Q: How are restaurants priced?

Q: How are restaurants priced?

A: Prospective sellers often ask a broker to suggest a selling price, even though they may already have an asking price in mind. There’s no answer to this question. A restaurant broker will first determine the fair market value before attempting to suggest a selling price. And, that involves a thorough review of all financial information, reviewing the lease, inspecting the premises, and factoring in market conditions and the seller’s estimate. Once these steps are completed, the broker will suggest a recommended price range – from low to high. Higher cash demands usually bring a lower selling price; smaller cash requirements generally command a higher price. Seller financing and terms of sale are often more important in closing a sale than the actual selling price.

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