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

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Comments & Replies: 2     Views: 7810     Posted By: Joe Ranieri  Joe Ranieri, Business Broker: LA, Orange County Areas

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.

Contributor: Business Broker: Southern California

All good comments to which I would add the following:

Pros:

In general, industrial park lease rates are less than retail shopping centers. In addition to shorter hours, also most are not open during major holidays.

Cons:

You live and die by the businesses in your area. Investigate the major tenants in the area, make sure they are financially stable and not likely to relocate. And if you are locating in the middle of an industrial with a major corporation, check out what food service options the company provides, their pricing, etc. There is a trend for companies to compete for top tier employees to offer unique food service offerings sometimes at a reduced price or even free. Its not uncommon for a large corporation to try to do everything they can to keep their employees onsite for lunch to enhance productivity.


  Helpful Resources To Assist In Selling And Buying California Businesses
Joe Ranieri, Business Broker, Orange & LA County Areas

Having owned retail/restaurant businesses for over 20 years, my interest turned to listing and selling businesses rather than owning them. I specialize tend to specialize in Orange County high volume restaurants, fast food independents and chains, bars and liquor stores. Call 714-292-5448.

Bob Baumgarten, Business Broker: Orange, LA Counties

National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-588-8727.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Lee Petsas, Business Broker - Orange, San Diego Counties, Inland Empire

UBI Business Brokers has been successfully selling businesses in Southern California since 1965. Our Agents have over 100 years of experience in selling small to medium size businesses throughout Southern California. We service Orange County, Inland Empire, San Diego. Phone Lee at 714-363-0440.

Rick Carlson, Business Broker - Southern California

You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.

William Park, Business Broker - Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.

Ryan Clark, Business Broker, Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan at 310-652-8353.

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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