Have you seen this happening in your cities. There's this phenomenon I found out about a few years ago, some group of investors buys up a bunch of sometimes-related restaurants. I'm guessng this is just about investment, but I don't think it's as simple as someone owning a string of franchises. Anyway reason I bring this up is the past few years I've seen that these groups are closing *sucessful* restaurants. I mean places you always see packed. Curious if anyone had any inside scoop on why this is happening.
A few things:
1. Restaurants can be busy and still fail. Happens all the time. It's great to have a lot of people come in but if you cant manage costs, or your avg. revenue per diner is low, or if there are disputes between owners etc.
2. It's possible they are interested in the business itself, that also happens. And where it can go wrong is if the investors don't have a feel for why the place is popular and they bring in a corporate culture that focuses more on penny pinching or they start making changes to the menu etc that might make sense for where they come from but end up costing customer loyalty. SOmetimes you'll see investor group (or maybe a larger company) buy a restaurant, run it into the ground and then sell it back to the original owners at a discounted price. Or they get rid of it and the new owners are able to turn it back to what it was before and they flourish. This is what happened when McDonalds invested in CHIPOTLE.
Nah that doesn't many any sense.
If the restaurant owned the land, then the interested party would just make an offer to buy the land.
And that's assuming the restaurant owns the land it's built on. Half of the time, they don't. I worked at a place back in the 90's that was paying $18,000 a month rent, and it wasn't even in a super popular area.
Fred.
Breh, investors do this all the time. In many industries not just food. Think about it. If there is a successful restaurant or store etc in a location, 90% of the work involved in being a successful real estate investor/developer has already been done for you. If the biz is already successful it means there is a lot of foot traffic, that you're in an area that is accessible to customers, that you're near the target demographic and that these ppl have disposable income. Assuming they have no interest in the underlying business, they will take it over, bleed it for any cash then try to market it some other way. That's what happened to Sears. Was taken over, bled then the head of the investment group formed a development company that took over the best locations for redevelopment (happening in Chicago as we speak).
Again they're not buying this land bc they want to be in the food business. Ubereats and all of these delivery options are hurting a lot of restaurants nowadays. Not sure if you've heard of ghost restaurants, but they are basically "virtual" restaurants where you order off their menu but the food is made in a commercial kitchen then delivered to you. Hard to compete against someone that doesn't have the same overhead expenses. These investors just want to redevelop, cash out then move to the next deal.
