How Do You Make A Difficult Business Decision?

[Articles]

Long story short, we have a family restaurant with a 53 year history, started by my grandparents as a sandwich stand in 1955.

The restaurant was a cash cow for decades, but sales have been declining steadily for a few years now, especially since a new national franchise with a similar menu opened across the street. The restaurant is located right off an interstate exit, so a lot of customers that are just driving by tend to go for the brand name they recognize, when before they had no other food choices on that exit and for 15 miles around.

The past year has been especially brutal. We have cut our staff nearly in half, dismissing all employees except family members, some of whom work part-time for free just to help keep the restaurant afloat.

Three generations have grown up in this restaurant, coming in after school every day to grab snacks, spending weekends and summers here, etc. It's the one place our entire family can identify with, and because of that there is a huge sentimental attachment to it.

But that sentimental attachment is not paying the bills. For about a year we have been expecting we might have to close the restaurant and go our separate ways. The family members who rely on the restaurant as their primary source of income (including myself) are really struggling financially.

But a new opportunity fell on our lap about a month ago. The franchisee across the street has offered us the opportunity to take over his restaurant immediately. After scrutinizing the books it’s not as profitable as we figured it was looking at it from our window (perhaps because of the high franchise fees), but it is still much more profitable than ours and it seems to be a high-quality, solid operation.

It’s a complicated deal, but financially it will work to our advantage. Part of the deal is we would basically swap restaurants, including the building and the land, and he will then turn our restaurant into a gas station and convenience store, which will eventually bring in even more clients to our new restaurant.

The downside is that we would be completely lose the family landmark and we would be locked into a very long franchise agreement with the restaurant chain, so it’s not as easy as changing names and moving to the new place. We would have to completely shutdown all aspects of our family restaurant and pretty much take on the corporate identity and menu of the franchise.

After consulting with attorneys and financial advisors, I am inclined to make the deal and move across the street. Three of my siblings agree, and the other three are against it. Ironically the three that disagree are the ones least involved in the restaurant. They only come by to eat (for free).

Even though as majority owner I have the final say and it’s ultimately it’s my decision, this has always been the family business and I do not want to alienate any of my brothers and sisters, since the restaurant is what has made us such a close-knit family.

So my question is, how do you make a tough business decision like this when it involves family members? I’m not sure writing down a list of pros and cons will do the trick on this one.

[RT Wolf]

"People often reject options on an emotional basis that they can learn to accept after the fact." Make absolutely sure that your siblings that disagree with this plan will hate you for the rest of their lives. If they'll get over it, then don't take that into consideration. Hurt feelings can be overcome.

I'm not offering support for either side, just clarity for one of your justificaitons for one of your options.

[Brutha]

Do you really have a choice to continue the restaurant?

[newsbone]

Why did your grandparents open up the restaurant? To make money i presume was the reason but to you its all about a legacy. Wise up 'IF YOU CANT BEAT'EM JOIN'EM' So it is said. Would you rather become broke with a legacy or rich without it. START YOUR OWN LEGACY AND WORK HARD TO TAKE OVER THE FRANCHISE. GUDLAK.Make that diificult decision.

[RubberDuck]

If the franchise isn't profitable either, what is the point in doing the swap?

In your shoes, I would probably look into the possibility of giving the restaurant a face-lift and maybe change/add to the menu.

Are there other stuff you could sell as well to people on the go, put yourself in your potential customers shoes. What would make you stop at your place? What is special about it? What can you offer which is attractive?

If your competitor across the street isn't doing well, it will close down and you are back in business again. It is just a matter of time..

Think out of the box...

RD

[Holistic Star]

Why don't you turn your shop into a convenience store?

or into a convenience store with coffee and sandwiches and homemade cakes?

or something else entirely?

[SimonaRich]

Think what feels best for you.

These are just a couple of my suggestions since I operated and sold couple of successful businesses (although not in the same field).

You mentioned that the restaurant that opened nearby offers similar menu. So why don't you change the menu into something that cannot be found in that area and there is demand for it? You can test it for a bit and if that does not work you should assess other options.

Also the restaurant's owners disclosed that they would plan to make your restaurant into a petrol station or a supermarket. So maybe they thoroughly researched and found a profitable opportunities here. Would you consider changing the profile of your business if that would be more profitable one? You would retain the land, just business would change.

Are there any other ways to make profit in that area? Is it sort of area where people need to visit temporary (then looking at accommodation business would be of value) or are there no gyms, spas, etc? I know that these seem very different business choices that you may not have experience in, but if you want to keep the land you may consider that.

You do not have to be an expert in something to succeed in business. Hiring the experts makes you succeed.

Now from the PD side of things...

In any way, you should always make decisions with your heart and not with your mind. Because every single person has different limited beliefs which serve like filters in your mind, you may think that some decision is great where it is totally wrong. This is because those limited beliefs are blocking you from seeing the best way around the situation.

But your feelings about the situation are never wrong. Because they are signals given by your inner being advising you if the situation is good for you or not. Your inner being is connected to pure intelligence (source, in other words) therefore it always knows what is right and what is wrong.

You should never try to please others no matter what you do, even if they are family members. Those that try to please everyone always end up making decisions that are wrong.

Only do what feels best for you. I know this may seem selfish but only by you succeeding you can help other people do so too.

[Susanna77]

Everyone here made good points, so I'll just ask:

are there any foreign communities in your area that you could cater for? I do this in my own country (at the moment also struggling because of current market conditions and because my main market's currency weakened considerablly).

For example: if there are lots of Spanish in your area can you offer paella; if there are lots Italians offer pizza, Portuguese offer "pastéis de nata" (custard cakes specific to the country). Create a niche market perhaps.

What I am saying might be rubbish. You know best about your business and that's the bottom line. You have the numbers; you have the emotional buggage and ultimately, like it or not it may be your decision. No one can ask any more of you than you can do: your best.

Coming to this forum and enquiring about my business really helped me. I now have a clear idea of where I stand, how long I can last and a date to close if things continue as they are. I hope you find some answers here too.

All the best. Keep us posted.

[Lauxa]

The whole thing just feels so disappointing... losing a treasured piece of family history to a souless corporate chain... I can understand how the family members who are "less involved" don't like the deal... and the ones who are involved are probably feeling pretty desperate...

Have you already done everything you can think of to boost sales? Such as a really creative billboard right before the exit advertising the quality and uniqueness of your non-chain restaurant?

Have you done some research on the franchise? Is their ethics and business model acceptable to you?

(Please tell me you're not turning into McDonald's...)

[teatree]

Do you own the land that your restaurant stands on?

If you do, my instinct is to stay put and not take on the other guys franchise. Think about it, he badly wants out and the franchise fees are killing him. They might kill you, especially if the franchise brand goes down the tubes (whereas you have complete control over the reputation of your own restaurant).

Can you add a petrol station beside your restaurant? Is there room? See if you can take him out - really promote your business, really fight. If your overheads are lower than the competitors, then you should be able to outlast him, especially if he is financed with debt.