If you have been thinking about investing in a restaurant or in restaurant stocks, you need to look at specific types of restaurants and what is happening in the economy right now.
In some ways restaurants have been somewhat recession proof because people have to eat every day. People have to have something to eat around noon and few people are going to change their habits significantly recession or no recession. Many people are just plain not going to take their lunch to work. Maybe they need to take time away from the office in order to take a breather, get outside, communicate with someone by cell over the lunch hour or whatever.
The vast majority of people who buy their lunch out will however, be looking for good deals. Many major restaurants have really focused in on this market, to help the lunch crowd really pay a minimal amount of money for lunch. Burger King has their value menu where you can get a Whopper Junior and small fries for $2.00 plus tax. McDonald’s has a dollar menu as well.Subway has their $5.00 menu that provides a lot of sandwich for a $5.00 bill. Even places like Olive Garden have lunch menus where people can get full for around $5.00 for lunch. Working people are taking notice as as most of these places are definitely full at lunchtime.
If you are thinking of starting a restaurant or purchasing a franchise, you would have to zero in on your market share; that group of people that will become your regular patrons. Who are they, what do they like for lunch and how cheap can you provide it to them? Working people are taking notice as most of these places are doing thriving business. Of course, you have to do your homework and the actual cost of the goods and labor are part of your whole expense. You must make money on what you provide or you will not stay in business long.
One type of eatery that seems particularly recession proof are Dairy Queens(wholly owned by Berkshire Hathaway whose ticker abbreviations are:BRK.A and BRK.B). During these hard times stressed out parents can take the kids out for a “mini-vacation” where they may not have the money to go on a real vacation. Just getting away from home for a ride in the family car with ice cream as the goal is enough for families with small children on a hot summer’s day. Parents can purchase half a dozen Dilly Bars and take them and the kids to the park for a good time to be had by all. All of this and change from a $10.00 bill.
In these terrible economic times everyone is trying to get as much as they can for as little as they can and have change to spare. People are returning to simple family pleasures of spending time together, doing free or close to free activities. This is the kind of market that will patronize places where they can feed the crowd for a minimal amount of money.
When you consider investing in a restaurant or restaurant stocks, focus on who the patrons are going to be in tough economic times. People want and need inexpensive good food options and they will appreciate restaurants that provide them.
Because food and the sharing of it are integral to our well being as a society, if you want to start a restaurant there is always room for another exceptional restaurant in almost any community. A “mom and pop” type operation can always draw in the after-church crowds as well as families on limited budgets. Be certain to have a great chef and a menu that really offers what your patrons want.