Branch’s Post

Leases, all-you-can eat lobster promotions and minimum wage increases, apparently are creating the crustacean a lot of headaches. Now the lobster is floundering. Depending on how a possible restructuring plays out, they could drown, too. #restaurant #casualdining #leasing #marketing #minimumwage

Part 1 Restaurateurs, As we have chatted about often, the economy, be it jobs, inflation, Wall Street, or Main Street. As Bob Dylan said in his, ‘The times they are A-Changin’ hit… …and you better start swimmin’ Or you’ll sink like a stone For the times, they are a-changin’ Well, that’s a first as I have never quoted Bob Dylan! My point is, as it has been throughout this focus is that as operators, we need to be engaged. We need to be present in the moment and understand what the minute is teaching us regarding creating the future of OUR business! We can say whatever we want about any financial topic, but one that we need to be very aware of for example is household debt. I’m not sure where we are at the end of 2023, but by year end 2022 household debt was at 109% of PCE. Why is this important to a restaurant? With our Guests more leveraged now than almost any other time (don’t think about 2008) they have palpably less $ to spend! So…this isn’t a doomsday post. It is really about something that a dear friend of mine and I were talking about last Friday pertaining to the axiomatic quote about, “future events cast their shadow before them.” With this being the case, we can take our ball and go home, call it a day, yield to the externalities, OR we can come to not only play ball, but to win! This last week was an eye-opener concerning the opportunities we have for betterment with our businesses. I was in an independent operators business to grab a bite. As I watched I saw glaring opportunities that ranged from ergonomics, to upselling, cleanliness, dirt, burnt out lights, to a menu that was horrendous in creating sales and margins. Last Friday, I happened to be in a great sandwich shop (the product is always exceptional). I had a little conversation with the (new) owner. He had just purchased this franchise 30 days ago, and has never been in the restaurant business. My heart went out to him as I knew this could potentially be a rough ride. I felt bad enough to do some pro bono work for him next week. The great news is that he seems smart and eager. I’m hoping he nails it! All I am saying is we need to be engaged in the moment and to look at it as a book. In other words, every moment has a story to tell us. Read the moment with the intent to understand how it pertains to you and your operation.

A cautionary tale to anyone signing a document - never assume the document you receive is the same as the one you sent out - even if you sent it with track changes enabled and locked. Always check every paragraph that the wording is the same and that there are no additional paragraphs inserted. A stitch in time saves nine. #CautionaryTale #Contracts #SettlementAgreement #ReadYourContracts #Lawyer #Attorney

Another no surprise. Dining out even in lower cost family focused restaurants has become prohibitive for even small families today. Then should you try and stay in the restaurant business, try and find a bank willing to support you at a cost you can afford. The end result of Bidenomics in small business? https://lnkd.in/dFh36i-6 #bidenfailures #bidenomics #economy2024 #election2024

"How hard is it to sell a restaurant now?" I just had a multimillionaire online business owner ask me about selling businesses and one of his questions was about how hard it is to sell restaurants now. And logically it makes sense. Restaurants are hard and have high failure rates. But people like them. A friend of mine and his kid bought one after he graduated college, basically buying his son a job that he ran for years rather than working in corporate, and then sold it (to work in the family business with his dad). I shared the story last week about the restaurant that burned down and someone still bought it and took it over. Why? Because restaurants are fun, they're "sexy" businesses. People come to you. You can meet and greet with influential people in your local area. You're still a business owner. And you don't need special individual licenses like tax firms, funeral homes, and certain trades. Anyone can do it. And many times you can hire managers to run it for you (even McDonald's does this, they have a GM and then basically can hire high schoolers to run it). And you can get the equipment cheaper than buying it all out of pocket. So despite the challenges, people will continue to buy restaurants. What kind of restaurant would you buy?

PROBLEMS WITH RED LOBSTER WERE CLEAR OVER TIME This is the logical cumulation of a 25 year Red Lobster decline that began in the early 00s under the Clarence Otis CEO administration at Darden. Much sleepier in those days than now, Otis and Co were unable to fix RL's guest mix problems that they worsened via FSIs and coupons. They should have sold the brand after the 2009 recession...but didnt. DRI could have improved its portfolio focus and saved a boatload of CAPEX spent on RL. In 2015, during the Starboard v. Darden proxy battle, RL became the flashpoint as the old DRI Board sold RL and its real estate just before the proxy vote, enraging shareholders. Otis & Co, lost and RL wound up paying rent, for which it never paid earlier. Golden Gate Capital held RL for a time and then offloaded it to Thai Union, a seafood provider. It had restauant partners, but none of which had experience operating US casual diners. Many difficult things later happened: money losing promotions, inability to attract a proper RL CEO and more. Obviously, Thai Union did not do its due diligence in 2016, its initial investment date. We in the industry recognize this 99 unit adjustment (and more, perhaps) had to happen eventually, and trust that opportunities for unit management and hourly personnel will be found as appropriate. One lesson is that US casual dining is difficult enough; it requires company leadership with specific casual dining background and resources to make it work.

🎣🌮💀 Update: they filed bk...👇 https://lnkd.in/dmBFUjrn What killed Rubio's Restaurants, Inc. ? If you said rising labor and operating costs, you're half right. 👉👉👉 Yes it's true that minimum wage for fast food workers went up to $20 an hour on April 1st. 💀 I've spoken endlessly about how other costs of operating a restaurant, from ingredients, utilities and insurance to endless litigation, have all marched relentlessly upwards. But that's half the story. The other half is the increasing popularity of competitors like Chipotle Mexican Grill and CAVA , who offer similar food with bigger marketing budgets and arguably a superior product. This could also be a story of a restaurant that expanded too quickly, reaching over 170 units just a few years ago, to the current 86 and falling. They filed bankruptcy in 2020, and appear headed that way again. It's too bad. Founder Ralph Rubio created a wonderful success story, but then financial operators took over and the business got stale, all while dynamic well-funded competitors were on the rise. So if you like their fish tacos, I'd hurry. I'm not sure how much longer this business is going to be around. (from the original post 🔮) #qsr #restaurants

A big topic at the Restaurant Finance & Development Conference concerned the number of bankruptcies among multi-unit franchisees. Many reasons were given such as post-covid consumer habits, labor and food inflation, and the weakening of the lower-end consumer. All of these are valid of course but the key reason in my view is the treatment of restaurants by the investment community as cash machines and not hospitality businesses. Restaurants that are highly leveraged have very little wiggle room when facing sales and/or margin declines. Private equity firms cannot get the returns they need without putting high debt on the acquiring business and deferring necessary maintenance/renovations. The restaurant brand owners go along for the ride. In most international markets where I operate these levels of debt are unheard of and bankruptcy laws are far more stringent. Facilities and levels of service are also much higher than in the USA. At the end of the day, investors can walk away and declare bankruptcy but the restaurant team members are the ones who suffer. https://lnkd.in/gzd67rGz

"How hard is it to sell a restaurant now?" I just had a multimillionaire online business owner ask me about selling businesses and one of his questions was about how hard it is to sell restaurants now. And logically it makes sense. Restaurants are hard and have high failure rates. But people like them. A friend of mine and his kid bought one after he graduated college, basically buying his son a job that he ran for years rather than working in corporate, and then sold it (to work in the family business with his dad). I shared the story last week about the restaurant that burned down and someone still bought it and took it over. Why? Because restaurants are fun, they're "sexy" businesses. People come to you. You can meet and greet with influential people in your local area. You're still a business owner. And you don't need special individual licenses like tax firms, funeral homes, and certain trades. Anyone can do it. And many times you can hire managers to run it for you (even McDonald's does this, they have a GM and then basically can hire high schoolers to run it). And you can get the equipment cheaper than buying it all out of pocket. So despite the challenges, people will continue to buy restaurants. What kind of restaurant would you buy?

The world of running multi-units is constantly evolving, and it comes with its own set of advantages and challenges. Established efficiencies, a strong brand, and a solid business model can be advantageous, but managing individual processes and software, is becoming more and more difficult and time-consuming. If you're managing a multi-location restaurant group, check out these nine tips to help you navigate these challenges and streamline your operations.