After more than a decade, the owners of a well-loved institution in Bend, Jackson’s Corner, want to tie the apron strings on a new operator.
It’s not because they want to retire. Rather, owners Jay Junkin and Parker Vaughn, feel that it’s time to walk away. Food costs have risen; employees are hard to find; and customer prices have to constantly change, they said.
They’re asking $1.2 million for the business that they have run in the old Delaware Grocery & Ice House, at 845 NW Delaware Avenue. “None of these decisions have been easy,’ Junkin said. “We’ve been talking about this for about a year.”
While not unheard of for established businesses to be For Sale, there has been an acceleration in the past few years, said Damon Runberg, Business Oregon economist. But it’s not a good time now with rising interest rates, worker shortages and economic uncertainty.
“For Owners seeking an exit strategy, they are timing these sales at a relatively poor time,”, Rundberg said. “With the high interest rates, there are likely fewer prospective buyers who can afford to acquire one of these small businesses, compared to this time last year.
“Yet, buying an established business can be far more profitable and less risky for an entrepreneur than starting a new business from the ground up.”
Jackson’s Corner isn’t the only restaurant in Bend up For Sale. At least a half dozen are currently on the market in Bend. Sunny’s Italian Joint in The Grove Market Hall in NorthWest Crossing, Rockin’ Dave’s Bistro & Backstage Lounge and a long-established Pizza restaurant; Pacific Pizza & Brew in Bend, are among the businesses whose owners are seeking exit strategies, either for retirement or turning toward other opportunities.
It’s encouraging that the businesses are up For Sale, rather than closing permanently, Runberg said. Through September, more businesses formed than closed, according to the U.S. Bureau of Labor Statistics.
Changing Hands
Dave Flier, owner of Rockin Dave’s Bistro & Lounge, has weathered an economic recession, growth of the region, ownership changes and a pandemic. His business is also up For Sale because it’s time to do something different, Flier said. “I don’t need to own something in it or be responsible for it all. ”
“I don’t need to own something in it or be responsible for it all.”
Junkin, who opened Jackson’s Corner in 2008, said it’s been increasingly difficult to maintain the quality customers have come to know in the local farm-to-table restaurant and also maintain prices customers will pay. Payroll has increased since pandemic closures ended. After the restaurant decided to close its east-side location, Junkin said he and his partner wanted to add the core employees to the Delaware Avenue location.
“We were thriving in multiple arenas — from customer relationships to relationships with employees,” Junkin said of the east-side location. “It was sad. We compacted to one restaurant. I didn’t want to lose our core people, so we carried a higher payroll. Everything is more expensive.”
If Jackson’s Corner sells, Junkin and Vaughan will still be around, as he and his partners also own the former Kebaba restaurant, now called Neighbor, and Blue Eyes Burgers and Fries on Greenwood Avenue. The sale of Jackson’s Corner has to be to the right owner, Junkin said. When it occurs, Junkin and Vaughan have offered to work two hours a day for up to 60 days to help with the ownership transition, according to the restaurant for-sale advertisement.
If the right buyer doesn’t come along, the owners have talked about revamping the concept at Jackson’s Corner to something simpler.
“We believe in what we do,” Junkin said. “That costs money. Since it’s gone public, there’s been an emotional outpouring from the community and it has reawakened us to think. We want to make sure we have extinguished all avenues.” Most recently, Bend’s The Breakfast Club closed their doors as part of retirement plan stating the increase in costs, employee shortages was just too much.
Inflation Is A Fact Of Life
Recent inflation that soared to double digits after the pandemic affected everyone, including long time restaurant owners. Inflation caused food prices to rise, rents to rise and labor costs to increase. That all affects the slim profit margins, said Brian Fratzke, president of Fratzke Commercial Real Estate Advisors & Property Management.
“Their food costs are too high; rent is too high; and the margins just aren’t there any more,” Fratzke said. “That’s why the food-cart business is very popular because it’s easier for restaurant owners to work with a cart rather than going through the process of building out a kitchen.”
Bend is still a place where new businesses want to come, he said. At the commercial brokerage, inquiries come in at least three times a week from would-be entrepreneurs looking for space. Since the pandemic, smaller commercial space is in demand, Fratzke said.
Running a restaurant is like a three-legged stool, said Jason Brandt, Oregon Restaurant and Lodging Association president. There are employee costs, food costs and overhead costs. Recently, all three legs of the stool have been unstable, Brandt said.
“We’re seeing operator fatigue as it relates to the frequency of having to pass on costs to the consumer,” Brandt said. “You have to take a hard look at increasing menu items and redoing your menu.”
Since costs have risen, restaurant owners have taken to upping prices and revising menus more frequently just to break even. For every dollar of food or beverage sold, restaurant owners earn about a nickel in profit, Brandt said. It’s a push-and-pull situation in restaurants, Brandt said.
Chipping away at a restaurant’s profits is a 2019 corporate activity tax that is in addition to Oregon’s corporate income tax, Brandt said. The funds raised by the tax are used for public education spending.
“All these mom and pop restaurants are getting charged taxes on gross sales, even though restaurants are one of the lowest grossing businesses in the state,” Brandt said. “It’s one of the worst policies we could have come up with.”
-October 12, 2023
