After a few bumpy years post-Covid, the restaurant industry is seeing some signs of – dare we say it – stabilization in the market. Along with it comes increased interest from potential sellers seeking exit strategies after taking concepts as far as they can, as well as buyers looking for growth and economies of scale. A recent report from Bank of America about the outlook for restaurant mergers and acquisitions in the remainder of this year and into 2025 said deals are on the upswing. Ted Lynch, managing director of Bank of America’s Global Commercial Banking’s Restaurant Group, says he is bullish about the next year, while Amy Forrestal, longtime managing director of the Atlanta-based investment bank Brookwood Associates, says the M&A activity she is seeing in the industry is “as robust as it was in 2016-17.” If you’re considering a possible sale or purchase, now is a good time to prepare. On the people side, make sure all owners are of a similar mindset on selling, consolidate owners if you currently have a lot of them, and hire a team of professionals who can guide you through the steps of a sale and help you find the best potential buyers. Then, review the strengths and weaknesses of your business. This should include assessing all stores to ensure there aren’t any that could negatively impact your sales price, tidying up your P&L records, and preparing answers to anticipated questions from buyers. Look for ways to make the transition as smooth as possible – by reviewing leases, reducing expenses where possible, streamlining existing processes and labor with technology, and being thoughtful about how and when to inform employees about your sale. Buyers should prepare in many of the same areas, in addition to understanding how the purchase would help them achieve strategic goals, knowing how much cash they have available for the purchase, and evaluating economic and legislative factors that could impact their ability to hire staff and operate profitably.

The recent news that the Department of Labor is increasing compensation thresholds for overtime eligibility as of July 1 means that managing costs in ways that are acceptable to guests will continue to challenge operators. “This rule will exponentially increase operating costs for small business restaurant owners who are trying desperately to maintain menu prices for their customers," said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association. "And because DOL created a one-size-fits all rule based on national income data, rather than regional data, this change is going to disproportionately impact restaurant owners in the South and Midwest.” On an ongoing basis, it seems restaurant operators will need to find new ways to run as leanly as possible. Are there areas of your business where waste is lurking? Could you make adjustments to your hours/staffing/menu/service model that help you maximize your efficiency or generate new streams of income? Could automation ease the load on your team, allowing you to streamline tasks or even trim the number of people required during a shift? Could you create a staff contest to generate ideas to manage costs? Talk to Team Four if you need guidance on how you can help your business operate as efficiently as possible amid ongoing cost pressures.