Selling a Restaurant Tips – How To Sell a Restaurant




Time to Hang Up the Spatula?
As a restaurant owner, there comes a time when you wish to sell the business.  Perhaps you’re looking to relocate, or you want a change of kitchen scenery, or it’s time to lie on a beach and let someone else grill up the grouper.  No matter what your reason, your next task requires far different skills than those that made you a successful restaurateur.  By making some common-sense decisions, you will gain the maximum amount of profit and walk away from your food emporium with a satisfied smile and a heftier bank account.

How Much Is It Worth?
The first major decision any seller makes is to put a value on the business.  Too high, and you drive away potential buyers.  Too low, and you leave money on the table that is rightfully yours.  Many restaurant owners figure that the easiest way to price their business involves adding up the depreciated value of the equipment, toss in the market price of the real estate (or the remaining price of the lease, if you don’t own the building), and tack on a certain multiple of annual sales – anywhere from one to four times the net.  If you do all that, chances are you would be way over the true value of the place.  The best solution is to hire a professional restaurant appraiser.  These people know your area, recognize how different kinds of restaurants have different cost bases, and understand what motivates a buyer.  They will use one of three methods to help determine an asking price:

  • Market value – Similar to doing “comps” on home real estate, appraisers look for recently sold restaurants in your area (or in an equivalent city or town) that match certain criteria, such as similar square footage, revenue, and clientele.
  • Income value – Past sales are converted into future projections, taking into account expected revenue growth, the competition, and the financial health of the region.
  • Asset value – Various tangible assets, such as real estate, equipment, inventory, and even employees, are assigned a specific replacement value.

Make the Place Salable
After having decided that it’s time to move on, you want to make sure your establishment puts its best face forward.  Now is the time to fix the roof, paint the dining room, replace that oven with the quirky thermostat, and do any other repairs you managed to put off in the past.  The money you invest at this stage will return itself multiple times.  First, it shows a potential buyer that you truly care about the business.  Second, it frees them from having to worry about doing it themselves so they can concentrate on building sales.

Marketing is King
Spread the word, far and wide.  The more offers you receive, the better.  Put a sign in the window, list your business for sale in the local newspaper and online, and notify your local restaurant association.  Have some nice brochures printed up that include photos of the place – when it’s full of customers, of course – along with specific details like square footage, what equipment is part of the sale, and the menu you typically serve.  Be sure to include your historical sales figures, profit-and-loss statements, and other pertinent financial details.  These days, it may also pay to put up a Web site devoted specifically to selling your restaurant.

Screen the Buyers
Not everyone who shows interest in buying your restaurant has the wherewithal to do so.  Particularly if you are planning to offer some kind of seller-based financing – hardly any restaurant these days changes hands without it – you want to make sure that whoever buys your restaurant will succeed.  You will expect to review their financial situation, the level of skill they bring to the business, and even whether their management style fits in with the staff on hand.  One of the best ways for a restaurant to continue doing well after a sale is by retaining as many of the line workers as possible.

Hire the Professionals
At the end of the day, you are a restaurateur.  Presumably you’re not also a business broker, a real estate attorney, an accountant, or a banker. By having these people as members of your team, you can concentrate on running a great restaurant while these professionals look after your interests in a, well, professional manner.  They will make sure the price you ask is fair, the buyer you select is worthy, the papers you file are accurate and complete, and the money that changes hands does so properly.  This is not to say that you can’t sell the business yourself, but it’s important to weigh all the advantages and disadvantages before moving ahead on your own.

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