Don’t Fire Your Restaurant Turnaround Services Firm Yet!

If you are contemplating restaurant turnaround services, the latest report from Technomic featured in Nation’s Restaurant News sheds some light on the current economic recovery. Here are some of the “highlights” of that report if you are an owner or investor of a failing restaurant or a bank faced with a troubled restaurant loan: What Recovery? “Both restaurants and the consumers they serve have yet to feel the economic recovery many had expected, according to data and analysis from research firm Technomic Inc.” In our experience, employment numbers are the driving foodservice sales growth in any restaurant planning. The national average still hover between 9% to 10%. Good years past those numbers were 5% to 6%! Do Numbers Tell the Story? “The latest Technomic industry forecast estimates that real, or non-inflation adjusted, 2011 total restaurant sales growth will fall 0.8 percent, a deeper decline than originally projected last fall, when restaurants’ real growth rate was expected to decrease 0.4 percent. The inflation expectations were adjusted between last year and this summer, once estimated at 2 percent and now at 3.5 percent.” Anything less than 1% to 2% real growth after inflation is still a challenging year. Check out some of our past newsletters if you are contemplating restaurant turnaround services. Bad News IF Small Chain or Independent! “The industry saw some sales recovery in 2010, compared with 2009, Technomic said, although the 500 largest chains reaped most of those gains, often at the expense of smaller chains and independents.” The bad news if you have own or operate ten or less non-branded units is the lack of cash flow spread around to the under-performing operations from the units that are still doing well. Are you in the early stages of engaging restaurant turnaround services to help in this recovery? Or, are you about to buy a restaurant in need of a turnaround now? If so, tell us what one or two concerns you have that our readers can lend some advice on.