Metro Detroit Hospitality Pros Are Leaving The Industry In Droves

You may have noticed a recent influx of food products marked with phrases like “gluten-free” and “dairy-free” at your local grocery store. During the crisis, many restaurants, while closed, have linked their supply chain to their patrons in order to help mitigate the impact of the crisis on their vendors, distributors, farmers, and other suppliers. If that continues post-pandemic, it may help provide more stable demand and pricing for both restaurants and the supply chain.

Many of the questions stem from the inherent brokenness of the restaurant model in America. Our government provides no safety nets for the low-wage, often undocumented workers upon whose labor the industry runs. A bio-network of businesses — farmers, meat and fish suppliers, wine and spirits makers and distributors, architects, linen services — begins to collapse when restaurants can’t feed customers to capacity, or when restaurants close altogether.

Represented a leading middle market private equity and credit investment firm as the administrative agent, lead arranger and lender in a senior secured, agented credit facility to a fitness club franchisee group with over 40 locations. The credit facilities were used to facilitate the purchase of the franchisee group by a private equity sponsor and provide debt capacity for future acquisitions and build-outs.

Based on the current and the past sales of your restaurant, consider the current Cash Flow and the Financial Projections. The franchisor should prepare a cash flow for the revenues based on the number of orders per day and multiply it by the average ticket size.

Fortunately, many lending and investors sources still view franchising as safe. The caveat is the concept itself must still be in high demand and where consumers will spend their money. Obviously, a franchise that sells high end items may not be a safe investment as many consumers have slowed down or eliminated spending on such items. Therefore, the chance of succeeding in this environment is certainly diminished.

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