Chris Muller’s post about more restaurants opening than closing in 2009 is a very interesting insight.
Our explanation was that these places opened because when folks lose their jobs they sometimes make the decision to strike out on their own. People take their severance pay, or their retirement savings, or the more traditional route of borrowing money from friends and family and “buy themselves a job.” The small business researcher David Burch called this business model “Income Substitution.” You’ve heard it before, “I’ve always wanted to open my own restaurant. This seems like the time to make my move.”
The restaurant business, even in 2009, is a remarkably easy-entry business. With a small amount of capital investment, anyone can open a sandwich shop or pizza delivery store, a Chinese or Mexican restaurant, or a local saloon. With good timing and desire, finding a recently closed restaurant which is still fully-equipped is really not very difficult. In many markets retail real estate is 50% cheaper than it was a year ago, and “free rent” for a few months is easily negotiated. Landlords need tenants, and restaurants are hard to retrofit for other retail uses.
Now go open some restaurants, the global economy needs you!
