So, you are putting your restaurant up for sale. After having undergone the huge undertaking of owning a restaurant, it is time to sell your restaurant. Whether it be due to competing financial pressures, serious family matters, or simply because you wish to continue onward with another phase of your life, you have decided to sell your business.
It’s not uncommon. According to research, most restaurant concepts have a short lifespan of only about five years, and many obstacles stand in the way of a good restaurant staying around for very long. At any rate, you’ve decided to sell (or at least, you are strongly considering it) and you have your work cut out for you. It will be tedious, but not impossible.
Here are a list of tips and pointers to best guide you through the selling process.
1. Focus on Presentation
Before you put your restaurant up on the market, be sure that anyone who passes by or walks in is welcomed by a clean and upkept environment. If a potential buyer were to walk up to your business today, what would they see? Is your landscaping trimmed and clear of debris? Is the interior well-lit? Don’t underestimate the power of an attractive exterior. Additionally, a clean and brightly lit sign in good condition adds to the perceived value of the restaurant as well.
2. Prepare a Financial Profile
According to information polled from professional business owners, one of the most common businesses fail to sell is because owners’ financial records are incomplete, inaccurate, or poorly maintained. As a seller, it is your responsibility to prepare for the selling process by developing an organized financial system for your business entity.
A prospective buyer is likely going to want to see detailed, confirmable figures, preferably in standardized formats like a balance sheet or a profit and loss statement. It would also be to your advantage to formalizing your financials a few months before putting the restaurant up for sale.
3. Be a Proactive Seller
If you are interested in selling your restaurant quickly, managing all follow-ups and next-step initiations are key. Letting potential buyers know what the next step is and setting up follow-up meetings with a prospect can really speed the process along. Having that sense of urgency and having the ability to provide whatever additional information necessary also can’t hurt the process from moving along quickly.
4. Hire a Restaurant Broker
To be clear, hiring a specialized restaurant business broker is up to you, the seller. You may have the experience necessary to pull off the sale on your own, however there are many advantages to business brokers that should not be overlooked.
For example, skilled brokers will know where to look for quality buyers, and will have the best understanding of the marketplace, which optimizes your chance of a larger profit.
5. Air Out Dirty Laundry
It is always a good idea to establish a relationship of trust with your broker. Be honest with your broker, make sure that they are aware of every negative aspect of your business, especially any that might become a liability for the sale to be successful. Talking about any issues you may have regarding your establishment’s situation; an informed broker is better equipped to help you resolve those issues and close those deals. An experienced restaurant broker will be highly skilled at dealing with these issues.
6. Marketing to Sell
If you haven’t already, you should develop a marketing plan that is broad, meaning that it doesn’t simply depend on your local paper. Regardless, creating a website that highlights the unique and interesting features of your restaurant can attract more customers, and a busy restaurant is a good sign to potential buyers.
Ask yourself what your restaurant has to offer. Take a fresh look at your establishment from an outside perspective and determine the biggest selling points of your business. Keep in mind that people will pay for the present, not a possible future. It is for this reason that it may also be a wise decision to upgrade your kitchen equipment and facilities, since money invested in those areas tends to reap in the sale.
7. Appraising Your Restaurant
Now that you at least have an idea regarding your marketing strategy, you can begin to set a price. There are many factors to take into consideration when deciding the market value of your restaurant, and of course every owner wants to get back all the cash, blood, sweat and tears they invested into their business. That said, rarely does a buyer offer exactly what is being asked for a restaurant business.
Visit with your broker and other advisors prior to and during the listing period so when you receive offers, you’ll be better prepared to understand and assess your options.
8. Keep Legalities Current
Another factor that should not be overlooked is that most prospective buyers will be concerned about the current state of the lease, the permits on the property and equipment, and the liquor license (if you have one). Potential buyers will want to be sure that the business they are purchasing won’t require immediate expense upon reopen.
If your restaurant is under a lease agreement, understanding the terms of agreement is critical. Talk to your landlord about your plans to sell and ask them about extending the lease. A lease that is secured in place can provide a sense of security to a prospective buyer and may make your offer more attractive to them.
9. Communicate with Your Broker
There is nothing more disappointing than signing a listing agreement and having communication fall silent. Keeping in mind that your broker is concentrating on selling your restaurant, engaging with buyers, making phone calls, and distributing information, it is important that you stay looped in all the activity. Be assertive, ask your broker what forms of communication they use and establish how you want to receive contact. Some brokers use high tech systems that automatically notify you when an inquiry about your listing has been made, and others who are poor at communication will never contact you. Establish communication standards early on and don’t let that connection fade through the process of the sale.
10. Keeping Your Intentions Discrete
Selling a restaurant can take anywhere between a couple months to a year. If your employees are aware of the sale, they could easily become distracted and begin looking for a new job in that time. Suppliers may become hesitant to extend their terms. It is better to keep the sale discrete until all of the nitty gritty details are sorted out. Keep your employees in the know when the time is right- not at the last minute of course, but not too early on.
Once your restaurant is sold there may be employees that want to continue on with the new owners, which wouldn’t be a difficult transition since they already know how the business works and likely have bonds with regular customers and venders. A broker can also help ensure that your sale preparations are kept discrete, which is beneficial since the public rarely sees a restaurant for sale in a positive light and this could potentially damage your brand.