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What Are The Pros and Cons Of Buying A Restaurant In An Industrial Park?

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Comments & Replies: 1     Views: 1556     Posted By: Joe Ranieri  

Are restaurants (deli's, sandwich shops, food services) in Industrial Parks good investments for business buyers? I get this question many times a year from potential restaurant buyers so I though I would answer this with my thoughts and get feedback from other Advisors & Professionals on BizBen.

Topics: Buying A Business     Tags: buying a business



What Are The Pros and Cons Of Buying A Restaurant In An Industrial Park?

PROS

Hours:

Typically, these businesses are only open Monday thru Friday from 6:30am-3pm, but it's important to remember that the owner will be spending their time doing payroll, going to the restaurant supply store, etc. The shorter hours do allow the business owner to have a life and spend time with family on the weekends.

Catering Opportunities:

Since the business is closed on the weekends, many owners either use or rent out the kitchen on the weekends for catering purposes. This allows the owner to make additional income. I have seen businesses lower their food cost by using food from the restaurant and putting it into the dishes of the catering business.

Easy to Prepare Menu:

Many of the customers who frequent these types of places only have a limited amount of time, because they are on their break or lunch from work, so the menu can't be too complicated. The best menu is deli or casual Mexican food, and always have items near the register for impulse items that can be eaten on the way back to the office.


CONS

Captive Audience:

Usually these types of businesses do not allow themselves to general foot traffic from the public, and so the customers are only those who work in the neighboring area. Itís important to remember these customers need to really be appreciated, and so when the business is open, the owner needs to be onsite. I have seen new buyers lose long term customers, because they didn't have any customer service skills. Itís important to remember that if the economy tightens and more people in the area start "brown bagging" their lunch, then that will lower monthly gross sales.

Price:

A profitable five day a week business with short hours can fetch a higher price on the market, because it allows the owner to run a business, but also have a life. A high price is obviously good for the seller, not as good for the buyer, but eventually all buyers become sellers, so they can get their investment back.

Lease:

Typically, the landlord for industrial parks are run by large management companies, and so the buyer needs to have good credit/assets to be approved, it's important to note that these companies are less flexible than small individual landlords.

I'd be curious to hear from other BizBen Users, Advisors, And Intermediaries who have had experience selling these types of businesses - thank you.


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Steve Zimmerman: Restaurant Broker Specialist

Steve founded Restaurant Realty in 1996. He has personally sold/leased over 900 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker - An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.

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