David is joined by Neal Sherman to discuss how to close a restaurant and recoup the most for your equipment.
About this segment of Blackbird TV
Guest: Neal Sherman, President, TAGeX Brands. To learn more about our guest, visit TAGeXBrands.com, or call 585-259-6353.
Recorded: March 23, 2021
Published: August 10, 2021
Joining me today is Neal Sherman. Neal’s, the president of TAGeX Brands, the largest liquidator of restaurant equipment in the United States of America, maybe the world. The question that’s burning on all these banker’s and people’s minds, it happened… I have to close my restaurant, Neal. What do we do? What do we do? What’s the first thing? From our standpoint, if you’re the restaurant operator, the person who’s there, if you have to close your restaurant because it just won’t work, the customers aren’t there, the demand isn’t there. Assuming that there is no collateral that you have or at leased equipment. Our approach is to work with them, to leave it in place, because once you move it, as you know, in any other industry, it becomes expensive to move. And we work with our clients to to put it on one or more of our sales channels, either an auction platform or a sales platform. If I could pile on there just briefly, not only does it cost you money to move it somewhere, but once you take it, you spend the money to do that. And once you take it out of its natural environment and park it in a warehouse, it just isn’t is pretty anymore and it doesn’t bring as much money. So just to pile on that thought, if you can leave whatever it is in place for a little while, often it might cost you another month or two in rent, but you’ll need to do the analysis of how much that rent costs relative to how much more you’ll get for it in place. And that’s a great question to ask, but I’m sorry. I just wanted to go on that. Go ahead. No, you’re absolutely right. In any business, not just in restaurant food service, but in any business, in place generates a greater return than from a warehouse. You know, we’ve seen pre pandemic, you know, maybe it’s 30, 35 percent higher returns in place versus pulling it out. And so that’s what we recommend. And we recommend moving quicker rather than not, because used equipment is not accretive in value. It’s not like a piece of art or a fancy car or something like that. It’s only going to go down in value over time. The good news is with restaurant equipment, it doesn’t suffer the technological obsolescence of things like technology and medical equipment, other forms of things that decline once you drive it off the lot so-to-speak. So there’s not a lot of innovation in the world of restaurant equipment. A six burner range is a six burner range. Indeed. So whether or not to sell in place or to remove needs to be answered. And then what happens if it’s sold in place, then speed is key, because what’s going to happen now, depending on how long you believe this burn is going to take, if you know that you’re going to close or you know that you’re going to go through a major tooling and not everything we we deal with is the apocalyptic closure sooner rather than later, because at some point, as you said, there will be a tidal wave of foreclosures. It may be a slower burn, but it will happen. And there’ll be so much surplus on the in the aftermarket, your prices will go down so move fast. From our standpoint, obviously, we expose things nationally because we’re a national company. And even if it’s a local operator in this environment, people drive a long way to pick up pieces of equipment. So that’s the the optimal outcome. So you want to move quickly. And if I could add one more thing, if it’s an operator that you’re dealing with, can you please clean the equipment? Yeah. You and I have, I’m sure, have many war stories about that. Neal. Good information. Appreciate you sharing it with us. And hopefully we can help some people out through this. Have a great day. Thanks for your help. Thanks, David. Appreciate it.