Nothing is permanent, especially in the restaurant industry, where competition is cutthroat. If you find yourself at the end of your run as a restaurant owner or are planning to start anew, there are many ways to liquidate assets and earn back some of your investment. One of these is through restaurant auctions.
This is a specialized type of auction that focuses on selling equipment and assets of a dining establishment. Ready to learn more about this method? We’ve shared all that you need to know about restaurant auctions below. Keep reading to see how they work and if they’re a good strategy for your business.
What Is a Restaurant Auction?
Auctions have been around for a long time, and they’ve evolved a lot in the past decades thanks to the internet. Restaurant auctions are just one of the many industry-specific permutations, focusing on selling assets from closing dining establishments, in most cases. Asset redeployment is also a good reason, especially if the items are not providing the returns they promised.
On the buyer’s end, a restaurant auction becomes a golden opportunity to source items at a fraction of the original price. Almost all products sold at auction are already used and may have some mileage, but that doesn’t mean they’re of poor quality. There’s also a wide selection of items that allow buyers to find exactly what they need.
Today, most auctions happen online. There are marketplaces where auction companies list available items from a restaurant. The buyers will then try to bid on the item of their choice, and if theirs is the highest after closing, then they get the item.
What Can You Sell at a Restaurant Auction?
You sell just about anything restaurant-related at an auction. Whether yours was a specialty cuisine establishment or a small kitchen, you’re welcome to sell your items in the marketplace.
1. Glassware and Dining Utensils
A lot of buyers are looking for dining utensil sets, glassware, and other items used by customers. These are usually on the more expensive side when purchased brand new, so getting them at auctions is quite the bargain for most.
2. Cooking Equipment
Purchasing an entire collection of pots, pans, and other cooking equipment is a major investment. That’s why restaurant owners choose auctions to get discounts for perfectly fine, if slightly used, equipment.
3. Machinery and Appliances
A dining establishment cannot function without a fully equipped kitchen. To cut costs on machinery and appliances, buyers will look at auction sites to get their ovens, range hoods, cooktops, deep fryers, and other items.
You can also sell your table, chairs, display cabinets, and other furniture used in your restaurant. If they are available in sets or in relatively good condition, then you may be able to sell them at a higher starting price.
5. Specialty Equipment
Your restaurant may be serving a specific type of cuisine that needs specialty equipment to prepare. Rather than finding another restaurant that may want to purchase your specialty items, you’d have a better chance of selling them at an auction with restaurant owners who are actively looking for them.
Why Sell at a Restaurant Auction?
1. Eliminate Long Negotiation Periods
This is especially applicable for in-demand or high-priced items. These assets usually undergo lengthy periods of negotiation just so the seller can find buyers and choose the best offer. During an auction, the seller does not have to negotiate. They only need to set the starting price and watch as the offers come in.
2. May Return a Higher Profit
Competition can be fierce in an auction, especially for coveted or rare items that your restaurant offers. In some cases, the offers may even exceed the store price, allowing you to gain a higher return.
3. Get an Audience That Wants Your Item
The biggest issue of liquidating assets is the selling part. Marketing them is another expense, and it will take a lot of effort to reach your target audience. At an auction, you’ll be on a platform with people who are actively looking for your items.
4. Quicker Sales
Auctions usually have a time limit. In physical ones, it’s usually just a few minutes. Online auctions, on the other hand, have longer durations before bidding closes.
5. More Transparent Than Other Methods
This applies both to sellers and buyers. Buyers can see what the price of the item is and know how much they need to offer to secure it — no hidden charges. For sellers, the marketplace allows them to actively monitor how much their items are being sold for.
Should You Choose a Restaurant Auction Company?
You have a choice to auction your items on your own or with the help of an auction company. Sure, you might be thinking that the former choice is more cost-effective since all the proceeds of the sale will go to you, but there are several advantages that make an auction company the better pick.
- No Need To Find Storage: When your restaurant closes, you’ll need to find a place where you can store your items before you ship them to buyers. But, most auction companies, like TAGeX, have warehouses where your items are safely stored before they’re deployed.
- Listings on a Dependable Platform: You may opt for Craigslist or eBay, but these platforms may discourage some buyers from making a transaction with you. An auction company will have a dedicated site where all the bidding happens. These are also packed with features that elevate the buyer and seller experience.
- No Need To Handle Shipping: While most auction companies don’t have shipping capabilities, they usually have a shipping partner that will handle all the logistics for you.
How the Process Works
So, how does a restaurant auction work? Here are the general steps to set your expectations.
- During the Restaurant Closure: We will come to your facility and provide closure services, and part of that is creating an inventory and moving your items to our facilities. This will also include organizing information and data about your assets.
- Marketing and Launch: We’ll devise a strategy to help you maximize your returns once the items go live on our site. To achieve the widest reach, we’ll take advantage of online tools as well as traditional marketing methods.
- Sale and Shipping: Once the bidding closes, we’ll handle communication with buyers as well as coordinate shipping and removal of items. The proceeds will be sent to the sellers shortly.
Types of Bidding
There are two types of bidding you can expect from restaurant auctions.
- Traditional Biddings: This method is what most people are familiar with, and it’s what we use in TAGeX’s online auctions. With traditional bidding, the buyers will escalate bids from an initial price. The bidding ends when the highest bid is determined. On most online platforms, the bidding stops after a set amount of time.
- Highest Bidder’s Choice: This system is used when there are several similar items for auction. The escalation is similar to a traditional auction, but once the highest bidder is determined, they’ll get to choose among the group of items. Then, another round begins until all items are sold.
The Bottom Line
When facing restaurant closure, you can still get a profit by selling your assets at an online auction. It’s the quickest and most convenient way for those who want to get rid of all their equipment while also earning some cash. Ready to get started? To learn more about the TAGeX auction process, contact us today!