Whether it be because of a change in circumstance in life, wanting to trade up to a bigger restaurant, or wanting to cash out some profits after building your restaurant up, deciding to sell a restaurant is tedious- but not uncommon. If you’re thinking to sell your restaurant, you are going to want to start preparing a few months out. Learning the process as soon as possible will save time later on.
Here is a compilation of tips and pointers we’ve gathered from the restaurant broker pros at JC Kapas.
1. Evaluating your Restaurant
A good first impression goes a long way. If a potential buyer were to pull up to your restaurant business today, what would they see? Is the exterior attractive and free of trash? Do all of the interior lights work? An unkempt dining area, kitchen, or outside could suggest to the buyer that there is an underlying issue with profitability.
When planning on selling your restaurant, it would be a good idea to make sure all of the equipment is up to date and in perfect working condition. You don’t have to update everything at once but be certain that if you dedicate a certain part of your finance upgrading and replacing equipment, money will be there in the sale.
2. Mandating your Leases
Going over your current leases, including those relating to property and equipment, and ensuring that all leases are transferable or give you the option of subletting, is beneficial because most buyers will want to see the lease before moving forward with any other price or term negotiations.
If your restaurant location is under a lease agreement, is imperative that you understand the terms of that agreement before selling. Talk to your landlord about your plans to sell and ask them about extending the lease. A lease that is locked in place can provide security for a prospective buyer.
3. Get Your Financial Advisors Involved As Soon As Possible
Keeping your lawyers, accountants, and other consultants integrally involved before the business is listed for sale will provide you with much-needed advice on legalities and taxes. The last thing you want is the last-minute introduction of advisors into the negotiation process, hindering the entire sales process. It would be much more efficient to have your team of advisors involved from throughout the entirety of the sale.
4. Don’t Be Too Quick to Turn People Down
If you get an offer less than expected, the tendency is sometimes to dismiss it and not even reply, however, experienced sellers know that selling is a give-and-take process, and every offer should be treated with respect and responded to accordingly. Keeping the buyer in the game is key. Brokers know how precious buyers are.
Speaking of brokers, it might be wise to consider hiring one. Restaurant brokers know where to look for quality buyers, and will have the best understanding of the marketplace, and will be able to find a buyer fairly quickly. What’s more, is they can ensure that your sale preparations are kept discreet, in the case you don’t want your employees to find out that your restaurant is for sale until the details are all worked out.
5. “Highlight the Housemade”
When appraising your restaurant, it is important that you set a reasonable price. Too high and your restaurant won’t sell, but too low and you’ll be losing money in the sale. It is also important that you assess all factors of value. Does your restaurant get a lot of foot-traffic? How well-respected is your brand? Is there a good lease in place? Do your research to find out what restaurants comparable to yours are selling for in the present-day market.
This is another advantage of hiring a professional broker. You might have the experience to pull off the sale of your restaurant without outside help, but a dealer who deals exclusively in the state of restaurants will know where to look for quality buyers, and they will know what your restaurant is worth and therefore be able to optimize the selling price of your restaurant.
6. Develop a Database
Be aware that serious restaurant buyers often visit your restaurant as a regular client. With this in mind, developing a database of customers, and then marketing to that database, will increase the profitability of the business over time and it will allow for a higher valuation. A large database gives potential buyers scope to increase the revenue on the business, rather than simply relying on past customers to return. Online booking widgets are a great way of growing your customer database with minimal work on the restaurant owner’s behalf. In addition to this, it also makes the restaurant appear more professional.