wish them continued success.