Share This Info:  

Important Points To Consider When Selling Your Restaurant


Tips For Selling Your Restaurant

Have you decided that it's time to divest ownership of your restaurant? If you've ever bought or sold a business, you know it can be a rather cumbersome process. It all comes down to you and the buyer settling on the "fair market value" of your restaurant. However, fair market value is a relative term.

There are some financial computations that are typically used in establishing a fair price for the sale of a restaurant. However, there are many other variables that also weigh heavily on establishing the final price. Here are some to consider when selling your restaurant business.

The following should make the process of selling your restaurant smoother and, hopefully, more successful.

EXAMINE YOUR MOTIVES

Before you get too far into the process, go over your reasons for selling. You don't want to make a decision that you'll regret later. You may be approaching retirement age, which is a good reason to sell. Or you may be burned out and ready to pursue something else as a primary vocation. If this is the case, you might want to take some time away from the restaurant first to make sure selling is the right move. There's also the possibility that you're just strapped for working capital and you're seeking to sell to alleviate the problem. This can work out to the benefit of the buyer and the seller. Many buyers are looking to purchase businesses for a return on investment and are willing to keep the current owner in place.

TAKE YOUR TIME

If you do decide to sell your restaurant, don't rush things. If you place yourself in a time bind, you'll probably wind up settling for less. The time to ideally sell your business is when you've come off your best year and things are looking great for the current year. I've often said, to get the highest gains for your company, you must have worked the hardest to get your just reward.

FIND THE RIGHT BUYER

Since you might have to finance some of the deal and you will probably have to stay on as a guarantor for a lease assignment, it is very important to find the "Right" buyer not just any buyer. You may be hesitant to use a business broker because of the fees these brokers command (between 09 percent and 10 percent of the total sale price), but you really need an intermediary to help put together a deal. A broker working on your behalf can help with the intricacies of negotiating a realistic and fair asking price. Working on your own, you might price your business too low and leave money on the table. Or you might price it too high and scare off any prospective buyers.

A word of caution is in order regarding business brokers. Focus more on the reputation of the broker than the fee level. You're much better off employing the services of a reputable broker and paying 10 percent than you are in hiring an unknown who offers to sell your business for 8 percent.

PUT ON YOUR BEST FACE

Before you start showing the business to prospective restaurant business buyers, step back and take a good look at your restaurant. The organization of a business will definitely affect the sale price. This is the time to be concerned about the cleanliness, the condition of the bathrooms, and the general organization.

Similarly, make sure your financial records are in good order. You need to be able to present detailed records of revenues and expenses, inventory purchases, equipment purchases and depreciation schedules, debt repayment, and accounts receivable and accounts payable.

SET A PRICE

Several variables must be factored into the sale price of a restaurant, but there are three basic approaches used:

* Market value of assets: The business is sold based on the market value of the assets in the restaurant.
* Earnings approach: The business is valued based on the cash flow potential.
* A combination of the asset values and earnings approaches: The value is derived from asset values and cash flow.

The most important vehicle we use in our firm is a cash flow availability model. We recast the number to come up with the sellers discretionary earning.

While there are three basic approaches, there are many intricacies involved in the final valuation. The value of a business is much more than the financial numbers, it could be valued less or more than the financial picture represents based on many factors that pertain to the ongoing business.

There are many different ways to value a business but at the end of the day, a business is worth whatever someone is willing to pay for it.

If you're looking to sell, establish a minimum price that you will take for your restaurant and don't budge. It may take a while, but if you've received input from your accountant, banker, and intermediary in establishing a "rock bottom" price, you'll eventually get is.

CHECK QUALIFICATIONS

As we said, finding a qualified buyer is critical since you might have to finance a portion of the purchase price. You need to consider the buyer's experience in the restaurant industry, experience in managing all or part of a business, and experience in managing other people-as well as his financial analytical skills. If you're loaning the buyer money to buy your business, you're betting on his ability to make it work! Don't take this lightly.

STRUCTURE THE DEAL

When you receive an offer, it will most likely be in the form of purchase agreement rather than an L.O.I. In the purchase agreement, it should clearly state how this deal is to be structured. The agreement should say, how much cash the buyer is willing to put in and when, how much, if anything, the seller is being asked to carry and at what term and rate. It should lay out all the expectations of the buyer, in terms of a non-compete, training, certain assets of the business, liquor licenses, outside financing and anything else that might impede the sale of the restaurant.

AND DON'T FORGET...

Two other considerations are worthy of mention. First, if you're selling the restaurant just before you retire, Thing about what you're going to do after the sale. After the hectic pace of running a restaurant you might find yourself bored after a month. Make a plan to keep active after the sale so that you don't have any regrets later.

Second, be sure to consult your accountant and/or attorney regarding the tax implications of the sale. They might advise you to structure the deal a certain way to minimize your daily outlay, which could enhance your return.

Christina Lazuric, CBIAbout The Author: Christina Lazuric, CBI is a Principle and Broker at My Restaurant Brokers. Christina has brokered hundreds of Restaurants, Bars, Food Franchises and food related businesses. MRB has the experience and buyer database to find the perfect buyer for your Restaurant or Bar. Serving Orange County & L.A. County, Christina can be reached direct at 949-257-7823 for any questions or having a consulation regarding buying or selling a restaurant.


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



  Helpful Resources To Assist In Selling And Buying California Businesses
Ryan Clark, Business Broker, 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 at 310-652-8353.

Joe Ranieri, Business Broker, Orange & LA County Areas

Having owned retail/restaurant businesses for over 20 years, my interest turned to listing and selling businesses rather than owning them. I specialize tend to specialize in Orange County high volume restaurants, fast food independents and chains, bars and liquor stores. Call 714-292-5448.

Jack Oh, Business Broker - LA, Orange Counties

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.

Bob Baumgarten, Business Broker: Orange, LA Counties

National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-588-8727.

George Lanza, Business Broker, At Plethora Business Sales

Plethora Businesses, a division of A Premier In Services, Inc., is a Business Intermediary Consulting Firm headquartered in Orange, California. Plethora specializes in the listing and sale of small and medium sized private businesses.

Peter Siegel, MBA - SBA Loans, Non SBA Financing Assistance

For over 25 years I have provided niche business purchase financial advisory and loan placement services with SBA and Non-SBA Loans, Retirement Plan Conversions, Private Investors, etc. Financing amounts available: $20K to $7MM. Call today to get pre-qualified or receive financing: 866-270-6278.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Mike Brewer: Liquor License Brokers, ABC Consulting Services

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.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Selling Buying Used Restaurant Equipment-Tips For Restaurant Buyers, Sellers

The restaurant business is a tough business to be in, no one can dispute that, and so it's imperative that an owner's equipment is in good working condition. A new owner should make sure that the restaurant's equipment is in good working order before they close escrow. Joe Ranieri gives his tips.

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!

Is Your First Offer Received Usually The Best Offer When Selling A Business?

Should you accept that first offer when selling a business? Brokers and agents agree that the first 30 days are probably the most critical when selling a small business - but should you take that first offer? Joe Ranieri (Orange and LA County Business Broker) starts this great Discussion on BizBen.

What Are Some Tips In Ensuring A Smooth Transition When Buying A Business?

Changing hands of ownership can seem both exciting & daunting to all parties involved, but it's important that a smooth transition occurs to maintain or achieve success of the business. Joe Ranieri (Orange And LA County Business Broker - Restaurant Specialist) shares some tips with business buyers.

Upgrading Liquor License: An Increase In Price When I Sell My Restaurant?

My restaurant recently upgraded its beer with wine license to a full-service liquor license, and if I sell, how much can that increase my selling price? Joe Ranieri, Southern California restaurant broker specialist initiates this discussion and other advisors, business brokers, agents weigh in.

What Are Some Tips On Buying A Butcher Shop, Meat Market? Broker Gives Tips

Butcher shops, once a vestige, are increasingly becoming popular again in many metropolitan and suburban cities. In this Discussion Post on BizBen, Joe Ranieri (Orange County & LA County Business Broker) discusses various issues of buying a butcher shop and what that entails for business buyers.

What Are Some Of The Best Tips On Buying An Existing Bakery Small Business?

Bakeries service all occasions from weddings, birthdays, retirement, and a whole host of other special occasions. Many bakeries do a brisk retail business, but really make their money in catering. Joe Ranieri a Southern California Business Broker looks at the top tips when trying to sell a bakery.

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

In this Discussion, Peter Siegel MBA (Business Purchase Financing Advisor at 866-270-6278) 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.

See All News, Tips And Events


Joe Ranieri Orange County Business Broker
Veld Group Business Brokerage Los Angeles County
Business Purchase Financing SBA Loans
Michael Brewer, ABC License Consultant
Facebook
Twitter
Linkedin
Google Plus You Tube
Vlogs and Podcasts


Auto Related
Business Services
Children Related
Communication Related
Computer, Internet Related
Construction Related
Entertainment Related
Financial Services
Health, Beauty Related
Home Improvement Related
Maintenance Related
Manufacturing Related
Media, Publishing Related
Pet Related
Photography/Video Related
Real Estate Services
Restaurant, Food Related
Retail Related
Service Related
Sports Related
Transportation Related
Travel Related
Wholesale Related

Auto Body Shops
Auto Repair Shops
Bakeries
Bars, Sports Bars
Cafe Restaurants
Car Washes
Cleaning Services
Clothing, Apparel Stores
Coffee Shops
Convenience Stores
Deli Restaurants
Discount, Dollar Stores
Dry Cleaners
eCommerce Websites
Fast Food Restaurants
Florists, Flower Shops
Full Service Restaurants
Gas Stations
Gift Shops
Gyms, Fitness Facilities
Home Health Agencies
Hotels/Motels
Ice Cream Shops
Juice, Smoothie Shops
Laundromats
Liquor Stores
Markets, Marts
Nightclubs
Pizza Restaurants
Postal, Shipping Stores
Preschools, Day Care
Print Shops
Salons, Beauty Shops
Sandwich Shops
Smog Test Only Shops
Smoke Shops
Spas, Med Spas
Sushi Restaurants
Tire Shops
Towing Services
Vending Routes
Wireless, Cellular Shops
Yogurt Shops

Alameda
Alpine
Amador
Butte
Calaveras
Colusa
Contra Costa
Del Norte
El Dorado
Fresno
Glenn
Humboldt
Imperial
Inyo
Kern
Kings
Lake
Lassen
Los Angeles
Madera
Marin
Mariposa
Mendocino
Merced
Modoc
Mono
Monterey
Napa
Nevada
Orange
Placer
Plumas
Riverside
Sacramento
San Benito
San Bernardino
San Diego
San Francisco
San Joaquin
San Luis Obis
San Mateo
Santa Barbara
Santa Clara
Santa Cruz
Shasta
Sierra
Siskiyou
Solano
Sonoma
Stanislaus
Sutter
Tehama
Trinity
Tulare
Tuolumne
Ventura
Yolo
Yuba

0 to $99,999
$100,000 to $249,999
$250,000 to $499,999
$500,000 to $999,999
$1 million to $2 million
over $2 million



BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2019, All Rights Reserved

               Vlogs and Podcasts  
Join Us On Social Media - Content Updated Daily
Sign Up Today - For Our FREE BizBen Weekly Email Newsletter
Includes The Best Info On Buying, Selling, Valuing, Financing California Businesses:
Articles, Blog Posts, Podcasts, Videos/Vlogs, Discussions, Q&A, Workshops, Webinars,
Resources. Watch For An Email Confirmation After Signing Up Above. Thank you.
Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 
Search BizBen.com

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Why Restaurant Buyers Typically Fail: Best Pro Tips For Buying A Restaur...
Read More News
What Are Some Tips In Ensuring A Smooth Transition When Buying A Busines...
Read More News