Restaurant Sector: Survival and Potential Conflicts, Part 5

  • Restaurant 8Restaurant owners/operator vs. lenders: lenders are somewhat suspicious of restaurants and the perceived high failure rate. While there are periods of easy money and credit, single unit operators at best have very constrained credit availability, and the big chains and successful large franchisees have it somewhat better.

But even the large chains are not immune to over leverage and debt. Too high debt is the number one predictor of restaurant bankruptcy. Perceived restaurant profitability and access to capital are linked as one would think, but overall lender attitudes remain difficult.

  • Restaurant owner/operators vs. employees: owners/operators work together best if their self-interest is joined. Employees want the best hours, more money and promotion potential. Owner/operators are interested in retaining and developing staff, getting compliance to established procedure and consistency and to manage costs.
  • Restaurants are said to be penny businesses, they focuses on the pennies so that profit later develops. As such, training, wages and sometimes wage and hour legal compliance become problematic areas where some employers, particularly those under market and financial distress, focus on cost control to their ultimate determent.

About John Gordon

John A. Gordon is a restaurant sector expert, who focuses on restaurant management, operations, and related earnings and economics matters. He consults with attorneys and other professionals who need to know about restaurants, via expert research, expert consultant and expert witness roles. Working for both plaintiffs and defendants, he has experience with both state and federal actions. He is an expert on chain restaurant business conditions and publicly traded companies. Gordon has extensive, career-long executive restaurant operations, corporate staff, financial management and management consulting experience, and is familiar with virtually all management issues and business disciplines. He has completed PSLRA securities, financial projections, due diligence reviews, earnings and damages, franchisee/franchisor matters, wage and hour and menu analysis expert work. Expert witness and article contributor for www.ForensisGroup.com

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