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Why Are So Many Quick-Service Restaurants Being Sold?

By in 2017 - Volume 19

Why Are So Many Quick-Service Restaurants Being Sold By Kevin Hardy featured in QSR Magazine April 2017

In California, skyrocketing real estate costs and rising labor rates have put a pinch on restaurateurs looking to sell, says broker Steve Zimmerman, president, CEO, and principal broker of Restaurant Realty Company.

“In high rent areas, either in northern or southern California, you’re seeing a consolidation of a number of independent non-franchised units, where the economics just don’t pencil out. You’ll still have some growth in the casual, fast-food arena, because people can still afford those type of opportunities,” Zimmerman says. “Most sellers if they have a viable business making money, most likely they are not making as much money as they did a few years ago. By and large sellers are motivated to sell.”

Zimmerman is more bullish on value-driven concepts. He has example after example of independent, full-service concepts that still rake in millions in annual revenues, but little to no profit. Rarely are independent restaurateurs in California selling as an exit strategy to retirement.

“It happens occasionally, but unfortunately a lot of people wait until it’s too late. Their sales have plummeted, their costs have increased,” Zimmerman says. “Seventy to 80 percent of our sells are what we call asset sales, which means there’s not much good will, the business is either marginally profitable or losing money, and the buyer potential is somebody thinking they have a better mousetrap … Very rarely do we sell something that somebody is really making money. That’s just the reality.”

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About The Author
Steven Zimmerman, CBI, M&AMI, CBB, FIBBA

Steve is the Founder, Principal Broker and Chief Executive Officer of Restaurant Realty Company. Steve has personally sold/leased over 1,000 restaurant, bar and/or nightclub businesses and many related commercial buildings totaling 2+ million square feet of commercial space, collaborated with over 2,000 clients and completed over 3,000 valuations since 1996.His real estate experience also includes sales, acquisitions, management and ownership of numerous properties throughout California including restaurants, hotels, apartment buildings, single family houses, an office building and a multi-use retail building. Steve is also the author of Restaurant Dealmaker – An Insider’s Trade Secrets for Buying a Restaurant, Bar or Club available on Amazon. Prior to starting Restaurant Realty Company Steve had over 20 years of restaurant experience and was President and Chief Executive officer of Zim’s Restaurants, which was one of the largest privately owned restaurant chains in the San Francisco Bay Area. READ FULL BIO | HIRE EXPERT WITNESS - LEARN MORE