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Eatery Listings Abound, But Fewer Buyers Biting

The effect of San Diego’s declining housing market is spilling over into the restaurant industry.

While there is no Multiple Listing Service for restaurants and bars, Jeanne Sanders, a veteran agent with the Riboc Group, a local business brokerage, estimates that there are at least 100 of them for sale, and that they’ll be on the market longer and go for substantially less than they would have a couple of years ago when the hospitality industry was at its peak.

“When housing went into a downward curve and the economy turned sour, that caused people to dial back on their spending,” Sanders said. “So that favorite hot spot where they went to drink, dine and party is not as hot anymore.”

There are about 1,000 restaurants in the county, according to Steve Zolezzi, executive vice president of the San Diego Food & Beverage Association.

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Sanders says the tally of listings, which is dominated by independent, locally owned venues, is up from 2006 and 2007. But she isn’t sure by how much. Furthermore, many owners opt to try to sell via arm’s length transactions rather than advertise their business with a brokerage.

Sanders projects that the current listings will take from six months to a year to sell, and many likely will not sell.

Greed’s Not Always Good

“I think the biggest mistake operators make is not selling when they’re at the top,” she said. “They get greedy and they hang on.”

She recalls that before the latest economic meltdown, she could depend on having purchase agreements signed no less than 24 hours after a buyer made an offer, and there’d be backup offers if that fell through.

Now it’s another story.

“While I still have people looking and there are still tire kickers, they’re either private investors or they have cash,” Sanders said. “But if a buyer makes an offer and it’s accepted, they’re very slow to write the check. They get excited at finding a place, then because of the economic climate, the juice wanes a bit, and they’re saying, ‘whoa.’ ”

On Nov. 12, Riboc’s Web site advertised listings for 27 eateries and bars, including four in the Gaslamp Quarter. The asking prices ranged from $85,000 for a 10-year-old, 1,600-square-foot beer and wine bar downtown to $2.25 million for a Gaslamp Quarter nightclub. Sanders declined to give the names of the venues for sale, citing confidentiality agreements. She also declined to name any that she sold this year, citing company policy.

Mike Spilky, who co-owns Location Matters, says that his restaurant brokerage currently has 22 listings, roughly half of which are asset sales.

Offering Prices Down

He says that overall, current offering prices are down about 30 percent from a year ago.

According to the brokerage’s Web site, the prices range between $250,000 for a coffee shop in Pacific Beach to $2.1 million for a sports bar and restaurant in central San Diego, while asset offerings range between $175,000 for a Fallbrook restaurant to $795,000 for nightclub space downtown.

This year, the company has sold eight restaurants, he says. They include Luna Lounge downtown; Rookies, a sports bar in Oceanside; Cendio in La Jolla, now called Vigilucci’s; and the Old California Mining Co. on Restaurant Row in San Marcos.

Steve VandenLangenberg, who bought Rookies in March, won’t say what he paid for the 13-year-old, 7,500-square-foot establishment and its full liquor license, but does say business is down 20 percent from what he expected.

That may be because it was closed for seven weeks while the liquor license was being transferred. The license had been suspended under the previous ownership, he says.

“I’m not losing money,” VandenLangenberg said. “I’m just not making what I thought I would.”

The Food & Beverage Association’s Zolezzi says business at the county’s restaurants is down about 30 percent from last year.

That doesn’t mean that all are suffering, of course.

“Those with mid- to lower price points are better situated in this economy than high-end places that sell a lot of meat or seafood, or those whose operating costs are high because they’re trying to retire debt on construction,” Zolezzi said.

Nonetheless, “It’s a buyer’s market and values are not what sellers would like them to be by any means,” he added.

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