The Cost of a Restaurant Buyout

As the holidays approach the holiday party season begins. Restaurants without private function space have only one option to accommodate a private event: A buyout. A buyout is when a restaurant offers to close their establishment to outside patrons for a certain amount of money. The amount is determined by numbers from the previous year, if available, and the anticipated revenue that would be generated that night. The amount is an attempt to prevent the restaurant from missed revenue by closing to the public.

The buyout does insure the restaurant a certain amount of revenue, but there is a cost. Being closed to the public offends regular patrons, who will be there long after the holiday season is over, and often consider themselves an integral part of the day to day success of the restaurant. On the opposite side holiday parties can bring in people previously unfamiliar with the restaurant. By knowing numbers ahead of time a restaurant can staff and order accordingly with more accuracy than a ‘normal’ night, thereby controlling labor and food costs.

I do not believe that there is a clear answer to whether a restaurant should or should not do a buyout. Each restaurant really needs to look at their bottom line and what their objectives are, both short term and long term. So you are left with two questions. Is the risk of offending your regular patrons worth the buyout? Or does the exposure to new patrons and guaranteed revenue make good business sense?