Want to sell your restaurant? Then you better find out the true market value.
As restaurant brokers, we look for five elements when we evaluate the possibilities for success – or failure – in selling a business. These elements are:
- Something to Sell / Profitability: Buyers don’t purchase unprofitable businesses. They look for prime location; long-term, favorable lease; working equipment, and inviting ambiance. Buyers pay for a successful track record.
- Verifiable Gross Sales: Tangible assets – furniture, fixtures, equipment, leasehold interests, real property, and inventory – are visible; a prospective buyer can assess them. However, gross sales must be substantiated by profit and loss statements, sales tax reports, bank statements, and other records.
- Proven Expenses / Operating Costs: What do you pay for liability insurance, labor, food and beverage products? How do food costs relate to menu prices? Is food prepared from scratch or from higher-priced prepared foods? Buyers will ask these questions – and they’ll look for answers in your profit and loss statements, the lease, menus, equipment, and location. You’ll also need appraisals of real property if your broker is to effectively market your restaurant.
- The Real Reason for Selling: Every restaurant is for sale at the right price and at the right time. Buyers want to know the real reason a restaurant is on the market. Some valid reasons include:
- Poor management skills
- Family considerations
- Burn out
- The Real Bottom Line: To effectively price a restaurant – to come up with true market value and realistic sale price – takes knowledge and skill. Many factors enter into pricing, and the “gross multiplier” rule of thumb is only one of our evaluation methods.
- Priced at Fair Market Value: “Is your business for sale?” The usual answer is almost always, “If the price is right.” Unfortunately, the perceived right price is often different from the fair market value – the price that a business can command at a particular time in a particular market. There may be other factors to consider – for example how quickly the owner wants to sell – that influence pricing, but the true market value is always the primary force driving a business sale. As restaurant brokers, we understand this and create unique selling strategies by:
- Analyzing the economic value of the lease
- Valuing the location
- Adjusting profit and loss statements
- Creating video presentations and professional sales presentations
- National marketing through our Web site, our Network Partners, and regional and national generic marketing in newspapers and trade publications
Want to sell your restaurant? Think about these five elements, and then call one of our offices to open the selling process and begin meeting qualified buyers.