PLANNING TO SELL? PROPER PLANNING IS ESSENTIAL!

Restaurant owners decide to sell for many reasons, including retirement, divorce or burn out. The reason is not as important as the decision and the owner's subsequent actions. Marketing and grooming a business properly can make the difference between selling at a profit or at a loss. But, most owners are too busy running the business to develop and implement a mareting strategy. And, marketing matters.

Restaurant brokers are specialists in food-service business sales. We look at properties objectively, evaluate the business, and outline steps to ensure that prospective buyers see the business in the best possible light. We understand today's tight market and the demands of buyers.

For example, while it's true that intangible assets, like good will, are important in restaurant sales, it's the tangible assets that prospective buyers see first. If the property isn't clean and attractive or the equipment doesn't work properly, many buyers won't even look at the books.
 
Clean Is Essential

Business buyers associate a clean restaurant with a professional, profitable operation. Tangible assets that concern prospective buyers include:

• Exterior: Windows clean; paint fresh; shrubs trimmed; parking lot striped; signs working

• Kitchen: Spotless; meets all codes, major equipment and hoods serviced; walk-ins organized

• Front of House: All elements in place; furniture, carpets, floors, and walls clean; restrooms scrubbed and painted

• Mechanical Systems: Working and serviced; filters clean; equipment age documented

Of course, you can't ignore intangibles when you're selling a restaurant. If records are sloppy, buyers will balk. And, if good will isn't documented, buyers will pay for only the depreciated tangible assets. Buyers will expect to see:

• Financial Records: Complete sales, purchase, and expense records; a minimum of three years' income statements, backed by monthly sales tax reports and returns to verify cash flow and business profits. Astute buyers will adjust financials to determine cash flow and discretionary income; they won't buy from a seller who has inadequate financial records.

• Legal: Up-to-date corporate books; copies of property and equipment leases; insurance policies; documents about trademarks, copyrights or logos.

• Employee Files: Separate files for each employee, including hourly wages and benefits, standard withholding forms, I-9  or other documents.

• Menus / Recipes: Increase prices and make any menu changes before the business goes on the market; print new menus if necessary. A recipe manual is invaluable!

• Marketing Materials / Public Relations: A portfolio of newspaper articles and advertising, including good photos of the restaurant.

Meet with your accountant to create or adjust historical financials, if necessary. Poor financial documentation is a leading reason that restaurants fail to sell in a timely manners at a fair market price. If books have been neglected, work with a financial advisor to adjust and recapture lost sales, even if it means paying a tax penalty.

Devising and implementing marketing strategies takes time. Smart sellers rely on a professional restaurant broker to market their business, locate and screen prospective buyers, and submit offers to sell – while they continue to operate their business. It's a partnership that pays off in timely and profitable sales.