How Long Does It Take For A Small Business Restaurant To Sell?


How Long Does It Take To Sell Restaurants

This question is bound to come up from a seller to a business broker at one point in their relationship. The truth may discourage a seller who desperately needs to sell, because in all honestly, many times in can take months.All restaurants are different, and with each, comes advantages and disadvantages.

A typical restaurant could take between six months and a year to sell, although there are exceptions, the length of time is important for a seller to know, because if they have a six-month listing agreement with a broker, just because it hasn’t sold in that time, doesn’t mean it won’t in the future.

I would say the four major things that would affect the time of the sale would be, price, profitability, rent/lease, and location.

1. The price of a restaurant was less of a concern for many buyers before the 2008 financial crash, because borrowing money before that time was much, much easier. I witnessed in the early 2000s, a restaurant that would normally sell for $75,000, later sell for $225,000. Gone where the days of 50% down, owner carry the remaining, to be replaced by all cash offers, this to the seller’s delight. In today’s market, we have basically returned to the way things were before, more owners must be willing to carry, and the number of buyers who can purchase something over $100,000, all cash, are fewer and far between.

2. Profitability has always been important, but before buyers would be willing to buy something with less emphasis on due diligence. Currently, the process of due diligence, whether through a detailed examination of books and records, visual observation, and looking at sales tax receipts and tax returns, takes much, much, longer, compared to what it once was. Many buyers are essentially buying a job, when they buy a restaurant, and they need to make sure that the job will be able to provide for themselves and their families at the end of the day. A business that provides a verifiable profit, in accordance with the price of the business, will fare much better in the open market.

3. What is the rent? This question will come up, over and over, when talking with buyers. If the rent is high, then it needs to be justified by the restaurants gross sales and profitability. I've found that as the rent goes up in the eyes of the buyers, less and less are willing to potentially take it on. A high rent can be daunting for many buyers, because it’s one thing that is always promised to go up, and when there is trouble, it’s one thing that’s unavoidable. Many buyers are comfortable with rents that are less then $3,000 and up to, say $6,500, but as that rent starts to get about $8,000, and especially $10,000 plus, more and more inexperienced buyers will move on. The lease and landlord are also factors that can affect the time of the sale. Is the landlord independent and easy to get along with or are they a major leasing company that must obtain the authorizing signatures from another state? Is the lease to be assumed or does the buyer want a new lease on different terms? All factors regarding lease and its transferability can either make the sell of the business sail along or bring it to a grinding halt, or even kill the deal.

4. The location of the business is important because, ultimately, it's where the new buyer will be calling their second home for the foreseeable future. Is the location profitable, but in a high crime area or is it profitable in an affluent beach city community? These are questions all buyers consider when looking at businesses for sale. Some business brokers will intentionally be non-specific when advertising their business, so that they can sell the business and its attributes to the buyer over the phone. Brokers may just include the county the business resides in while advertising, if the business is in a less than desirable area, they do this to increase the number of calls they receive from potential buyers, because ultimately, the more buyers who look at the business, the chances that one will write and offer, and hopefully buy it.

Categories: BizBen Blog Contributor, How To Sell A Business, Selling A Business

Contributor:

Joe Ranieri
Areas Served: Orange, Los Angeles County Areas
Phone:  714-292-5448 Cell, 714-292-5448 Text
Having owned both retail and restaurant businesses for over 20 years, my interest turned to selling businesses rather than owning them. I specialize in Los Angeles & Orange County restaurants, fast food independents and chains, bars, & liquor stores. Call me direct at 714-292-5448 Cell/Text.





  Helpful Resources To Assist In Selling And Buying California Businesses
Ryan Clark, The Veld Group, Business Brokerage: Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan, Business Broker at 310-652-8353.

Rick Carlson, Business Broker - Southern California

You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.

Jack Oh, Business Broker: Southern California

Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989 Cell / Text.

Mike Brewer: Liquor License Broker, ABC Consulting Services In California

Liquor license brokerage and consulting services. We provide: Alcohol License Transfers Application Consulting & Processing, Liquor License Purchases & Sales, City Zoning Permits & Land Use Entitlements, Public Convenience or Necessity Findings and Letters. Phone Mike Brewer direct at 800-437-1100.

William Park, Business Broker: Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.

Lee Petsas, Business Broker: Southern California Area

Lee Petsas has been selling businesses with UBI Business Brokers in Southern CA since 1981. In 1999 he became the Owner and Broker for UBI. He has been approved multiple times by Courts as an Expert Witness in the area of Business Valuations.

Peter Siegel MBA, BizBen Founder, ProBuy, ProSell, ProIntermediary Programs

Peter Siegel, MBA - Founder Of BizBen.com (since 1994), I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I advise/coach buyers, sellers, and brokers daily about buying & selling small to mid-sized businesses throughout the Nation. I can be reached direct at 925-785-3118.

Steve Zimmerman: Restaurant Broker Specialist, California

Steve founded Restaurant Realty in 1996. He has personally sold/leased over 1000 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker- An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Buying A Restaurant Can Be Challenging: 3 Key Tips For Restaurant Buyers

People always need to eat; there should be plenty of business. Some restaurant buyers think there is prestige to owning a popular eating establishment. But it isn't an easy business purchase. Peter Siegel, MBA (BizBen Founder, ProBuy & ProSell Program Director at 925-785-3118) reviews this topic.

How Long Does It Take For A Small Business Restaurant To Sell In California?

This question is bound to come up from a seller to a business broker at one point in their relationship. The truth may discourage a seller who desperately needs to sell, because in all honestly, many times in can take months. All restaurants are different - Joe Ranieri, Business Broker explains.

Why Restaurant Buyers Typically Fail: Best Pro Tips For Buying A Restaurant

Buying a restaurant (no matter what type) can have many pitfalls, and potential restaurant buyers should know how to avoid getting burned! Several restaurant intermediaries and advisors weigh in on this BizBen Discussion about the best way to find, purchase and run a restaurant successfully!

Buying A Restaurant With Financing: 5 Options For Restaurant Business Buyers

In this Discussion, Peter Siegel MBA (Business Purchase Financing Advisor at 925-785-3118) discusses financing of purchasing a small to mid-sized restaurant business (with or without real estate). When it comes to financing a restaurant, potential restaurant buyers have many options to choose from.

BizBen Podcast & Webinar: Business Purchase Financing And SBA Loan Options

Ever wonder what is involved in obtaining business purchase financing to buy a business or franchise? Peter Siegel, MBA who has over 25 years advising on all types of financing for business buyers in this BizBen Podcast & Webinar - SBA loans, Non-SBA Financing, Alternative Financing Sources.

Buying A Pizza Restaurant, Pizzeria Tips: What Pizzeria Buyers Need To Know

Peter Siegel, MBA discusses buying pizza restaurant for sale tips and what to watch out for. Topics: Owner involvement in the business as pizzerias are most successful when the owner is onsite.

Dirty Tricks By Some Business Brokers: Sellers Of Small Businesses- Be Aware

Lee Petsas (Southern California Business Broker) shares his concerns regarding some questionable business practices by some California Business Brokers lately. Other Business Brokers and Advisors weigh in as well on this BizBen Blog post with other "dirty tricks" they have observed and heard about.

Buying A Liquor Store Small Business: When Do I Perform The Inventory Count?

The only time to get an exact and accurate inventory count, and valuation, is at the time the business is being transferred. To do so beforehand, would mean that any merchandise sold after inventory is taken, but before close of escrow - Peter Siegel, MBA with BizBen & others discuss this topic.


Michael Brewer, ABC License Consultant
Escrow Services Diane Boudreau-Tschetter
HVAC Business For Sale Central Valley
Chuck Post Laundromat Industry Expert
Facebook
Twitter
Linkedin
Vlogs and Podcasts
Advertise On BizBen
BizBen Blogs And Articles
New Postings Reports On BizBen Sign Up
Instant Email Alerts On BizBen
BizBen ProBuy Program
Business For Sale California Stats

BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 Dublin, CA 94568 © 1994 - 2021, All Rights Reserved


New Info Daily:   Facebook   Twitter   Linkedin   Vlogs and Podcasts



500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Buying A Restaurant Can Be Challenging: 3 Key Tips For Restaurant Buyers...
Read More News
Why Restaurant Buyers Typically Fail: Best Pro Tips For Buying A Restaur...
Read More News