In the USA, there are 750,000 restaurants; 75,000 of these are independent, with 10,000
restaurants for sale at any given point in time.
How should one prepare to sell restaurants?
- Quality Financial Information and business reports: if buyers must recreate the
financials and need all kinds of explanations about the numbers, we have a problem! A
good broker will help a seller present the business professionally, comparing the
business with industry standards. - Industry Standards: Because there are so many restaurants out there, there are high
quality statistics of how a restaurant is expected to perform based on the size of the
business. This includes Sales per Employee, margin%, and rent coverage as compared
with monthly sales, Size of Market, Sales and Profitability trends, and payroll costs as a
percentage of Sales, age of equipment, and many, many more. - You need to have someone who understands these statistics and how to present
them. In just one database I use, I have information on the sale of 26,667
restaurants as of June 2024. With this much information available, it is very difficult to
verbally present a picture of why your restaurant is worth a premium as compared with
others. The major point of delineation when comparing your restaurant with others includes
financial statistics as compared with other businesses sold. - Do you work Breakfast and Lunch only or dinner only and can expand to other
meals. This is a reason to buy a Restaurant, but it doesn’t create value because a new
owner is going to have to take the risk of building this new product offering. A Seller is
paid for what the business is doing, the business is bought because of what a new
owner with new energy and ideas can do with the business. - Do you have long-term staff, or do you have a high turnover rate? The quality of your
cooks and servers goes a long way toward supporting quality value for a business. - Do you have unique recipes that will be passed on with the business or are you a me-
too operation? There is a big difference in the attractiveness of these two types of
businesses in the Buy-Sell marketplace. - What kind of market are you in? Where are you? How long have you been there?
What is the trend for the city and the specific area? Is the business seasonal? - Do you have an internet presence? Do you have a customer-friendly website? Do you
have quality reviews and ratings on Yelp and the other sites? This is very important. - Seller: Would you pay what you are asking for your restaurant? Many restauranters
want to sell their restaurant for more than they would pay for the business, this is a
problem. - Appraisal: You need a quality appraisal showing the pricing and why with comparable
restaurant sales.
In all business sales, the quality of the information presented is the key to a successful sale.
Of course, the restaurant must be priced right. Buyers are not going to waste their time arguing
with a Seller about the correct pricing for an overpriced business. There are too many options
out there for buyers to find a fair-priced business.
If you are thinking of selling your restaurant, give me a call, and I will help you get ready to sell
your business. I don’t charge for this service; it is part of establishing a relationship.
Take Care and be Safe!
Dale Shepherd, Capital Business Solutions
Vice President and Managing Director, TN, NC, VA
Master Certified Business Intermediary and Certified Franchise Broker
Kingsport, TN
