Selling a Rural Restaurant is a Feat of Endurance
Successful businesses are eminently salable at a multiple of revenue or profits; restaurants are a notable exception. Most go up for sale when an owner or founding chef departs. Unproven new ownership may lack the ability to maintain the customer experience, which is closely tied to a chef/owner’s vision, and new owners are often merely buying a lease and some kitchen equipment rather than customer goodwill. That’s the dilemma buyers and investors ponder in such situations.
Rural restaurants are an even tougher sell, even when you’re a local institution with decades under your belt. Two very different such institutions are currently for sale.
The Country Drive-In just concluded its 57th season in Winthrop as a respite for south central Minnesota travelers. Burgers are its most popular menu item, employees are mostly local high schoolers, and being at the crossroads of two major state highways—one connecting Iowa with Minnesota lake country—ensures a steady stream of business.
Owner Steph Thorsen generates nearly $250,000 in sales between May 1 and Labor Day. She and her husband have owned the drive-in for a dozen years but are ready to move on as they enter a different phase of life. She’s asking basically a year’s revenue as the sale price and is content to wait one or two years for a buyer.
Thorsen notes there’s a lot of SBA money out there right now and hopes a sale is easy. “I want to see it continue,” she says. “Hopefully [I’ll sell to] a former employee who appreciates the history.”
Two and a half hours straight east sits Harbor View Café in Pepin, Wisconsin, on the shores of the Mississippi. It opened in 1980 and constitutes destination dining for several generations of Twin Citians and Rochester residents, as well as the locals. Everything is made from scratch, and the homey digs belie the culinary prowess in the kitchen. Owner Ruth Stoyke has worked at Harbor View Café for 32 years and owned it since 2005.
The seasonal (March to November) restaurant is having a great year, says Stoyke, which translates to just north of $1 million in revenue. It went on the market in early 2018 but found a buyer just as this issue of TCB went to press: three siblings with roots in Pepin, two of whom work in the restaurant.
The long runup to a buyer is perhaps connected to the town’s business climate. Stoyke says three of the town’s six restaurants are for sale, and all the neighboring riverfront businesses have shut down. She says a lack of available housing stock (many homes are vacation rentals) makes it hard to attract employees or buyers.
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“Back in June, when we couldn’t find a dishwasher who wasn’t on meth, I washed a lot of dishes,” Stoyke notes.
Her business broker, Craig Prescher of Jewson Properties of Wabasha, Minnesota, notes that there are fewer buyers and less affluence in smaller communities. Restaurants’ labor-intensive nature and thin margins make them challenging to sell. “Ruth is a very good operator,” he notes. “It’s a unique opportunity for someone hands-on.”
This story appears in the Oct./Nov. 2021 issue with the title “Buyer’s Market.”
