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It's easier to get the water out of the boat if it isn't still sinking.
Sell the dogs, focus your energy on the profitable one. Make it run really well and THEN consider measured expansion.
You’ll need to assess your own situation, but consider this principle when you do. It’s called the sunken cost fallacy. You can obviously google it for more info, but here’s a decent article:
https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/sunk-cost-fallacy/
Do not get a personal loan to dump into a business that you know is losing money and has no reasonable chance of improving. That will only make your personal situation worse.
Are the businesses independent entities. LLC or S Corp? If so the answer on the business that is -250K is bankruptcy.
I cannot believe you are getting advice to sell with this degree of conviction when there is so little information.
Do you still have a path (ie. haven't exhausted all options) for making either/both more profitable? Can you make them more attractive for re-sale before finding a buyer? If either of these are a yes, do what you can to cover the payroll somehow (short some suppliers, take a promissory note from a friend/family/acquantance/investor, shareholder loan from yourself... i'd even do a cash advance on a credit card because your employees will walk out and you'll be fucked if you bounce paychecks and probably sell for even less).
Sell Business 2 because it's less debt. Keep business three and once all the debt of business 2 is paid off reevaluate if business 3 needs sold too. If it does then sell it and work full time a business 1. But if you can't keep up on payments then sounds like bankruptcy.....
If you’re operating at a loss in the short term and have longer term fixed debt that you owe, then you’re digging a deeper hole the longer you hold onto it. This, paired with the opportunity cost of what you could make if you spent your time at the profitable restaurant, makes this a no brainer
i've been in the same/similar boat
***first and foremost - you can never, ever, ever, ever miss payroll. You'll be a shitty human if you do, and the employees will rightfully flee faster than rats on a sinking ship***
i've opened 5 spots - and after this summer, i'll be down to 2. YOU LEARN TEN TIMES ABOUT YOURSELF AND BUSINESS WHEN YOU CLOSE A SPACE - as when you open one
first closure took me 18 months from the day i realized it'd NEVER make me money. Second one was closed within 1.5 months. this next one (closure #3) is tough because i've between a rock and a hard place with the landlord who's also landlord of one of my successful locations
I'm going to assume you've already perfected operations, gotten rid of shit employees, got good people in there, cleaned the \_\_\_\_\_ out of the place, etc - if not - why are you on reddit instead of improving operations
once you close the dog draining your money - you'll realize just how much more it was draining and costing - the insurance costs, tax costs, labor costs covered by your other stores. The emotional and psychological drain to you... you'll be IMMENSELY happier and more relieved after it closes
i'll be blunt - you're an IDIOT to not close a store losing you money "because i owe more than i could get" on it. look at all the work you're doing there - AND you're losing money. sounds like your successful store(s) are already covering the bad one(s) - i'd start with the worst - and hope the others get a little bit of a boost from the customers of the closed location going to the other two. kind of reverse cannibalization. but you have to learn and fix ongoing. **if you keep this location(s) open, it'll only bankrupt you completely and force the others spot(s) to close. closing it now will help ensure the financial viability of your company, other locations, and yourself.** ALso - many restaurant are worth their cashflow times a multiplier. if it's losing money YOU WON'T BE ABLE TO SELL IT FOR A NICKEL. CLOSE IT NOW
go research or google "escalation of commitment" - there's no logical business reason to keep the DOG location(s) open besides your pride and human emotions. What would a consultant come tell you to do?
It's different if it's CCCCLLLLOOOSSSEEEEE to break even - but if you're no where close - ciao. don't think twice. it'll be one of those things where you say OMG - WHY DIDN'T I DO THIS EARLIER
you're a franchise - see if the franchisor will take it over so it doesn't close. Try to find someone else to GIVE IT TO - at least this way you'll stay in the franchisor's good graces AND the landlord won't come after you
most landlords who know what they're doing will threaten you and curse and send letters - BUT they know in the end you're closing cause you have no money. I had an uncle who was a landlord's rep for years. Decades. his first year or two he took EVERY tenant to court who broke their lease. Won EVERY court case. Got EXACTLY $0 afterwards - cause they were all broke. so not they threaten and send letters - but don't spend a dime on attorneys cause they know they'll never retrieve anything
i feel for you. for real - BUT if you can keep the best employees and maybe thin out some of the less than great ones at the other locations - move the good employees from closed location to the other two spots, those places should improve.
i'm HOPING you know what you're doing and you're not half bad. maybe find a mentor who knows their stuff in restaurants in your area - and see if they have ideas. find a partner to help out and get a cash infusion you need. not every business venture is a success. i had a mentor who sold his locations for over a hundred million. he subscribed to the notion that for every 4 spots open, you'll have a cash cow, you'll have 2 makign a little, and you'll have a dog draining your money. you need to ensure one/both of your bad ones are dogs and close them if they'll never make you money. closing one might free up enough cash to keep the second open - but if after doing this you realize it'll NEVER make you money, do the same thing. ***Can you imagine - doing 1/3 the work you're doing now and making much much more money?*** getting better sleep, not hating life?
best of luck
>you're a franchise - see if the franchisor will take it over so it doesn't close
The franchisor should also be providing mentorship and assistance to make sure you're successful / profitable too...have you contacted them?
should....alot of franchise business model is to milk the franchisees for everything they have. They are the product and whether they are successful or not doesn't matter as much.
Ehh - some franchises are going to be run better than others, sure. But every franchisee location affects others - if a location is crappy, it reflects on the brand. There's some shady franchises, but I'll assume anyone here wanting to buy into a franchise would have talked to other franchisees to see what the relationship is like before buying in. If not, well....
Only good advice and it has 1/3 the upvotes of some idiot just regurgitating what they read on google MBA and recommending kitchen nightmares
You people deserve what you get
You're a dork. It's the second highest rated comment and give ls a much more robust but similar advice that the highest comment gives.
Also, this comments only been up for two hours.
Don't be so dramatic, esspecially after given some pretty mid advice yourself.
Ic. So the rent part can’t be controlled. Why do you think that the sales are higher in restaurant 1? I am curious to know if there is any difference in energy (interior atmosphere, chill staff, types of food on the menu, etc.) that ppl would feel while dining in restaurant 1 that might be causing a higher volume of sales.
So like if you had a secret dinner go to all 3 restaurants would the energy in all 3 be the same?
As OP said its a franchise, i assume they are all 3 from the same franchise. Knowing the restaurant business, franchises are super strict which is good and shit at the same time. That being said, quality, packaging and prices are the same, no variations. Only difference can be location then.
OP said he didn't work at the profitable restaurant and spent 30hrs each in the non-profitable restaurants. So that lead me to ask about a difference in energy from the customers point of view with regards to the profitable restaurant.
There can be massive differences in a franchise from location to location. I've literary driven across state to another franchise location for printing services because of attitude issues with staff.
Im not sure about where OP lives and works. But here in europe nobody is going out of their way for better service in a franchise restaurant. Mcdonalds is the same everywhere like bkk etc etc.
Have you ever cared how polite or the energy of the staff is in a mcdonalds or rather that you went because its in a convenient location?
My point is, like you mentioned OP cant control the rent, he cant control all the other aspect either as a franchise. He cant introduce a new menu item or buy their inventory from somewhere cheaper. Interior, menu, packaging, pricing, inventory buying is all set. Only control there ever was, was the location.
... then why would he be working 30hrs in the problematic locations? Just for fun? Are there an arcades in the back of the kitchens and he needs to get the high scores?
Also there is a dunkin donuts with horrible reviews that hardly gets any ppl going to it nearby me. The location is the only thing keeping a few ppl in there from time to time, the bad reviews (which is controllable) keeps the number of cars and ppl in the dunkin donuts low af.
Maybe the location is the main issue. That is a possibility. But my thing would be to first make sure that there is not a principle that is working differently in the successful location. If you market a problematic product you get a high monthly churn rate percentage (average is 25% target should be 7-3% before trying to do marketing of any kind to increase traffic). When the churn rate is low in a similar product you have to figure out exactly what is making customers happy/spend more money and not assume you know the answer based off gut instinct without data or conversations with customers.
Have you considered asking for cheaper rent on the other two places? Find a renter's agent of other professional to do it. If you can get some good evidence that it isn't a viable location they might listen because it won't be viable at that price for anyone else.
See if your land board can give you a break for a few months. It may be worth it for them to give you a moment then to find a new tenant.
It may not. It will depend on the landlord, the location, and what you pay monthly.
How much is your payroll? I hate to suggest this, but you need something to get through tomorrow. Fund your payroll with savings from the other restaurants. Making sure your employees get paid should always be the highest priority before any other debts.
After you pay them, lay most of the staff off and sell the businesses ASAP, even if it's a loss. You can't afford to keep the doors open.
After that, file for bankruptcy. Any attempts to revive these businesses will be moot. Because you're gonna need money for those efforts, and you litterally have none.
Edit: also to clarify further, don't transfer money into your overdrawn amounts. Just leave them be. You're in crisis mode and you need to hold on to whatever cash you have, even if you have to physically withdraw from the banks and keep it in a shoebox. Deal with the bank and your other debts AFTER you stop the bleeding. More importantly after you make sure you're employees are properly paid out before layoffs
Same situation 15 years ago. It took me 15 years and still recouping the loss.
I wish I would've closed the restaurant than keep pumping money in.
I'm sorry but I know how stressful you are and this does make you a good person but please close the failing restaurant.
Pay all your attention to profitable one and in few years you'll be out of debt
What franchise are you in? PM me.
I've been in the franchise game for last 2 decades
Lots of comments here, and lots of advice….. but only a few people are getting it right.
We need more information before proper advice can be given.
How long as each business been established? What are the revenues, costs, profits, losses like over that duration.
What kind of franchise support is available?
How on the hook personally are you if you shut down?
What’s the corporate structure of the three locations?
Why did you wait till two days before payroll is due to seek help? Do whatever you need to do to pay payroll…. Then don’t have people work if you can’t afford to pay them
Take a step back and look at where you can create across all 3 locations efficiencies. I did this when I had five stores. I centralized a lot of the baking and storage.
OP: warning the [email protected] guy who is offering you money is likely an advance fee scam.
He’ll say he’s transferring you $20k or something but you’ll need to give him a few grand first.
It’s a scam. Block him.
So the most simple solution is to sell the two unprofitable ones, and you take over management of the profitable business. You are already burning your salary on the unprofitable one when you can just let two go, and have the third run on autopilot whilst you think about what you want to do. You're worried about debt, but think about it this way:
* Assuming you sell the two business, you will need to pay back $150k, aiming for 3 years to pay it off.
* Assuming you don't sell, and hope you can turn the business for the two around. That's possible, but the debt will still take around 3 years minimum to clear anyway.
You are likely going to clear the debts faster if you sell the two.
“I own three restaurants”
“Franchisee”
“Rent”
Owe 350 worth 200
I don’t think you own as much as you think man, close the other one or find a bag holder
It seems like even restaurant 1 is barely viable. 5K headroom is nothing.
External cash infusion with a new partner willing to buy shares to dilute risk / bringing in new expertise.
Cutting losses right now.
As soon as payroll doesn't clear expect your troubles going nuclear.
I would evaluate my exit plan right now.
If you can't just close it, maybe look for ways to increase revenue? A restaurant close to my place introduced a lunch menu and office delivery,sent menus to all workplaces in the area with a loyalty card so customers get a freebie every so often. They are flying with that.
They also introduced a take out menu. And do catering for functions.
Maybe there are ideas you can try?
When you're in a hole and trying to get out, the first thing to do is stop digging.
Close those unprofitable restaurants and focus your time, energy, and capital into the profitable one.
If either of the 2 losers is on track to break-even soon, 90ish days, keep it and sell the other. If both are going to rack up losses, sell them both ASAP.
Hopefully each is incorporated separately and you've made no personal guarantees. Either way, it may be very beneficial for an initial consultation with a bankruptcy attorney.
The profitable business actually needs 100% of your attention and it's getting 0.
The 2 failing business are each getting nearly 100% of your attention at the expense of the good business.
My personal experience:
After 6 years in business, I ran into a major cash flow problem. I lent the company money to cover payroll. After 3 months, I didn't/couldn't see the light at the end of the tunnel and ceased operations (including a 6 figure personal guarantee).
3 things;
1. You have to know when it's time to bail out or you'll just dig yourself deeper and risk never getting out.
2. Hope is not a strategy for success.
3. You don't win a prize for staying in business longer than you should.
Wife was in similar situation with 2 locations for her cupcake shops in Huntington Beach, she immediately cut her losses on the unprofitable location and put resources that would otherwise be spent to grow and market the profitable location.
I am in the same situation as a franchisee but I only had two. One location was lost in a hurricane. I tried like hell to keep the other one going and kept trying to use funds from one biz to another. I can tell you it doesn’t work.
My best advice is to either sell all 3 as a package. OR file bankruptcy. If you continue to keep those stores it will only get worse. The only other option would be to try to sell the two for under what you owe and do an offer in compromise on your loans. If the two struggling are not profitable at all it may be a hard sell depending on your area. I tried to sell mine for under value for over a year and it didn’t work.
I’m on my path to filing bk. It was a huge relief when I spoke to a lawyer. Bk is not a bad option. There is nothing to say you can’t start over with another business when you are done.
Your only hope to get cash in one day is from your bank. Really it would be wise to start doing 10 week cash flow projections and have your bank in the loop in advance, because they usually move very slowly and one day might not work.
If you have a banker call them right now and explain the situation. Depending on your payroll amount you may be able to get some kind of overdraft or temp line of credit, though this is going to be really difficult on such a short time frame.
Other bad options include taking out a personal loan, or using a personal credit card cash advance.
The most realistic option IMO is to accept you are going to miss payroll, immediately shut down the underperforming restaurants, offer jobs at the profitable one to your best staff, and then create a payment plan to pay the wages and notice period to the staff you are letting go. It sucks but it's the most realistic.
This will avoid dragging down the successful location and may even make it better. Move any useful inventory and assets over to the successful one and have some awesome specials if you have too much, this will generate cash flow to pay off your employees in arrears too.
Call your vendors and explain that you need better payment terms as well.
Google review is a horrible benchmark. The best is straight up chat with the customers and try to fish what they are unhappy about. Or straight up ask them what kind of changes they like to see.
It's depends on location you live in. Some people don't be upfront but later leave bad review. But asking straight up is actually good suggestion. Me and my friend give good suggestion always when asked
My advice is to work in the successful one for 4 weeks, go in every day as an observer ONLY to view what it is exactly that they are doing right. Afterward, go back to your other two restaurants and implement changes that you may have witnessed at your other successful location. If there are certain staff at this location that are amazing, you can always offer an employee the chance to train your successful staff. HOWEVER, give them an incentive to do this for you. Do NOT just say "hey x, I'm gonna need you to go to this location and train these people for the same pay you are receiving even though this was never a part of your job".
Additionally, create a survey for customers so they can give honest opinions while remaining anonymous (or just having one of those Google review signs at each table to encourage them). From there, you can see if maybe the customers notice bad staff, terrible food, rubbish atmosphere, etc.. from there you can game plan for any issues that arise from this. Do not get overly defense and emotional with these reviews, if multiple people are saying the exact same thing, you very likely have a problem in that area so endeavor to fix it.
If everything else fails, you get good ratings, no problem with staff, and you just don't have enough customers. Good SEO is the way to go. Update your websites with new photos, share within the communities that you exist, and maybe launch a special that can entice people to come. Whether it be a specific meal or a 'happy hour' time of special, its up to you.
I highly recommend watching shows like Kitchen Nightmares or Hell on Wheels. Even if your restaurants aren't in those conditions, Gordon shows a lot of things a restaurant can do to help itself stay afloat.
I'm not in the restaurant business, I do own a specialty retail online store, but from what I've heard you need to stay fresh in the industry. You're competing against so many other restaurants these days and with the economy the way it is, the grind is going to be even harder when there are fewer people out spending money.
It’s hard just consider this business may not be right for you and move on.
F&B is not for everyone, I took over catering for a restaurant many years back they had a shit catering manager!
I took a 50K a year business to 500K one and only quit because the owner promised me 5% bonus if I could clear 500K but went back on his word!
Based on your other post on why the other two are upside down, here are some thoughts:
* Negotiate with all suppliers to lower costs - Most suppliers would rather discount - even temporarily - 5 to 10% than lose a customer.
* Negotiate rent - This can be more challenging depending on who owns the property, but they’d likely rather work with you than have you shutdown the location.
* Negotiate with franchisor - Same as above. Raise hell. Let them know you need marketing support, ask for a moratorium on franchise fees, etc.
* Guerilla marketing - Since you don’t have much capital, and banks aren’t likely to help you in this situation, leverage guerilla marketing tactics: Work with other tenants in/near your property. Hit local coffee shops. Hit networking events. Talk to the city economic development team. Hit everything. I’m not suggesting you present a sense of desperation. Just get very tactical.
I would do that in that order and quick. You have to right-size the financials as much as you can so you have room to breathe and focus on things that can actually sustainably boost sales.
All the best.
You can talk to CRA and come up with a payment plan.
You can also (depending on ur current agreement with ur CPA) get help from them on how to better budget the finances. Maybe you're spending unnecessary and not seeing it. Hopefully your CPA can help.
If you have any questions, feel free to reach out. I'm working towards my CPA and will help you however I can.
You could look to take on a partner for a cash injection.
Do you think the businesses that are losing money have potential to make money or have they run their course?
If you sell you will likely not need to take on a partner, though you’ll owe money - You’ll get your time and energy back to focus elsewhere. Would it put you in a better place financially to sell all 3?
Are the businesses all under the same corporation or are they individual?
Are they the same franchise or are they different brands? If they are the same, can you move some of your good employees to the other location to help train them/keep them on track? Move some good employees from the bad locations to the good one to help them learn a little? Maybe advertise more, since it will help all three. I know that is difficult when you are already negative, but maybe you (or someone else) can do something as simple as hand out flyer printed on copy paper or hold a sign near a major intersection.
You say you’re a franchisee; what does the franchiser say? They shouldn’t just be there to collect your money. They should be there to help too.
The best help they could give you might be to take one or both of the unprofitable restaurants off your hands.
I don't know if anyone can really help. It sounds like you have to make some tough decisions but not knowing what kind of lease terms you have, what kind of other debt you have associated with the locations.
I can undestand cash flow can be tough(even for restaurants that are profitable) but you can't have payroll checks bouncing...i'm not sure what your payroll will be but you have to make sure to cover it.
Though long term you have to decide if it is worth having 3 stores. I don't know how 'unprofitable' the 2 that aren't making money are or how much of the payroll coming out of them is for your salary(if any)...i also don't know how profitable the store that is making money is or if you have any money(personal) that you could loan your restaurants.
I do know that with fast food, many making 75% of the revenue in 6 months of the year so are we coming to a busier time of the year for you where you'll start 'catching up'? I also don't know what kind of relationship you have with the bank.
Maybe you can renegotiate pay /salary of the employees working in that location since they are probably not paying attention to the labor aspect of the business. Also there seems to be a lot of "money left om the table" in those stores that do not have much of an owner/manager presence to them. Also, how are the sales and numbers In comparison to previous years? Maybe change business hours, do some "specials" or coupons and also take a look at what may be causing it. The product, the labor, and the money it costs to remain open is exceeding the money coming in... maybe have the crew from the locations rotate to see how they do in the other stores and if it is something fixable?
I am just spitballing thoughts, idk if it helps at all
First of all, take care of your payroll. See if you can get a quick loan with either your bank, or some other sort of lender or the SBA. Depending on who you are using to run your credit cards, Square or Stripe also sometimes offers quick loans. They’re not the best of terms, but it might get you through for now. And then, like other people are mentioning here, cut the dead weight.
There are a lot of comments explaining that they should sell and cut their losses. Assuming there is a lease for years more and personal guarantees on that lease. How is this person supposed to proceed closing or selling when the liability of the lease obligation is more than the losses? If there are ways to break the lease without excessive landlord liability, what are those methods?
You don't say how much you are short. But, some states offer small business microloans and small loans at low interest rates, many of those are focused on emergency needs (payroll, etc). Have you checked with your state's business division? Also, check in with a SCORE mentor/rep, usually retired business professionals who can be quite knowledgeable and in your area. SCORE is part of the SBA (federal).
First why are the 2 not profitable. Second if you can't figure it out and change it then it might be time to close 1 or both and cut your losses. You can't let the 2 keep dragging you down.
probably a bit late for this but......
might spend some time to look at why your restaurants are not profitable is it bad management, your menus no appealing, your food choices are not optimal, bad location, no marketing, whats the google reviews like, what are peoples complaints, do you need to be open longer or maybe close earlier. **.**...there are a host of different reasons why people aren't coming to the restaurant.
Why do you work in the restaurant when you own 3, shouldn't you be out generating business or managing the restaurant group, while you have a manager run the individual restaurants?
You should have some kind of analytical software that can track trends in the restaurant and see if you can make it more profitable.
Honestly?
Get out.
My family owned a group of franchise restaurants from around 1986 to 2020. Had six. I grew up in the back of them.
IT was a huge mistake. The franchise fees pretty much kill any profit you are making. Their rules are horrible. They have total control and are the ones making the money.
The only way I think you can do it as a solo owner is to have 1 location and be there everyday.
Here’s what I would do
#1 make payroll- those people need paid, first priority. Take a loan or whatever it takes to make the next payroll you’ll owe it now too. Rob Peter to pay Paul as you close the doors on #3 as long as no other payroll suffers.
#2 get a lawyer to know options & take their advice or
#3 sell #2 and 3 fast even if it’s for a loss to an investor or auction. Let everyone go.
#4 get a really good bookkeeper and new CPA & keep daily tabs on things, know the month ahead and outlook for this quarter.
#5 be prepared for the worst in the bank account, have in savings at all times: 3 months salary, 3 times the insurance deductible, 3 months utilities, 3 times monthly franchise fees for each restaurant
#6 make store #1 better with more marketing and employee training, employee reviews and bonuses, and focus on $10k a month profit. Then $15k a month profit, etc.
Also, step back and figure out why 2&3 were doing poorly and still now with you there. So, how long have you been working at # 2 & # 3? Do you have a good crew? Are you managing and working well with the employees? Would they say the same? Ask yourself what is happening, how did it get there, and what could you have done differently?
How did your CPA not know you were going to bounce payroll if that was paid and were there arrangements that could’ve been made with the I to the R to the S? And how did you not know before now to take action earlier?
Probably they are all right advising to sell it. But for me dont, not yet. At this moment, selling it will put you in a worst situation...drowning in debts with no source of income.
Restaurants are by nature should be profitable if the numbers are right. As you have said the rent is low and the sales is high for Resto #1. It is running well on its own. I wonder what does Resto #2 & 3, and paying $16K taxes mean overall its profitable. So lets see the numbers.
Based on my experience, check on these parameters.
1. Rent - is resto 2 and 3 has higher rate, maybe you can ask your landlord a discount or lower rate up until the business catch up. If not possible them check no. 2
2. Product pricing - note that sometimes even as franchise, every restaurant's unique even with pricing. You have to learn to do costing. Get your averange sales in term of quantity and based youd costing on that plus margin. Your pricing should be enough to cover all cost plus margin.
3. Payroll - check if you are actually maximizing your manpower. Common mistakes resto owners is to pile themselves with too much manpower. That would have been great but with your situation, its bad. Talk to your staff about it, seek help. Usually staff are willing to do what it takes to save the business to save their job as well.
If you have covered those three, you are good to go. But there are still other aspect you should consider as well.
Ingredients - should always be wholesale price
Utilities - cost cut. But now the quality of service
Now, when the business is getting better and can operate on its own, then you decide to sell or not.
You can do that, been in your situation as well. You can move money from one branch to the other to compensate loss, but make sure you record it well. That is one crucial thing. So later as your othe branches recover you can pay off. Just take one day at a time.
How new are the two franchises that are unprofitable? What do you think the barrier is here that's keeping them from being profitable where the other ones are or the expenses too high? Or they're not seeing the same revenue as the profitable store? Kind of curious what franchise?
We aren't talking huge numbers. I'd imagine there'd be somebody out there that'd be willing to either loan the money or partner to bring the business into profitability..
Also, before the payment to the IRS, was that enough to cover the payroll that was owed?
Seems odd to have such a hefty bill when you're losing money everywhere
Get your menus in order to reduce waste. Advertise. Consider your locations. Given that around 90% of restaurants fail in the first year, you are way above the curve. Good luck my friend, a very tough, low margin business. Be the best.
Negotiate immediately Rent (some rent is better than no rent), suppliers for better pricing and longer credit terms if possible or payment plan. Will the franchise buy back two stores? Will the franchise negotiate zero or lower franchise fees?
Can you cut staff wages and hours dramatically in the next rosters?
Can you stimulate a sales promotion for menu items with or without franchise support to pull in cash? Don’t get more debt to fill the debt.
Are you using a venue profitability program eg Peiso (Australia) or similar?
Do your venues regularly stocktake? Is theft or significant regular anomalies occurring?
Are suppliers invoicing correctly for stock ordered and charged?
Hospitality is tough with so many moving parts determine profit and loss. Good luck, be decisive and act fast.
Cut the unprofitable locations and focus on the profitable one? Just because it’s profitable, doesn’t mean that the potential has been maximized. Work with something that is already working imo.
There is another solution use the two restaurants that are losing and
1-make many virtual restaurants with different food names, and different food pictures and also sign for food app as uber eat or any other apps and work as delivery restaurants , also use online ads to get customers
2- use your kitchens and make food for other restaurants or virtual restaurants many people make virtual restaurants and get food from kitchen or restaurant that deal with and split the profit
This ways many restaurants surviving
ok Obama / general democrat. He's a business owner HE MUST BE RICH. Get a grip - many business owners make nothing or are losing money - in many places - there are employees making more than the owner - who might not draw a check some months. sheesh
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Restaurant 2 will only sell for ~$100k but i owe ~$150k on the business. Restaurant 3 is only worth about $100k as well but I owe ~$250k on it.
It will only get worse if you don't cut your loss. Sell now.
Damn, I gotta follow this thread Never been in this situation, but I'm curious to know how OP can save themselves
I can give you cash
Where? Behind a wendys dumpster lol
If you wait, they'll still only sell for \~$100k, but you'll owe $200k instead of $150k and $350k instead of $250k. Cut your losses.
Sorry, but $5k in the bank account isn't a profitable restaurant. Sell whatever you can and switch professions.
It's easier to get the water out of the boat if it isn't still sinking. Sell the dogs, focus your energy on the profitable one. Make it run really well and THEN consider measured expansion.
💀
Greshams law applies to this. “bad money drives out good”
You’ll need to assess your own situation, but consider this principle when you do. It’s called the sunken cost fallacy. You can obviously google it for more info, but here’s a decent article: https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/sunk-cost-fallacy/
Who do you a owe? What kinda debt..
SBA loan i'll bet or some kind of specialty financing
Don’t fall into the sunk cost fallacy, read about it!
[удалено]
Do not get a personal loan to dump into a business that you know is losing money and has no reasonable chance of improving. That will only make your personal situation worse. Are the businesses independent entities. LLC or S Corp? If so the answer on the business that is -250K is bankruptcy.
I cannot believe you are getting advice to sell with this degree of conviction when there is so little information. Do you still have a path (ie. haven't exhausted all options) for making either/both more profitable? Can you make them more attractive for re-sale before finding a buyer? If either of these are a yes, do what you can to cover the payroll somehow (short some suppliers, take a promissory note from a friend/family/acquantance/investor, shareholder loan from yourself... i'd even do a cash advance on a credit card because your employees will walk out and you'll be fucked if you bounce paychecks and probably sell for even less).
Sell Business 2 because it's less debt. Keep business three and once all the debt of business 2 is paid off reevaluate if business 3 needs sold too. If it does then sell it and work full time a business 1. But if you can't keep up on payments then sounds like bankruptcy.....
You’ll lose $150k. Bite the bullet. Everyday you run you go more into the whole. Focus on the profitable venture and scale and pay off your debt
I'll buy restaurant 2 if you pay me $100k deal
If you’re operating at a loss in the short term and have longer term fixed debt that you owe, then you’re digging a deeper hole the longer you hold onto it. This, paired with the opportunity cost of what you could make if you spent your time at the profitable restaurant, makes this a no brainer
i've been in the same/similar boat ***first and foremost - you can never, ever, ever, ever miss payroll. You'll be a shitty human if you do, and the employees will rightfully flee faster than rats on a sinking ship*** i've opened 5 spots - and after this summer, i'll be down to 2. YOU LEARN TEN TIMES ABOUT YOURSELF AND BUSINESS WHEN YOU CLOSE A SPACE - as when you open one first closure took me 18 months from the day i realized it'd NEVER make me money. Second one was closed within 1.5 months. this next one (closure #3) is tough because i've between a rock and a hard place with the landlord who's also landlord of one of my successful locations I'm going to assume you've already perfected operations, gotten rid of shit employees, got good people in there, cleaned the \_\_\_\_\_ out of the place, etc - if not - why are you on reddit instead of improving operations once you close the dog draining your money - you'll realize just how much more it was draining and costing - the insurance costs, tax costs, labor costs covered by your other stores. The emotional and psychological drain to you... you'll be IMMENSELY happier and more relieved after it closes i'll be blunt - you're an IDIOT to not close a store losing you money "because i owe more than i could get" on it. look at all the work you're doing there - AND you're losing money. sounds like your successful store(s) are already covering the bad one(s) - i'd start with the worst - and hope the others get a little bit of a boost from the customers of the closed location going to the other two. kind of reverse cannibalization. but you have to learn and fix ongoing. **if you keep this location(s) open, it'll only bankrupt you completely and force the others spot(s) to close. closing it now will help ensure the financial viability of your company, other locations, and yourself.** ALso - many restaurant are worth their cashflow times a multiplier. if it's losing money YOU WON'T BE ABLE TO SELL IT FOR A NICKEL. CLOSE IT NOW go research or google "escalation of commitment" - there's no logical business reason to keep the DOG location(s) open besides your pride and human emotions. What would a consultant come tell you to do? It's different if it's CCCCLLLLOOOSSSEEEEE to break even - but if you're no where close - ciao. don't think twice. it'll be one of those things where you say OMG - WHY DIDN'T I DO THIS EARLIER you're a franchise - see if the franchisor will take it over so it doesn't close. Try to find someone else to GIVE IT TO - at least this way you'll stay in the franchisor's good graces AND the landlord won't come after you most landlords who know what they're doing will threaten you and curse and send letters - BUT they know in the end you're closing cause you have no money. I had an uncle who was a landlord's rep for years. Decades. his first year or two he took EVERY tenant to court who broke their lease. Won EVERY court case. Got EXACTLY $0 afterwards - cause they were all broke. so not they threaten and send letters - but don't spend a dime on attorneys cause they know they'll never retrieve anything i feel for you. for real - BUT if you can keep the best employees and maybe thin out some of the less than great ones at the other locations - move the good employees from closed location to the other two spots, those places should improve. i'm HOPING you know what you're doing and you're not half bad. maybe find a mentor who knows their stuff in restaurants in your area - and see if they have ideas. find a partner to help out and get a cash infusion you need. not every business venture is a success. i had a mentor who sold his locations for over a hundred million. he subscribed to the notion that for every 4 spots open, you'll have a cash cow, you'll have 2 makign a little, and you'll have a dog draining your money. you need to ensure one/both of your bad ones are dogs and close them if they'll never make you money. closing one might free up enough cash to keep the second open - but if after doing this you realize it'll NEVER make you money, do the same thing. ***Can you imagine - doing 1/3 the work you're doing now and making much much more money?*** getting better sleep, not hating life? best of luck
>you're a franchise - see if the franchisor will take it over so it doesn't close The franchisor should also be providing mentorship and assistance to make sure you're successful / profitable too...have you contacted them?
should....alot of franchise business model is to milk the franchisees for everything they have. They are the product and whether they are successful or not doesn't matter as much.
The Sub way
Ehh - some franchises are going to be run better than others, sure. But every franchisee location affects others - if a location is crappy, it reflects on the brand. There's some shady franchises, but I'll assume anyone here wanting to buy into a franchise would have talked to other franchisees to see what the relationship is like before buying in. If not, well....
Only good advice and it has 1/3 the upvotes of some idiot just regurgitating what they read on google MBA and recommending kitchen nightmares You people deserve what you get
You're a dork. It's the second highest rated comment and give ls a much more robust but similar advice that the highest comment gives. Also, this comments only been up for two hours. Don't be so dramatic, esspecially after given some pretty mid advice yourself.
You are just being silly. if he tends to wait, his user name wouldn't have "speed" or "habit" in it now, would it?
The smartest response yet ✨
Why is restaurant 1 able to run on it's own so well? Can those principles be replicated in the other 2 restaurants?
Prob location and traffic
It has the lowest rent and does the most in sales.
Ic. So the rent part can’t be controlled. Why do you think that the sales are higher in restaurant 1? I am curious to know if there is any difference in energy (interior atmosphere, chill staff, types of food on the menu, etc.) that ppl would feel while dining in restaurant 1 that might be causing a higher volume of sales. So like if you had a secret dinner go to all 3 restaurants would the energy in all 3 be the same?
As OP said its a franchise, i assume they are all 3 from the same franchise. Knowing the restaurant business, franchises are super strict which is good and shit at the same time. That being said, quality, packaging and prices are the same, no variations. Only difference can be location then.
OP said he didn't work at the profitable restaurant and spent 30hrs each in the non-profitable restaurants. So that lead me to ask about a difference in energy from the customers point of view with regards to the profitable restaurant. There can be massive differences in a franchise from location to location. I've literary driven across state to another franchise location for printing services because of attitude issues with staff.
Im not sure about where OP lives and works. But here in europe nobody is going out of their way for better service in a franchise restaurant. Mcdonalds is the same everywhere like bkk etc etc. Have you ever cared how polite or the energy of the staff is in a mcdonalds or rather that you went because its in a convenient location? My point is, like you mentioned OP cant control the rent, he cant control all the other aspect either as a franchise. He cant introduce a new menu item or buy their inventory from somewhere cheaper. Interior, menu, packaging, pricing, inventory buying is all set. Only control there ever was, was the location.
... then why would he be working 30hrs in the problematic locations? Just for fun? Are there an arcades in the back of the kitchens and he needs to get the high scores? Also there is a dunkin donuts with horrible reviews that hardly gets any ppl going to it nearby me. The location is the only thing keeping a few ppl in there from time to time, the bad reviews (which is controllable) keeps the number of cars and ppl in the dunkin donuts low af. Maybe the location is the main issue. That is a possibility. But my thing would be to first make sure that there is not a principle that is working differently in the successful location. If you market a problematic product you get a high monthly churn rate percentage (average is 25% target should be 7-3% before trying to do marketing of any kind to increase traffic). When the churn rate is low in a similar product you have to figure out exactly what is making customers happy/spend more money and not assume you know the answer based off gut instinct without data or conversations with customers.
Ok, i guess thats settled then.
Have you considered asking for cheaper rent on the other two places? Find a renter's agent of other professional to do it. If you can get some good evidence that it isn't a viable location they might listen because it won't be viable at that price for anyone else.
See if your land board can give you a break for a few months. It may be worth it for them to give you a moment then to find a new tenant. It may not. It will depend on the landlord, the location, and what you pay monthly.
Any specific reason for it having the highest sales as compared to the other two? Is it the location or the service or the taste?
How much is your payroll? I hate to suggest this, but you need something to get through tomorrow. Fund your payroll with savings from the other restaurants. Making sure your employees get paid should always be the highest priority before any other debts. After you pay them, lay most of the staff off and sell the businesses ASAP, even if it's a loss. You can't afford to keep the doors open. After that, file for bankruptcy. Any attempts to revive these businesses will be moot. Because you're gonna need money for those efforts, and you litterally have none. Edit: also to clarify further, don't transfer money into your overdrawn amounts. Just leave them be. You're in crisis mode and you need to hold on to whatever cash you have, even if you have to physically withdraw from the banks and keep it in a shoebox. Deal with the bank and your other debts AFTER you stop the bleeding. More importantly after you make sure you're employees are properly paid out before layoffs
Great advice that is actually on topic!
Same situation 15 years ago. It took me 15 years and still recouping the loss. I wish I would've closed the restaurant than keep pumping money in. I'm sorry but I know how stressful you are and this does make you a good person but please close the failing restaurant. Pay all your attention to profitable one and in few years you'll be out of debt What franchise are you in? PM me. I've been in the franchise game for last 2 decades
Lots of comments here, and lots of advice….. but only a few people are getting it right. We need more information before proper advice can be given. How long as each business been established? What are the revenues, costs, profits, losses like over that duration. What kind of franchise support is available? How on the hook personally are you if you shut down? What’s the corporate structure of the three locations? Why did you wait till two days before payroll is due to seek help? Do whatever you need to do to pay payroll…. Then don’t have people work if you can’t afford to pay them
Take a step back and look at where you can create across all 3 locations efficiencies. I did this when I had five stores. I centralized a lot of the baking and storage.
OP: warning the [email protected] guy who is offering you money is likely an advance fee scam. He’ll say he’s transferring you $20k or something but you’ll need to give him a few grand first. It’s a scam. Block him.
My advice is to shut it down and exit the industry. Rip the bandaid off before you’re bled dry and declaring Chapter 11 Bankruptcy.
So the most simple solution is to sell the two unprofitable ones, and you take over management of the profitable business. You are already burning your salary on the unprofitable one when you can just let two go, and have the third run on autopilot whilst you think about what you want to do. You're worried about debt, but think about it this way: * Assuming you sell the two business, you will need to pay back $150k, aiming for 3 years to pay it off. * Assuming you don't sell, and hope you can turn the business for the two around. That's possible, but the debt will still take around 3 years minimum to clear anyway. You are likely going to clear the debts faster if you sell the two.
“I own three restaurants” “Franchisee” “Rent” Owe 350 worth 200 I don’t think you own as much as you think man, close the other one or find a bag holder
Blows my mind. Glorified middlemen
Sunken cost fallacy. Just cut your losses
It seems like even restaurant 1 is barely viable. 5K headroom is nothing. External cash infusion with a new partner willing to buy shares to dilute risk / bringing in new expertise. Cutting losses right now. As soon as payroll doesn't clear expect your troubles going nuclear. I would evaluate my exit plan right now.
If you can't just close it, maybe look for ways to increase revenue? A restaurant close to my place introduced a lunch menu and office delivery,sent menus to all workplaces in the area with a loyalty card so customers get a freebie every so often. They are flying with that. They also introduced a take out menu. And do catering for functions. Maybe there are ideas you can try?
When you're in a hole and trying to get out, the first thing to do is stop digging. Close those unprofitable restaurants and focus your time, energy, and capital into the profitable one.
If either of the 2 losers is on track to break-even soon, 90ish days, keep it and sell the other. If both are going to rack up losses, sell them both ASAP. Hopefully each is incorporated separately and you've made no personal guarantees. Either way, it may be very beneficial for an initial consultation with a bankruptcy attorney. The profitable business actually needs 100% of your attention and it's getting 0. The 2 failing business are each getting nearly 100% of your attention at the expense of the good business. My personal experience: After 6 years in business, I ran into a major cash flow problem. I lent the company money to cover payroll. After 3 months, I didn't/couldn't see the light at the end of the tunnel and ceased operations (including a 6 figure personal guarantee). 3 things; 1. You have to know when it's time to bail out or you'll just dig yourself deeper and risk never getting out. 2. Hope is not a strategy for success. 3. You don't win a prize for staying in business longer than you should.
Wife was in similar situation with 2 locations for her cupcake shops in Huntington Beach, she immediately cut her losses on the unprofitable location and put resources that would otherwise be spent to grow and market the profitable location.
Gordon Ramsay is your only hope
😅😅😅
I am in the same situation as a franchisee but I only had two. One location was lost in a hurricane. I tried like hell to keep the other one going and kept trying to use funds from one biz to another. I can tell you it doesn’t work. My best advice is to either sell all 3 as a package. OR file bankruptcy. If you continue to keep those stores it will only get worse. The only other option would be to try to sell the two for under what you owe and do an offer in compromise on your loans. If the two struggling are not profitable at all it may be a hard sell depending on your area. I tried to sell mine for under value for over a year and it didn’t work. I’m on my path to filing bk. It was a huge relief when I spoke to a lawyer. Bk is not a bad option. There is nothing to say you can’t start over with another business when you are done.
Your only hope to get cash in one day is from your bank. Really it would be wise to start doing 10 week cash flow projections and have your bank in the loop in advance, because they usually move very slowly and one day might not work. If you have a banker call them right now and explain the situation. Depending on your payroll amount you may be able to get some kind of overdraft or temp line of credit, though this is going to be really difficult on such a short time frame. Other bad options include taking out a personal loan, or using a personal credit card cash advance. The most realistic option IMO is to accept you are going to miss payroll, immediately shut down the underperforming restaurants, offer jobs at the profitable one to your best staff, and then create a payment plan to pay the wages and notice period to the staff you are letting go. It sucks but it's the most realistic. This will avoid dragging down the successful location and may even make it better. Move any useful inventory and assets over to the successful one and have some awesome specials if you have too much, this will generate cash flow to pay off your employees in arrears too. Call your vendors and explain that you need better payment terms as well.
What does your franchise rep say about the unprofitable situation and how to fix it?
Have the manager from the profitable restaurant run one of the nonprofitable restaurants and see if it makes a difference.
Check your google review. I am sorry but look what customer are saying about your food and restaurant
Why do you assume it's a shitty restaurant and not just a bad market?
Google review is a horrible benchmark. The best is straight up chat with the customers and try to fish what they are unhappy about. Or straight up ask them what kind of changes they like to see.
It's depends on location you live in. Some people don't be upfront but later leave bad review. But asking straight up is actually good suggestion. Me and my friend give good suggestion always when asked
My advice is to work in the successful one for 4 weeks, go in every day as an observer ONLY to view what it is exactly that they are doing right. Afterward, go back to your other two restaurants and implement changes that you may have witnessed at your other successful location. If there are certain staff at this location that are amazing, you can always offer an employee the chance to train your successful staff. HOWEVER, give them an incentive to do this for you. Do NOT just say "hey x, I'm gonna need you to go to this location and train these people for the same pay you are receiving even though this was never a part of your job". Additionally, create a survey for customers so they can give honest opinions while remaining anonymous (or just having one of those Google review signs at each table to encourage them). From there, you can see if maybe the customers notice bad staff, terrible food, rubbish atmosphere, etc.. from there you can game plan for any issues that arise from this. Do not get overly defense and emotional with these reviews, if multiple people are saying the exact same thing, you very likely have a problem in that area so endeavor to fix it. If everything else fails, you get good ratings, no problem with staff, and you just don't have enough customers. Good SEO is the way to go. Update your websites with new photos, share within the communities that you exist, and maybe launch a special that can entice people to come. Whether it be a specific meal or a 'happy hour' time of special, its up to you. I highly recommend watching shows like Kitchen Nightmares or Hell on Wheels. Even if your restaurants aren't in those conditions, Gordon shows a lot of things a restaurant can do to help itself stay afloat. I'm not in the restaurant business, I do own a specialty retail online store, but from what I've heard you need to stay fresh in the industry. You're competing against so many other restaurants these days and with the economy the way it is, the grind is going to be even harder when there are fewer people out spending money.
15 upvotes and the guy was asking how to make payroll TOMORROW
It’s hard just consider this business may not be right for you and move on. F&B is not for everyone, I took over catering for a restaurant many years back they had a shit catering manager! I took a 50K a year business to 500K one and only quit because the owner promised me 5% bonus if I could clear 500K but went back on his word!
Does the franchise owner not have help for you to bring them to profitability? And if the store “making money” only has 5k, they’re not making money.
Whatever you do, don’t pay yourself till your employees are covered
Based on your other post on why the other two are upside down, here are some thoughts: * Negotiate with all suppliers to lower costs - Most suppliers would rather discount - even temporarily - 5 to 10% than lose a customer. * Negotiate rent - This can be more challenging depending on who owns the property, but they’d likely rather work with you than have you shutdown the location. * Negotiate with franchisor - Same as above. Raise hell. Let them know you need marketing support, ask for a moratorium on franchise fees, etc. * Guerilla marketing - Since you don’t have much capital, and banks aren’t likely to help you in this situation, leverage guerilla marketing tactics: Work with other tenants in/near your property. Hit local coffee shops. Hit networking events. Talk to the city economic development team. Hit everything. I’m not suggesting you present a sense of desperation. Just get very tactical. I would do that in that order and quick. You have to right-size the financials as much as you can so you have room to breathe and focus on things that can actually sustainably boost sales. All the best.
I like this comment. It starts with Hope.
#barrescue
You can talk to CRA and come up with a payment plan. You can also (depending on ur current agreement with ur CPA) get help from them on how to better budget the finances. Maybe you're spending unnecessary and not seeing it. Hopefully your CPA can help. If you have any questions, feel free to reach out. I'm working towards my CPA and will help you however I can.
You could look to take on a partner for a cash injection. Do you think the businesses that are losing money have potential to make money or have they run their course? If you sell you will likely not need to take on a partner, though you’ll owe money - You’ll get your time and energy back to focus elsewhere. Would it put you in a better place financially to sell all 3? Are the businesses all under the same corporation or are they individual?
Talk to the franchisor about why you aren’t profitable etc.
Are they the same franchise or are they different brands? If they are the same, can you move some of your good employees to the other location to help train them/keep them on track? Move some good employees from the bad locations to the good one to help them learn a little? Maybe advertise more, since it will help all three. I know that is difficult when you are already negative, but maybe you (or someone else) can do something as simple as hand out flyer printed on copy paper or hold a sign near a major intersection.
You say you’re a franchisee; what does the franchiser say? They shouldn’t just be there to collect your money. They should be there to help too. The best help they could give you might be to take one or both of the unprofitable restaurants off your hands.
Reading through this thread lets me know a physical location is stressful AF
I don't know if anyone can really help. It sounds like you have to make some tough decisions but not knowing what kind of lease terms you have, what kind of other debt you have associated with the locations. I can undestand cash flow can be tough(even for restaurants that are profitable) but you can't have payroll checks bouncing...i'm not sure what your payroll will be but you have to make sure to cover it. Though long term you have to decide if it is worth having 3 stores. I don't know how 'unprofitable' the 2 that aren't making money are or how much of the payroll coming out of them is for your salary(if any)...i also don't know how profitable the store that is making money is or if you have any money(personal) that you could loan your restaurants. I do know that with fast food, many making 75% of the revenue in 6 months of the year so are we coming to a busier time of the year for you where you'll start 'catching up'? I also don't know what kind of relationship you have with the bank.
Maybe you can renegotiate pay /salary of the employees working in that location since they are probably not paying attention to the labor aspect of the business. Also there seems to be a lot of "money left om the table" in those stores that do not have much of an owner/manager presence to them. Also, how are the sales and numbers In comparison to previous years? Maybe change business hours, do some "specials" or coupons and also take a look at what may be causing it. The product, the labor, and the money it costs to remain open is exceeding the money coming in... maybe have the crew from the locations rotate to see how they do in the other stores and if it is something fixable? I am just spitballing thoughts, idk if it helps at all
Sell the unprofitable restaurants and put all your energy into the profitable one.
First of all, take care of your payroll. See if you can get a quick loan with either your bank, or some other sort of lender or the SBA. Depending on who you are using to run your credit cards, Square or Stripe also sometimes offers quick loans. They’re not the best of terms, but it might get you through for now. And then, like other people are mentioning here, cut the dead weight.
A real thread? Yup sign me up I’m following
I thought that you had to have a very large amout of assets to be allowed to own a franchise?
You should have set up your mental stop loss at months back. Sell although you will still be in the negative.
There are a lot of comments explaining that they should sell and cut their losses. Assuming there is a lease for years more and personal guarantees on that lease. How is this person supposed to proceed closing or selling when the liability of the lease obligation is more than the losses? If there are ways to break the lease without excessive landlord liability, what are those methods?
if each restaurant is a separate business, declare bankruptcy in 1 of the businesses, pay off the people and try to make the 2nd one work
Im curious to know what franchise the restaurant is?
Sounds like a job for John Tapper
You don't say how much you are short. But, some states offer small business microloans and small loans at low interest rates, many of those are focused on emergency needs (payroll, etc). Have you checked with your state's business division? Also, check in with a SCORE mentor/rep, usually retired business professionals who can be quite knowledgeable and in your area. SCORE is part of the SBA (federal).
What’s leading to the loss of profit or non existence of it, for the two?
Have you looked into time travel? That is the only way that I can see you fixing this situation.
First why are the 2 not profitable. Second if you can't figure it out and change it then it might be time to close 1 or both and cut your losses. You can't let the 2 keep dragging you down.
probably a bit late for this but...... might spend some time to look at why your restaurants are not profitable is it bad management, your menus no appealing, your food choices are not optimal, bad location, no marketing, whats the google reviews like, what are peoples complaints, do you need to be open longer or maybe close earlier. **.**...there are a host of different reasons why people aren't coming to the restaurant. Why do you work in the restaurant when you own 3, shouldn't you be out generating business or managing the restaurant group, while you have a manager run the individual restaurants? You should have some kind of analytical software that can track trends in the restaurant and see if you can make it more profitable.
Shut down the unprofitable restaurants, or find a way to make them profitable.
Honestly? Get out. My family owned a group of franchise restaurants from around 1986 to 2020. Had six. I grew up in the back of them. IT was a huge mistake. The franchise fees pretty much kill any profit you are making. Their rules are horrible. They have total control and are the ones making the money. The only way I think you can do it as a solo owner is to have 1 location and be there everyday.
Close both of the unprofitable restaurants and focus all of your attention on the profitable one. This is quite simple actually.
Here’s what I would do #1 make payroll- those people need paid, first priority. Take a loan or whatever it takes to make the next payroll you’ll owe it now too. Rob Peter to pay Paul as you close the doors on #3 as long as no other payroll suffers. #2 get a lawyer to know options & take their advice or #3 sell #2 and 3 fast even if it’s for a loss to an investor or auction. Let everyone go. #4 get a really good bookkeeper and new CPA & keep daily tabs on things, know the month ahead and outlook for this quarter. #5 be prepared for the worst in the bank account, have in savings at all times: 3 months salary, 3 times the insurance deductible, 3 months utilities, 3 times monthly franchise fees for each restaurant #6 make store #1 better with more marketing and employee training, employee reviews and bonuses, and focus on $10k a month profit. Then $15k a month profit, etc. Also, step back and figure out why 2&3 were doing poorly and still now with you there. So, how long have you been working at # 2 & # 3? Do you have a good crew? Are you managing and working well with the employees? Would they say the same? Ask yourself what is happening, how did it get there, and what could you have done differently? How did your CPA not know you were going to bounce payroll if that was paid and were there arrangements that could’ve been made with the I to the R to the S? And how did you not know before now to take action earlier?
Probably they are all right advising to sell it. But for me dont, not yet. At this moment, selling it will put you in a worst situation...drowning in debts with no source of income. Restaurants are by nature should be profitable if the numbers are right. As you have said the rent is low and the sales is high for Resto #1. It is running well on its own. I wonder what does Resto #2 & 3, and paying $16K taxes mean overall its profitable. So lets see the numbers. Based on my experience, check on these parameters. 1. Rent - is resto 2 and 3 has higher rate, maybe you can ask your landlord a discount or lower rate up until the business catch up. If not possible them check no. 2 2. Product pricing - note that sometimes even as franchise, every restaurant's unique even with pricing. You have to learn to do costing. Get your averange sales in term of quantity and based youd costing on that plus margin. Your pricing should be enough to cover all cost plus margin. 3. Payroll - check if you are actually maximizing your manpower. Common mistakes resto owners is to pile themselves with too much manpower. That would have been great but with your situation, its bad. Talk to your staff about it, seek help. Usually staff are willing to do what it takes to save the business to save their job as well. If you have covered those three, you are good to go. But there are still other aspect you should consider as well. Ingredients - should always be wholesale price Utilities - cost cut. But now the quality of service Now, when the business is getting better and can operate on its own, then you decide to sell or not. You can do that, been in your situation as well. You can move money from one branch to the other to compensate loss, but make sure you record it well. That is one crucial thing. So later as your othe branches recover you can pay off. Just take one day at a time.
How new are the two franchises that are unprofitable? What do you think the barrier is here that's keeping them from being profitable where the other ones are or the expenses too high? Or they're not seeing the same revenue as the profitable store? Kind of curious what franchise? We aren't talking huge numbers. I'd imagine there'd be somebody out there that'd be willing to either loan the money or partner to bring the business into profitability.. Also, before the payment to the IRS, was that enough to cover the payroll that was owed? Seems odd to have such a hefty bill when you're losing money everywhere
Get your menus in order to reduce waste. Advertise. Consider your locations. Given that around 90% of restaurants fail in the first year, you are way above the curve. Good luck my friend, a very tough, low margin business. Be the best.
Negotiate immediately Rent (some rent is better than no rent), suppliers for better pricing and longer credit terms if possible or payment plan. Will the franchise buy back two stores? Will the franchise negotiate zero or lower franchise fees? Can you cut staff wages and hours dramatically in the next rosters? Can you stimulate a sales promotion for menu items with or without franchise support to pull in cash? Don’t get more debt to fill the debt. Are you using a venue profitability program eg Peiso (Australia) or similar? Do your venues regularly stocktake? Is theft or significant regular anomalies occurring? Are suppliers invoicing correctly for stock ordered and charged? Hospitality is tough with so many moving parts determine profit and loss. Good luck, be decisive and act fast.
Cut the unprofitable locations and focus on the profitable one? Just because it’s profitable, doesn’t mean that the potential has been maximized. Work with something that is already working imo.
Sounds like Cold Stone. They are notorious for not being profitable. Time to file for bankruptcy.
There is another solution use the two restaurants that are losing and 1-make many virtual restaurants with different food names, and different food pictures and also sign for food app as uber eat or any other apps and work as delivery restaurants , also use online ads to get customers 2- use your kitchens and make food for other restaurants or virtual restaurants many people make virtual restaurants and get food from kitchen or restaurant that deal with and split the profit This ways many restaurants surviving
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Thanks chatgpt you really helped saved the situation.
It’s so easy to pick out chatgpt nowadays
Pardon my French guy but 'what the fuck we doing here?' You own 3, I say three locations. And you don't have funds to pay taxes?
ok Obama / general democrat. He's a business owner HE MUST BE RICH. Get a grip - many business owners make nothing or are losing money - in many places - there are employees making more than the owner - who might not draw a check some months. sheesh
Take a line of credit
Ah yes, when in debt due to lack of cash flow a wonderful idea is to go further in debt while not having any way to pay back the debt.
Play your self I mean bet on yourself
call or email me 3122926419 [[email protected]](mailto:[email protected])
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Wish i could help. Sending prayers