Did you know that there are over 1 million restaurants in the United States?
With so many restaurants, you might think that selling a restaurant is out of the question. Selling a restaurant is easier than you think, and you can still get a high dollar value for your business.
You want to make sure that you get enough money to make up for the backbreaking hours of work to run a profitable restaurant.
Are you ready to find out the steps you need to take when selling a restaurant to get a nice return on your hard work?
Let’s get started!
1. Is It Time to Sell Your Restaurant?
This is the most important question to ask yourself before you start the process to sell your restaurant. There are many reasons why it’s time to sell. You could be burned out from running the business, it could be at its peak, or you’re having issues with your partners.
You don’t want to sell your restaurant in a rush. If you’re under pressure to sell the business, then you’re likely to get a low valuation for the business.
You’re going to need time to prepare for the sale. Ideally, you want to give yourself between 6-12 months to get your business ready.
2. Restaurants Have Curb Appeal, Too
If you’ve ever bought or sold a home, you know that how you present the home has an impact on the sales value of the home.
How you present your restaurant has an impact on the sales price as well. You want to make sure the restaurant is clean, well-organized, and attractive.
You want to take care of repairs and any structural issues before you put the restaurant on the market. You also want to make sure the kitchen equipment works and functions.
The impression that you need to give is that you’ve taken care of the space and equipment for the time you’ve owned the restaurant.
3. Make Sure You’re Within Legal Rights to Sell
You want to make sure that you can legally sell your restaurant. If there’s a partnership, have all partners agreed to a sale? If not, have they agreed that it’s OK for you to sell your share of the restaurant?
You may find yourself in a situation where you can’t sell your restaurant because of partnership issues.
You could be thinking, “I’d like to sell my restaurant, but I might not get the full value.”
You may not have to sell the entire restaurant. You can have an asset sale, which would mean you sell certain aspects of the business.
This works often when investment firms buy out large companies. They’ll purchase a company at a low rate, and then sell off pieces of the company to make the investment worthwhile. You could apply that playbook to your restaurant sales and still cash out.
You also want to check your commercial lease to make sure that you are within your rights to transfer the lease upon the sale. If you’re not sure, talk to your landlord.
Let them know that you plan to sell. You may be able to negotiate a longer lease so potential buyers feel more comfortable about buying a stable business.
4. Your Business is in Your Spreadsheets
The key to selling your restaurant for a good price is in your financial reports. You may do these yourself or hire an accountant to put these together.
You want to show your profit and loss statements. It’s OK if you show that your restaurant loses money. They will affect the valuation, but it shouldn’t be a reason why you don’t sell your restaurant.
Other financials are operating expenses, tax statements, and revenue projections. An investor would want to look at these financials to spot opportunities to improve the business.
5. Get a Good Valuation
You put so much into your business, and you’re likely to have an emotional attachment to the restaurant. You want to price the restaurant to make up for all of the time and energy you put into it.
That could lead you to overvalue the restaurant. No one will want to buy a business that’s overpriced.
You want to make sure that you give a proper valuation for the restaurant, and a business broker could help you do that. They can look objectively at the business and set a fair price for the restaurant.
6. Gather Your Documentation
You need to present more than financials to potential buyers. You’ll need to make sure that you have a copy of the liquor license, business license, any permits to operate the restaurant.
A potential buyer will also want to see inspection records from the Board of Health, a complete list of assets in the business, and a copy of the lease. All of these records should be updated.
7. Marketing Your Restaurant
How do you get the right buyers for your restaurant? That comes from marketing. You may need to work with a commercial real estate agent, but there are things you can do to help them present the restaurant.
For example, you can list out all of the great features of the restaurant, the clientele, and sell the location of the restaurant.
8. Negotiate Your Offers
You’ll get offers from potential buyers. Some of the offers will be below your initial asking price. You need to be prepared to negotiate to bring that asking price up. Don’t be afraid to walk away from bad offers, either.
This is where a real estate agent can be useful because they can guide you through the negotiations.
Selling a Restaurant for Profit
It’s not always easy to let go of something you worked so hard for. If it’s time to sell your restaurant, you want to make sure that you get the best price possible for it.
Selling a restaurant starts by coming to an agreement to sell and presenting the restaurant in the best light possible. Get the curb appeal up and get your documentation to prove the value of the restaurant.
You’ll need to step up your marketing efforts so you can target the right buyers. Be sure to check out the Marketing section of this site for more great articles.