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No sale for Pio Loco restaurant
A moment of silence for the passing of what sounded like a very cool restaurant plan.
The Pio Loco Tapas project is dead, said Brad Tillson, who’d planned a tapas restaurant within Pine Street School’s 7,500-square-foot Mexican restaurant location at 1135 Pine Street.
Of course, he’s disappointed.
Tillson, the former director of BloodSource North State, spent months planning menus, sampling dishes, writing a business plan, imagining paint colors and even setting up supplier accounts.
Everyone who’d heard about Tillson’s place looked forward to the prospect of a restaurant that served small plates of good, fresh food at the new Pio Loco Tapas. I know I did.
“A perfect storm” is how Tillson described the events that led to the death of his business idea.
First, he said, banks were reluctant to lend money to a new restaurant.
Second, Tillson said, he and Pio Loco owner, Jeff Cerasaro, disagreed on the price.
Wednesday, Tillson tried to find the silver lining in that storm that soaked his dream.
“Maybe that building was too big,” he said.
“Maybe what we need is something smaller - 1,400 to 2,000 square feet. Or maybe there’s another venture out there. My daughter is trying to get me to buy a hair salon. I’d be going from the frying pan into the hair salon. It’s unfortunate, but I’m the eternal optimist. Maybe it’s all for the best.”
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Brad - Don’t give up on your idea and don’t give up on a space downtown. Like Doni, I was looking forward to tapas - oh, and sangria! I thought the idea was great! And a more intimate space might be just what you’re looking for. What’s the status of the Thompson’s clothing store? Just throwing ideas out there. We’re full of them.
Adam, Co-Owner
HawkMan Studios and Art Hop
As the agent involved in the transaction, it should be clarified that the escrow was opened for the sale with an agreed upon price by buyer and seller. The difficulty came about as a result of a couple of financing factors: (1) the lending market has tightened up considerably, and (2) although Brad had great ideas, lenders were hesitant to lend to an individual that has not had direct experience in the restaurant business. In many cases, the SBA, who was one of the considered lenders in this instance, has almost made it a policy to not loan where there is no experience factor, in some cases, for at least 2 years. In the Pio Loco case, this was a big factor.
Both buyer and seller were most interested in seeing this sale happen, and under better financial times, it would have been a done deal.
To clarify the price mention, as lenders turned down the deal, there was talk of adjusting the price. However, the final lender turn down happened before the final price negotiation meeting.
The seller has decided to take the restaurant off the market for the fall season, and here is wishing Jeff and Pio Loco the very best.
Ron Largent
Aren’t Real Estate Contracts protected under the privacy code Real Estate Agent Largent.
Maybe you are disclosing terms and conditions that should be kept confidential. Even if you did represent
the Seller, Jeff , you should not be discussing the financial or experience of the Purchaser or being turn down
by Lenders.
.
I sure wouldn’t want my Agent or Broker discussing my contract!
The Price was probably too high for this market and I don’t believe you should have even mentioned
the SBA and/or that he didn’t meet requirements on a local news cafe or to anyone. Even if escrow
has canceled you shouldn’t be discussing the Pio Loco contract on line.
As for the Buyer, I like the idea of Tapas. Please don’t give up your dream. Just find a much smaller
place and maybe a drive thru for the business people who just want some good food and go
home to relax after a hard days work.
Look for a private lender or a private investment group of locals. Do the two years and show off
your stuff then reapply for the new business loan.
Maxx, I was thinking the very same thing in regards to disclosing the details of a real estate transaction gone south by the agent. Talk about unprofessional.
I agree with Maxx. I wouldn’t want my realtor discussing any contract I signed.
But I do think a much smaller place would be the perfect start.
Private Lenders for two years then you can expand when you
have standing room only and customers still order.
La Cabana is a perfect example. They opened a small branch
using the old Bartel’s Hamburgers building on Bechelli.
Eat sitting down or drive thru. Anything to get your tasty tapa’s
to your hungry customers.
I like the “Tasty Tapa’s” name. Keep up your dream.
So, there is a great little location on Benton and Market……..
Thank you to the people who wrote in expressing support and ideas. We will be considering all options - I think the concept would be wonderful for Redding!
And to clarify Ron’s comments, the “experience factor” was not in question with any SBA contact (the SBA does not lend money, but guarantees bank loans) - one local lender had brought this up.
In addition, we had not had “a final turn down”" prior to the cancellation of the contract - the decision was made based on many factors, financing options among them. The lender was and is interested, but the value of the operation was downgraded after due diligence by myself and my acquisiton team.
If any other details of this venture need to be commented on, I would prefer to be contacted for accuracy .
I too wish Chef Jeff all the best - I still think this is one of Redding’s outstanding properties and it would have been tremendously exciting to complete the deal
Thank you, Doni, Kelly and everyone for your support.
Brad Tillson
I would be looking at Agent Largent for an apology online soon as to your privacy (which now you have none) or
looking for an attorney.
He won’t be getting any of our business for commercial transactions. I’m passing it on.
.
Wow, I forgot how much I dislike the idea of anonymous posting. Are you sure this is the right route, News Cafe?
Maxx makes an assumption about Ron Largent not having permission from the principals to post the broad overview of how the sale fell apart. I don’t know either, but since the buyer posted here for clarity, I’ll make the assumption that he was OK with it generally. Brad, good luck with your next venture. Your idea has my mouth watering…
Ultimately there was no contract here. The business is now off the market. All of us are better informed about the real impacts of a tightening credit supply. Personally, I found it very interesting to read what happened. My thanks to Brad, Jeff, and Ron for letting us in on the broad issues involved. Best wishes to all involved.
Mr. Skip Murphy is a Realtor at Coldwell Banker C & C Properties where Agent Larson was the previous Commercial Agent.
Thank you Skip
and Best to all
I don’t see where Ron Largent overstepped anything. He was very general in his comments and did not reveal any specific details.
In terms of clarification and explanation, business opportunity sales are treated a little differently than the traditional real property sale. Almost every contract will have a provision that makes the transaction contingent upon financing, and this is usually a key component of the agreement, as was the case with the Pio Loco. This provision protects the buyer, and at the same time alerts the seller that the deal is not done until the financiing is approved. To consider the deal done with the opening of escrow is not good, for financing can be very difficult for a number of reasons. (1) Lenders will look at the business being purchased to determine if the business can justify a new loan that will be repaid by the gross revenue of the business. They will look at the business and the assets of the business as their security for the loan. (2) They will look at the borrower as to his or her ability to operate that business. They will consider many factors, depending on the nature of the business, and the business experience of the new owner will be considered, along with the proposed business plan, the environment for that particular business to succeed in, and the overall market conditions for that particular business at this time. The lender will also look at the lease, if real property is not involved, and can object to lease provisions if they so choose. In other words, the lender looks at a business without the real estate in a very different, and at times, critical way. In the big majority of cases, where a business opportunity sale fails is where the financing cannot be arranged. To help solve this problem, the Small Business Administration (SBA) offers seminars to future business owners, at which point they cover all of the above and much more. They talk about specific areas that the potential buyer needs to improve, change, or work on, along with what should be involved in the due diligence portion of the purchase. They talk about financial statments, and month ending Profit and Loss statements, and how to measure your marketing expenses versue income. They are very thorough in their seminar, and it is a very worthwhile learning experience. Business sales are not an easy process. In the case of Pio Loco, both buyer and seller did their utmost to make the sale happen, but the financing issue became the final deciding factor. Unfortuately, the economic times today complicated everything, for all of the items above became even more critical than they would have a few years ago. Timing is everything. Thanks,
Ron Largent
I don’t know why anyone would trust a realtor who is completely out of touch with reality.
I feel that Agent Largent told us more than we needed to know, publicly.