A tasty business ventureBusiness Sales Article
Quality dining packed with experience is undergoing a major renaissance – now is the perfect time for restaurateurs to sell their business
The appetite for upscale restaurants dishing up quality cuisine that provides its customers with great service, ambience and an unmatchable experience are in hot demand right now – and not just from foodies.
With New Zealanders and tourists increasingly devoting a bigger share of their wallets to upscale cuisine that provides both quality and experience that can’t be replicated online, restaurants are primed for a renaissance.
The popularity of television shows such as MasterChef as well as the ever expanding consumer search for something unique, that stands-out and provides a great experience to photo or chat about with friends and family have given restaurateurs a massive point of difference to pursue.
Not only are Kiwis out and about taking in the sector’s resurgence, but a booming tourism industry has elevated the upscale restaurant sector’s buzz, and along with it the sector’s prosperity and investor appetite.
So why is now a good time for restaurant owners to consider selling?
There will be a variety of reasons restaurant owners will seek, or should seek, to sell their business – from a change in life circumstances to the discovery that running a restaurant is not for them. Some may be thinking of trading up to a bigger restaurant or cashing out some profits after building up their business.
The need to refresh
Shifting trends within the hospitality and food sectors has underscored the need for those already in the industry to refresh and refocus.
Instead of the traditional standard quality of cuisine experiences dished out in New Zealand, a growing pool of foodies have emerged who are increasingly looking for an experience that is only outdone by the quality of the meal. While this can include the novel, innovative experiences like eating in the dark, a winning situation with the right amount of effort and attention to detail can be eating in a space where you can see and interact with the chef preparing the food, enjoying a meal that has a story attached to it, or a scene setting with just the right level of ambience, fun and laughter. And if the restaurateurs get it right, consumers are willing to pay a premium for these types of experiences and will linger for much, much longer.
With our rapid rise in immigration and tourism, the opportunity to create a culinary fusion of epic proportions has been served right up to our doorstep. Our local food industry has become even more of a multi-cultural melting pot in recent years, with ingredients, flavours and cooking styles from all over the world. It is often the case that the latest and greatest dining scenes are blending both global cuisine and experience, and exceeded expectations while doing it.
Globally, New Zealand restaurants are renowned for their creativity and focus on premium, fresh ingredients, and many have achieved household recognition. Some of the best restaurants right now include Auckland’s Soul Bar & Bistro, Euro Bar and Restaurant, The French Café as well as Gatherings in Christchurch and Pacifica in Napier.
The market is hot
There seems to be no shortage of people who want to own a restaurant or acquire the talent housed within. Food innovation is no longer the preserve of restaurateurs: today, entrepreneurs from all backgrounds are making gourmet creations.
Grant Hattaway has been a part of the hospitality sector for 20 years, which has included stints as a restaurant owner. “Now’s a great time to get into the hospitality industry, I’ve never seen more activity and interest in the sector and there’s always room at the top,” he says.
Recent data shows that New Zealanders are spending proportionally less on groceries and more on eating out. Rising supermarket prices are also a factor he says, “it’s often the same price to buy ingredients as it is to eat out.”
On the back of such significant rises in house prices, and the ongoing support of a positive economy, there is now a larger pool of people aged 40 plus who are spending more of their disposable income on an afternoon lunch or night out in the city.
Not to be left out, the under-30s are the biggest spenders on food, allocating around 20 percent of their budget to eating out. “Eating out has become the social norm for millennials,” Mr Hattaway says. And the proportion of this spent on eating out in an atmosphere and an experience that is ‘Instagram’ worthy is a lucrative trend for the restaurateurs of today and the future.
Recent movement in the sector includes the sales of Soul Bar & Bistro and Oyster and Chop in Auckland and Pier 19 in Queenstown, with Bayleys involved in all three.
Soul Bar, a fixture of Auckland's fine dining scene for more than a decade, was sold to Nourish Group, who also owns Auckland's Euro and Jervois Steak House, and Shed 5 and Pravda Cafe & Grill in Wellington.
Oyster & Chop, which like Soul Bar is in Auckland's Viaduct, was sold to restaurateur Mike Opperman, who also owns Dixie Browns.
Mike has said the tourism boom, and the Viaduct's ability to capture a large proportion of tourism spend, was a critical factor in his decision to buy the restaurant.
Bayleys’ head of tourism and business sales Paul Dixon says the market is unique in that it is not only attracting new operators and buyers looking for businesses to cater for and benefit from the expected growth in tourism, but is also providing the ideal platform for existing owners to cash up.
“Many tourism related businesses have now enjoyed a few good years off the back of very difficult times during the Global Financial Crisis. With businesses now realising their potential, owners are taking the opportunity to either cash up and retire or move onto their next venture,” Dixon said.
Carolyn Hanson, tourism, leisure and hospitality agent for Bayleys notes that some businesses are now selling for three times their profit earnings. “That’s a ratio owners weren’t able to get three or four years ago. As a result, Bayleys has a great range of tourism-related businesses on our books along with an increasing database of potential buyers.”