Nobody sets out to fail, but the reality is that restaurants close all the time.
And after shuttering a business, what do you do with the assets? You could keep them for posterity’s sake, sure, but you could also just sell them and recover a bit of money.
When Pancake House was bought by the Max’s Group about five years ago, they did exactly that. To liquidate a large volume of equipment—four 1,000-square meter warehouses of equipment, to be exact—which Max’s wasn’t going to use anyway, Pancake House enlisted the help of Astoca, a multinational industrial auction firm. The company did live auctions about every two months and sold everything over the course of a year.
“That was when the owners of Astoca realized there’s opportunity to do auctions in the F&B industry,” says Karlo Manalo, who does business development for Astoca Philippines.
These days, Astoca’s auctions are almost exclusively done online through Asia Bid Co., their online bidding platform, and Manalo says they’ve since grown a respectable list of clients in the foodservice industry. Their biggest restaurant asset sale to date fetched P1.75 million, from a tenant at Shangri-La Mall. The second biggest is P1.6 million from an iHop sale.
Liquidation isn’t just for closing shop
“Even established restaurants understand that liquidation is an integral part of operations,” says Manalo, explaining that letting go of assets can also be a vital component of reinvesting in your business. “Assets can grow old, become obsolete, break, or a part may no longer be available,” he adds.
“Even established restaurants understand that liquidation is an integral part of operations,” says Karlo Manalo, explaining that letting go of assets can also be a vital component of reinvesting in your business.
Not all restaurants that are liquidating then are doing so as a result of closures. Some may be moving to a new location, upgrading, or renovating. “When [Mang Inasal] embarked on a refurbishment and upgrade program, they had to close down several stores for renovation. So all their equipment, from furniture and kitchen to items in their commissary in Pasay, we [helped them sell].”
Liquidation doesn’t have to be complicated
However, in the case of Global Restaurant Concepts Inc. (GRCI), local franchise owner of establishments such as California Pizza Kitchen (CPK) and iHop, the need to liquidate was a consequence of closures.
When a few of their restaurants closed down, the company had to sell off kitchen equipment, air conditioning units, furniture, lighting fixtures, and some small items, says Michelle Mutt-Mendoza, GRCI admin and facilities officer. The company tapped Astoca’s services, and Mutt-Mendoza says, “They [sold] the items before the deadline and helped us liquidate [everything] fast and easy.”
Some of Astoca’s other clients are mall operators who have had to liquidate foreclosed items left by former tenants with outstanding accounts.
Ayala Malls, for instance, had to sell items from former merchants at Ayala Fairview. Says Robert Lachica of AyalaLand Malls Inc., “Astoca was recommended by our colleagues in other malls. We needed their help because we [could not] facilitate the sales ourselves due to manpower and time constraints.”
Malou Rodriguez of Festival Mall likewise says that they decided to collaborate with a company like Astoca in order to make the process easier. “They can reach a larger audience through their online platform and they already have existing patrons for their auctions,” he says.
The other side of the equation
For restaurateurs who are just starting out or those who are trying to keep costs down, it makes sense to avoid splurging on brand-new equipment. “Instead, spend money on marketing, [ensuring the] quality of your food, investing in your people” suggests Manalo.
While in some cases, the need to liquidate is a consequence of closures, liquidation may also be necessary when moving to a new location, upgrading, or renovating.
When the CPK branch in Makati closed down about two years ago, Manalo recalls that one of the largest items they had to sell was an oven the size of a car. It was won by a buyer from Negros for P350,000 to P400,000. It proved to be a steal because there was no local supplier and a brand new unit shipped from the U.S. would have cost the buyer P2 million.
Just because an item is secondhand, however, doesn’t always mean it’s more affordable, according to Anders and Beth, owners of Parañaque restaurant The K. “Since it is an auction, it does not mean it is cheaper on all things. And it’s secondhand so an element of risk is involved,” they say.
Manalo points out that, although buyers have some confidence in the quality of their items, “everything we sell is on an ‘as is, where is’ basis, so there are no guarantees.”
How the auction happens
Before a sale, Astoca first checks for any legal impediments. “We ask if the asset owner owes any debts to their landlords or suppliers,” Manalo says.
Barring any legal hiccups, the company then conducts a valuation. If the asset owner agrees to the valuation that Astoca provides, arrangements for the auction are made. The items are cleaned, arranged into lots (groups of items sold together), and photographed.
Once the pictures, complete with descriptions, are uploaded on the website, the sale officially begins. During this period, interested buyers can visit the location of the items to view them. Because the Asia Bid Co. website has an auction engine, buyers can already place their bids online.
The sale proper usually lasts between two to five days, depending on the type of assets, says Manalo. Once the sale ends, notifications are sent out to the winning bidders.