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Fire in the Belly

Local restaurants are changing hands like hotcakes.



When you walk into a restaurant, the last thing the owner wants you to know is that it's up for sale. These matters are kept quiet — no matter how tricky that might be in Richmond's tight chef and owner community — because sellers want no whiff of suspicion among patrons or employees until the deal is done.

But quite a number of local restaurants are discreetly up for grabs, and restaurant sales have been brisk in an otherwise tepid real estate market.

Just this month, high-profile bistros Grafiti Grille and Cafe Lafayette changed hands; the selling of Dot's Back Inn, effective New Year's Eve, drew plenty of attention; while Blue Mountain Coffee, Toppings, Red Hot & Blue, Bellagio and several others sold more quietly.

Most chefs and owners admit that every restaurant has its price — and rare is the owner who won't quietly solicit interest from a potential buyer on occasion, particularly when pockets are deep and the risks are calculated.

Discretion is paramount, says business broker Sev Sinanian, whose firm, Bandazian & Holden, moves a fair chunk of the local restaurant market. "Part of the process of finding qualified prospective buyers is screening out tire-kickers from serious buyers as best we can," he says. "Then we'll let them take a good, hard look at our listings."

Options on the market now include a Virginia Commonwealth University-area coffee shop, several Fan and Museum District restaurants and bars, various Italian places, a sushi house and a multipack of food franchises in the suburbs. Others, including some of the city's most high-profile fine-dining establishments, are also quietly on the market.

Commercial for-sale listings may show interior photos but rarely provide business names or give street addresses, the better to stave off chatter among workers and even competitors. Sellers usually set their asking price at 30 percent of gross sales; buying the real estate is an extra expense. Owners must report their cash flow, which in Richmond usually ranges from low-fives to six figures; they also state their reason for selling.

Some owners are retiring; others decide to move on, presumably to something more profitable or less grueling. There's a difference, Sinanian says, between those who buy a restaurant to fulfill a dream and those who want a restaurant that will work. Hence the high number of closings in an always-volatile market sector.

"Money is going to dictate the longevity of the business," Sinanian says. "The more cash, the better. Banks aren't going to finance much unless it's a tier-one franchise with a lot of cash. And the rents have to be right — not more than 10 percent of the gross sales — or it can't work."

"Richmond is robust," Sinanian adds. "It's fairly typical to have a slowdown around the holidays, but not this year." Out-of-towners, moving from larger cities and attracted by the relatively less expensive costs of operating a business here, are a key part of the mix. The trade-off is an increasingly competitive retail climate without the population radius of Washington, D.C., or New York.

Junior Joseph, who sold Karen's Diner and opened Paradise Diner in Stratford Hills last month, says the restaurant business is a tricky one for buyers and sellers. "They're hard to buy because everybody wants more than what they're worth; selling is easy if you're flexible and don't need a lot of cash up front." Regardless of the financial challenges, Joseph stays in it, he says, because "it's all I've known since I stood on a crate to wash dishes when I was a kid." S

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