Revolving door of restaurant closings keeps auction houses busy

Destination or casual, independent or chain, thousands of restaurants of all types are closing nationwide.

The Twin Cities' recent losses include Cafe Maude and Haute Dish in Minneapolis, Tanpopo in St. Paul, Joe's Crab Shack in Roseville and Famous Dave's in Bloomington.

"I don't think we've ever seen such an aggressive, persistent number of closures as we've seen in the last six to 12 months," said Neal Sherman, president of RestaurantEquipment.bid in Rochester, N.Y., and a 30-year veteran of restaurant auctions.

Auction houses are one of the beneficiaries of the spate of restaurant closures. RestaurantEquipment.bid alone has been involved with more than 500 closures in the last 10 months, including Ruby Tuesday and Logan's Roadhouse.

Sherman's company this week began an online auction for equipment taken from Famous Dave's in Bloomington, which closed July 23. While the Famous Dave's auction contains no branded merchandise, it's a potential bargain bonanza for gas fryers, smokers, bar tables, wooden chairs, booths, holding cabinets, ovens, drinking glasses and booster seats.

Calling itself the "Wild West of online auctions," RestaurantEquipment.bid starts all items at $1 with no reserve bids. When the bidding ends, many items are sold for 30 to 40 cents on the dollar, with some going for far less than that.

A new mixer would cost $14,000 but at auction it might go for $3,500 plus $500 for shipping, Sherman said. Most buyers at the online auctions aren't local, and they don't mind paying the cost to ship a large piece of equipment on a pallet. Transportation costs for a large piece of equipment may be as little as $200. "They're still ahead of the game even with shipping." Sherman said.

Greg Christian, co-owner of Auction Masters in Maple Grove, has been conducting restaurant equipment auctions for decades, usually with inspections. He's recently dealt with Nye's Polonaise Room, Toby Keith's and Tryg's.

"It's an amazing business," he said. "Two restaurants close and two go in to replace them. We sell a lot of used equipment."

In September, he's putting 20 semitrailer truckloads of restaurant equipment on an online auction, an event he now does three times a year.

Restaurant owner David Fhima, who is no stranger to failures and successes in the industry, said many independent restaurateurs use the auctions as a way to pick up supplies on the cheap. "A lot of them are buying pots, pans, silverware and china," he said. "A fork that costs $7 new might be 3 to 5 cents at an auction."

Fhima will soon take over the Forum Cafeteria space in Minneapolis' City Center. He's hesitant to purchase used refrigerators and ovens, which can be unreliable, at auctions. But he said, "I'd buy a six-burner gas burner in a heartbeat. They last forever."

The participation of chain restaurants in the auctions — whether selling or buying — is a relatively new development. "It used to be the independent owners buying 10 to 20 years ago," Sherman said. "Now it's also people from the larger recognizable chains watching every dime and the foodies who love barbecue and want a good piece of commercial equipment."

In the auction for the equipment from the former Famous Dave's in Bloomington, an electric smoker was seeing some action by Friday afternoon, as were the veggie slicer and prep tables. No bids were higher than $20, however.

Sherman said early bids are deceiving and the Famous Dave's auction is open until Tuesday.

"The aggressive bidding doesn't start until the last few days," he said.