Dear Aunty B,
I am a highly-experienced restaurateur and three years ago sold up to start a restaurant in a very small but popular holiday resort. It is a family business that also employs my wife, two sons and one daughter-in-law.
In the middle of January, we got hit with a big fall in sales. It has continued to fall until April when it picked up, and then has continued to fall again. While my restaurant is now an “icon” (according to the local rag), the locals have simply shut their wallets and city folk are either staying home or going to cheaper restaurants.
I expect this Christmas and holiday season to be slow, but while I could survive that, I can’t survive if next year is bad. I certainly could not survive another bad Christmas. My family has all taken a fall in wages and we are getting by.
About 30 minutes away there is a sizeable town and I could relocate to a restaurant at the bottom of a resort. It would break our hearts to do so, as we have poured our passions into creating a unique restaurant on a large piece of land and the new restaurant would lack the atmosphere of the oldm but it would get a lot more business.
There are very bad restaurants operating there now and several of them are packed on the weekend, especially Sunday night when we might have six people. I know that my good name will mean we will be an instant success.
My question is this. Should I hold on because next Christmas will be better than this? Or should I sell up now and move to the larger town? (Also I own the freehold and would have to sell if I move. While the price of the freehold has risen a lot, the valuation has recently fallen – though I would still be way ahead if I sold now as I already have a buyer interested in the land.)
NSW central coast.
Bad news. Sell now and move to the larger town, because next Christmas is going to be worse than this Christmas. My feeling is the credit crisis is still to wash through the economy. While Christmas next year seems a long time away, it is always at the end of bad times that consumer sentiment is lowest and there is the most doom and gloom.
I assume that as an experienced restaurateur you have tried everything you can while keeping your high standards; changing the menu, double sittings, lunch specials and so on.
If it was just you running your restaurant with a few employees, fine. Maybe you could hold on, given you are a very experienced restaurateur. But your extended family is involved. You can’t have them working on bread and butter wages for the next two years. They will be very resentful, and quite frankly it’s not fair to ask them to make such a big sacrifice.
You say you have a buyer lined up at a good price. Grab it! If you are forced to sell next year, you will get less for your freehold and could even struggle to find a buyer.
Congratulations on building an icon, but you can do it again. This is a time to push emotion aside and be very, very pragmatic.
Your Aunty B.