How to Sell Your Restaurant Amid Retirement, Burnout and Economic Uncertainty
Looking to sell? Here’s what you need to do right now. Restaurant owners are part of a nationwide move to exit small business. A recent survey by online business marketplace BizBuySell found that “28 percent are speeding up their exit timelines.” The reasons include retirement (44%), burnout (30%) and economic uncertainty (21%). For restaurant owners, the numbers could arguably be higher. The baby boomer generation is driving retirement scenarios, with writers coining the phrase “Silver Tsunami” to reflect large numbers of aging Americans turning 65. The count, based on the latest census data, shows approximately 10,000 Baby Boomers are hitting retirement age every single day between now and 2030. Burnout, the second most common response to the survey, is certainly a factor for restaurant owners who were initially hit by shutdowns and subsequently plagued by persistent recruitment and labor shortages, inflation and supply chain disruptions. Three out of four are only now, three years post-pandemic, settling into what the National Restaurant Association terms “the new normal.” That is why the timing for selling a restaurant, for many, may finally be right. Those holding off, having delayed retirement or focusing on operations, could signal a selling cycle on the horizon that may quickly accelerate inventory and expand the restaurant for sale market.
Restaurants Expect Strong Sales This Summer
Consumers aren’t so sure. Warmer weather usually boosts restaurant sales, but diners may hold back for the second straight summer as inflation weighs on consumers’ minds — and wallets. “I think operators are still hopeful for a good summer boon in foot traffic and sales … but I think on the consumer side, they’re more hesitant,” said Huy Do, research and insights manager at market research firm Datassential. Last year, consumers pulled back on their restaurant visits in May, June and July amid inflation concerns. In addition to higher restaurant bills, diners were also paying more at the gas pump and in grocery stores. Salad chain Sweetgreen said its sales slowed after Memorial Day and blamed the trend on a range of factors, including erratic returns to offices and surging summer travel. Chipotle told investors that its sales decelerated starting in late May, citing the broader economy, its new workforce and a return to normal seasonal fluctuations in college towns. And Shake Shack said its June sales disappointed as lower-income consumers visited less frequently. Restaurant sales snapped back in August, which Black Box Intelligence attributed to higher consumer confidence levels as gas prices fell. Inflation may be easing this year, but prices are still rising, adding to worries about regional bank failures and a potential recession before year-end. U.S. consumer sentiment fell to a six-month low in May, fueled by concerns about the debt limit standoff, according to a University of Michigan consumer survey.
‘Bar Rescue’s’ Jon Taffer Warns Over State of Restaurants
Business is ‘booming,’ but we’re ‘challenged. Restaurants are expected to hit record numbers this summer, and, as a result, “Bar Rescue”‘s Jon Taffer is sounding the alarm on the worker shortage – a problem that is being solved with artificial intelligence and robots. “Since April, we’ve hired over 900,000 employees. We need a lot more, but we’re forecasting record travel this summer. Record hotel occupancy. Restaurants are booming, but we’re challenged because we need people to fulfill all the business that we have now,” the television star explained to host Stuart Varney. During his Monday appearance on “Varney & Co.,” Taffer attended the National Restaurant Association Convention, which was heavily centered around robotics and automation technology. “In my restaurant business, we’re using it more in the back of the house for purchasing and pricing and things like that. Here I’m standing in a SkyTab booth now. This is all new transactional technologies that connect third parties like DoorDash and Uber Eats into the P.O.S. system,” Taffer began. “Frequency programs, credit card programs, all connected into one system now. And then robotics are huge. Wendy’s is about to launch a chat box program in Europe with automated ordering. There are the restaurateurs, they’re going crazy already.”
How Restaurants Can Get a Slice of Gen Z’s $360B Spending Power
Consumer changes that aren’t breaks from past consumption patterns, but modulations of them. Generation Z is entering the workforce, and with a disposable income estimated at $360 billion a year, this demographic is becoming a powerful block of consumers. “Younger generations are more obsessed with food than ever,” Nikki Freihofer, a strategy director at food and beverage consultancy The Culinary Edge, said during an education session at the National Restaurant Association Show on Tuesday. But earning the loyalty of these diners, the oldest of whom are around 26 years old, will be challenging, she said. ”They eat out roughly 10% to 11% less at their age than millennials did at the same time.” Gen Z’s low restaurant consumption, despite its spending power and love of food, is pushing the industry to find the brand characteristics that can woo this demographic. Here are some of the insights that could help restaurants convert Gen Z diners into reliable customers, according to experts at the NRA Show. Social media is becoming an increasingly powerful discovery tool for Gen Z, Lindsay Lyons, Coca-Cola’s group director of consumer strategic insights, said during an education session. “Social media is actually the first place that most of this cohort is going to interact with a new product or a new brand for the first time,” she said. Social media can push consumers toward a restaurant’s digital channels. Restaurants should expect about 60% of order growth to come through digital channels in the next few years, said Scott Finlow, Pepsico Foodservice’s CMO. Food can go viral on social platforms, and brands with a strong digital presence, especially those that are continuously updating their menus, can capture sales from those moments, Freihofer said. TikTok’s ability to drive viral sales, for example, is well-documented, Freihofer and Graham Humphreys, CEO at The Culinary Edge, agreed. Chipotle, for example, added a TikTok-inspired fajita quesadilla to its menu in February.
Grubhub to Share More Detailed Data with Restaurants
Operators will be able to view how different customer segments are performing. Grubhub will start sharing more detailed guest data with restaurants, part of a few updates to its toolkit for operators unveiled Thursday. Restaurants will now be able to see how different customer segments are performing. They can view data such as total sales, average order value and average daily orders from new and existing customers as well as members of the Grubhub+ program. That data should help operators make smarter decisions about how they spend their marketing dollars, said Liz Bosone, VP of restaurant success for Grubhub, in an interview. Previously, restaurants could only see aggregate information like month-over-month sales and gross food sales. The update improves upon that but stops short of giving restaurants access to data on individual customers, something many have been asking for from third-party delivery providers. Bosone said that more segmented audience data has been a top request from restaurants. “They’re not as fixated on knowing exactly who the person is,” she said. “It’s just, ‘How do I reach this type of guest?’ “We are obviously adding more and more information, and hopefully this is a real value add for them,” she added. The company is also streamlining the process for how restaurants dispute refunds when a customer has a problem with their order.
Inflation-Weary Consumers Are Starting to Chase Restaurant Deals
Consumer use of deals at restaurants grew by 8% year-over-year in Q1. Consumers started trading down at the end of 2022 in response to higher menu pricing. Now, they’re taking things up a notch – more aggressively seeking deals and discounts to use restaurants. New data from Circana finds that consumer use of deals at restaurants grew by 8% year-over-year in Q1. Consumers’ inflation fatigue is also evidenced by April’s slowing sales growth – the industry’s weakest performance since July 2022 and its second-softest month of growth in over two years, according to Black Box Intelligence. In other words, consumers are proving they simply don’t want to pay as much for eating out as they have been doing for quite some time, including for the traditionally lower-price point quick-service segment, where menu prices remain 8.2% higher over last year. According to Circana, most of the increase in Q1 deal usage (84%) came from QSRs, which represent most of the total foodservice traffic. Visits to QSRs increased by 2% and deal visits by 7% in the quarter over last year. Full-service restaurant traffic declined by 1% in the period, but visits on a deal were up by 4%. Although 73% of all foodservice visits are not on a deal, those visits were flat in the quarter compared to the visits on a deal growth. Broken down, “buy some, get some,” and coupon deals were among the most popular deal types, growing 13% and 18%, respectively, compared to a year ago. Discounted price deals increased by 8% and daily specials grew by 6%. Combined item specials declined.
DirecTV Reaches Deal to Provide NFL ‘Sunday Ticket’
To bars and restaurants. DirecTV has struck a multiyear deal to continue broadcasting the National Football League’s “Sunday Ticket” package to commercial establishments, including bars and restaurants. Financial terms of the deal weren’t disclosed. The NFL sold the “Sunday Ticket” commercial rights to EverPass Media, a joint venture owned by private equity firm RedBird Capital Partners and the NFL, earlier this year. The companies confirmed the “Sunday Ticket” deal on Thursday afternoon. The agreement, which kicks in for the 2023 season, gives DirecTV the ability to use its network of satellite TV installations to connect sports bars, casinos, restaurants and hotels throughout the U.S. with “Sunday Ticket,” just as it has in previous years, said the people. While this is the first deal EverPass has struck to distribute commercial rights, the contract doesn’t guarantee exclusivity, according to people familiar with the matter, who asked not to be named because the discussions are private. The joint venture can negotiate a separate agreement with other cable or streaming companies that may want a commercial hookup outside of satellite TV, said the people. EverPass can also build its own commercial connection in future years and bypass third party licensing, one of the people said. DirecTV has been the sole provider of “Sunday Ticket,” the NFL’s out-of-market Sunday afternoon package of games, since 1994. Bars and restaurants, such as Buffalo Wild Wings and Hooters, rely on “Sunday Ticket” to bring in big crowds on Sundays during the NFL season.
Did You Know?
Three strategies to set your restaurant team up for summer success. Summer hiring is in full swing, and many restaurants are struggling to navigate one of their busiest seasons of the year while dealing with ongoing labor shortages and a volatile economy. Turbulent times call for creative solutions, so focusing on efficiencies and making investments in your staff are the best areas to tackle when it comes to running a restaurant this summer. Here are three strategies to set your business and team up for a successful, profitable season.
Employee Tip
How a Chick-fil-A franchisee finds the right employees. Will Swan is the human resources director for a Chick-fil-A location in Athens, Georgia. While Chick-fil-A has a reputation for building a great culture that fosters a second-to-none customer service experience, the brand’s storefronts have not been immune from the labor crunch that’s affected the foodservice industry since the outset of the pandemic. Swan knows as well as anyone that advertising a job listing, wading through candidates, and finally interviewing and onboarding them can be a time-intensive process. Recently, his Chick-fil-A location decided to be more deliberate about how they source, screen, and hire new team members.
Bielat Santore & Company – Restaurant Industry Alert
MIDDLESEX COUNTY, NJ – RESTAURANT
Own your own business; casual dining concept; strategic Middlesex County highway location; BIG breakfast/lunch trade; systemized operation; 225 seats; grossing $1.2M+; available with or without franchise flag; owner retiring – priced RADICALLY REDUCED to sell!
Contact Richard Santore, 732-531-4200, for additional information.
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