Apr 17, 2020

How To Liquidate And Close A Restaurant

As a restaurant owner, there are some things that impact your business that you can’t  control.  The great recession of 2009 and the COVID-19 pandemic of 2020, are just two examples from recent history where outside forces quickly killed a strong economy.  Many restaurant owners find themselves at the mercy of such catastrophic events, causing their businesses to fail.  If you find yourself in that situation, and are wondering what to do next, this video segment is for you.  

I’m Larry Morgan with RL Liquidators, and over the past ten years we’ve helped hundreds of businesses, including many dozens of restaurants, reclaim value from their assets after they’ve closed their doors.  We understand how difficult this time is for you, and want to offer some advice to help you achieve the best possible results, as well as share some common pitfalls we hope to help you avoid.  When any business closes prematurely, defaults on legal obligations are common.  We are not attorneys, and so want to be very careful not to give any suggestions that may be construed as legal advice.  If the close of your business results in defaulting on legal obligations, we encourage you to seek competent legal counsel to help you navigate those defaults.  After all of that has been resolved, you will likely have some, or all, of your restaurant assets remaining; both supplies and equipment.  

The most common, and potentially devastating, pitfall that we see restaurant owners stumble into over, and over again, relates to those assets.  Let me preface this with, we understand the restaurant owners point of view.  We know how much you paid for all the supplies and equipment in your restaurant.  We know how much it is to buy new, or how much-used equipment costs to refurbish.  We know how much you have invested, and likely what you’ve sacrificed be able to invest it.  We also know that this is likely the first time you’ve experienced a business failure, and just because the restaurant has failed doesn’t mean your dreams have died. Immediately after closing, those dreams can burn brighter than ever, and we often see restaurant owners come out with a renewed determination to achieve them. 

As a result of these two things, the cost of the assets and your continued drive to succeed, people often fall prey to the simple, yet devastating pitfall, of placing everything in storage.  They do this because they believe that they will use it all again to open another restaurant at some undefined time in the future, and that one will be much more successful than the last.  They believe they have learned their lessons, and know what mistakes to avoid to make it all work next time, so it won’t be in storage for long.  We understand all of that,  because we’ve seen it; more times than we can count.  Experience, however, has given us a different perspective.  In our experience, once those assets are placed into storage, they rarely come back out.  The person who stored them, full of conviction that they would use them again, pays storage fees, often for years, until they finally accept that it’s time to sell them and move on.  Sadly, by that time the assets have lost much of the value they had when the restaurant first closed.  Any supplies and equipment simply lose value over time, and restaurant assets are no exception.  So, for the time the person has been paying storage, the assets they’re storing have been steadily declining in value.  In the person’s mind, the assets retain the value they had when the restaurant closed, so when they learn how much their value has dropped, they’re shocked. Often, the realization comes as a blow almost as hard to accept as the original failure of the restaurant, prompting them to hold on to the assets even longer, certain they will find the right buyer and get the value they so firmly believe the assets have.  This rarely happens, and by the time they’re finally willing to accept the lost value, what they recover then is a shadow of what it was worth when the restaurant first closed.  

We’ve seen this pattern play out time and time again, and it’s heartbreaking every time.  Now, it may seem as though we’re suggesting that an owner of a recently closed restaurant simply give up on their dreams and sell everything.  That is not what we are suggesting.  What we are recommending is that you make a decision and take action quickly.  If your dream of owning your own successful restaurant is still strong, don’t wait; move forward now.  Make plans, set deadlines and then take consistent action to meet them.  Those that wait, that take a break, that put their assets into storage with no clear plan on when they will come out again rarely ever return to them, and their dream eventually fades, along with the value of their assets. Conversely, if you’re not moving forward with starting another restaurant, sell your assets now; while they still have their greatest value.  You won’t recover the money you spent to purchase it all, no one ever does, but we’ve learned over the years that the longer you wait the less you’ll get.  When you do make the decision to liquidate, to recapture as much of the value as you can, we also don’t recommend trying to do it on your own.  There are a number of risks here, not the least of which is that you will be making decisions about what you think has value and what doesn’t, and then only saving or trying to sell the things you believe have enough value to be worth your time.  We are frequently shocked and dismayed at the value of the things people give away, throw away or walk away from, assuming those things just aren’t worth their time.  

The key to recovering as much as you can from your assets lies in selling everything.  A reputable liquidation company, like RL Liquidators, can be a tremendous asset in that regard.  When we are the ones either selling the assets in place, or removing them to one of our facilities to be sold, we’ll sell everything; and we mean everything.  If you put it in your restaurant, and have the right to take it out again, and we feel it has value, we sell it.  We take not only the stoves, ovens, refrigerators, walk in’s and other big ticket items, but we also take the paper products, plastic ware, table ware, serving ware, light fixtures, cleaning supplies, shelving units, furniture, office equipment; in one high end restaurant we removed the cherry paneling and molding from the walls and ceiling, and sold that.  We’ve sold all the bar equipment from behind a beautiful bar, like anyone else would do, but then removed and sold the bar itself as well as the cabinetry above it.  

A reputable liquidation company, like RL Liquidators, has two major advantages; they understand the value that every item has, not just the big ones, and recaptures value from all of it, increasing the amount you can recover from your assets, and they already have the buyers looking to buy it all. When you take action quickly, either opening a new restaurant or liquidating, you can avoid almost every other pitfall and mistake that would otherwise follow, relating to your remaining assets.  Moving quickly is difficult, we understand that.  Many resist it and hesitate.  A business failure is a significant loss, and like any other loss, it can be difficult to accept.  That hesitation however, is the one thing, beyond the closure of the restaurant, that restaurant owners most regret most often.  We advise so strongly against hesitating because of the devastating consequences we have repeatedly seen as a result.  Our advice is to make a decision quickly, and then move forward with commitment.  We know that working through the closure of any business is difficult and painful, but a good liquidation company like RL Liquidators, can make your life much easier.  

I hope this was helpful.  If you have questions,  click on the “Liquidate Now” link below, or e-mail us at info@rlliquidators.com.  Thanks for watching.