One of the most predominant businesses to use the merchant cash advance is restaurants. Historically it has been next to impossible for a restaurant to get any type of unsecured financing from a bank or other financial institution. So it is no surprise that they were the early adopters of the MCA product.
If you've been any restaurant, especially high-end ones, you might have been the only patron. With virtually every American feeling the economic crunch the first discretionary spending to cut is eating out. As a MCA provider we have definitely seen our clients sales fall for high- and middle-end restaurants while sales at low-end restaurants increase significantly as the consumer spends much less (its a great time to own a little taco shop or pizza joint.)
There are a few bright spots for our gourmet restaurants and their clients. All of those that are surviving have adopted the fixed price menu. This recent article in Restaurant News shares the success stories from restaurants that are thriving with a prix-fixe menu and actually gaining market share.
If your in the business that offers MCA you probably know that most providers are very hesitant to offer new restaurant a contract when the clients need it most. MCA providers need really look at a potential clients operating history. Agents selling the MCA really need to get to know the client and find out the following:
Have sales remained steady over the past six months? If so, the owner is definitely doing something right and will most likely be around for a long time.
Has the owner changed his operations? For example cut costs or added a breakfast serving to increase sales.
What marketing changes has the owner successfully implemented? Offering the fixed price menu or free delivery in the local area are good examples.
Now the agent can submit the client for financing with not just an application and some statements, but submit a complete package that is much more compelling.
March 28, 2009
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