How to Get a Restaurant Ready to Sell
The art of getting a restaurant ready to sell really starts with planning and preparation. Restaurant owners planning to sell a restaurant in 2022, should be in the process of collecting and organizing important supporting documents now.
The New Years is a great time for restaurant owners that are considering selling a restaurant to prepare for the sale. January-April is the busiest months for restaurants for sale to go under contract with buyers.
A large number of people are familiar with the process of getting a home ready to sell, but a small number of restaurant owners understand how to get a restaurant ready to sell.
Dallas Restaurant Broker Dominique Maddox says, “ getting all the items required to list a restaurant for sale can be challenging if the restaurant owner is not prepared and organized.
The best advice is to start collecting all your documentation early, so you are prepared when calling a Restaurant Broker for a free restaurant valuation”.
Restaurant Brokers Checklist for selling a restaurant:
A copy of the lease and all amendments
Three years of Profit and Loss statements
Three years of tax returns
A copy of Furniture Fixtures and Equipment-only items owned by the seller
Franchise Disclosure Document (if franchise)
Copy of Vendor/Supplier List
Copy of Employees with pay rates
One year sales tax filings
Pictures of Front and Back of house
The start of a new year brings new excitement to the idea of entrepreneurship and ownership. Corporate Refugees fuel record buyer demand for entrepreneurship. Buyers are paying record-high prices for restaurants that have continued to perform well during the pandemic.
To learn more about EATS Broker consulting services or to receive a complimentary restaurant valuation, contact Dallas Restaurant Broker Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
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Steps for first-time restaurant buyer
What are the Steps for first-time restaurant buyers? This question EATS Broker gets multiple times weekly for buyers inquiring about restaurants for sale. Many interested buyers looking at restaurants for sale opportunities will be first-time restaurant buyers.
Many buyers are shocked about the difference between buying a home compared to buying a restaurant. The buying process from purchasing a home to purchasing a restaurant has completely different steps.
The restaurant sales transactions can be more complex where the smallest detail can make the difference from selling a restaurant or a restaurant for sale not selling.
Dallas Restaurant Broker Dominique Maddox says, “I enjoy educating restaurant buyers about the process of buying a restaurant. A big part of my job responsibilities is to educate and help buyers through the restaurant buying process.
The Restaurant Broker at EATS Broker provides a Five Step-by-Step overview of the First time Restaurant Buyer process:
- Research online:Restaurant buyers can get an idea of the inventory available on restaurants for sale in the local market on BizBuySell.com. The site is the internet’s largest business-for-sale marketplace.
Individuals interested in buying an existing restaurant can get preliminary information on the site like price, income, EBITDA, cash flow, gross revenue, rent, and year established.
- Have documents ready to show– When buying a home, the buyers will contact the bank and get pre-qualified before contacting a Real Estate Agent.
Many buyers are shocked when a Restaurant Broker asks for proof of funds before providing the name, address, and financials of a restaurant for sale.
Restaurant Brokers Golden Rule of Thumb
-If the listing is a franchise or over $100,000, a Restaurant Broker will want to see proof of funds (bank statement, 401K, or letter from bank). The franchise requires a certain amount of liquid funds before approving a potential franchisee.
The landlord will want to see proof that the new tenant can afford the lease. There is no need to provide financials to a buyer that can’t qualify.
-The bank statement, 401K statement, or letter from the bank should be within 60 days; close out your account number because a Restaurant Broker will only need to see your name and amount.
- Contact a Business Broker
A majority of the restaurant for sale are listed by a Business Broker or a Restaurant Broker. Buyers are required to sign a confidentiality agreement to access more information about the listing for sale.
A select number of restaurants for sale brokers will provide more information instantly once the non-disclosure is signed. Unfortunately, a large number of the listings will require a buyer to provide proof of funds.
Once non-disclosure is signed and proof of funds, the buyer will get a copy of the package. The package will have the name, photos, financials, details about the lease, and the restaurant’s location.
4. Visit the restaurant
A restaurant buyer gets to visit the restaurant as a customer. Some buyers will want to skip this step and schedule a meeting with the owner to ask questions and tour the kitchen area.
The Restaurant Broker at EATS Broker Tip:
A restaurant buyer should come to the seller-buyer meeting provided with questions. A buyer will learn more about the business and its long-term potential by asking the right questions.
- Evaluate and make a buying decision
During this step, a restaurant buyer will evaluate the information they have received from the seller. The buyer will decide whether to make an offer and the contingencies needed to feel comfortable. The buyer will start the due diligence process if the purchase agreement offer is accepted.
For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dallas Restaurant Broker Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
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What is a Cloud Kitchen? What should you know?
A cloud kitchen is a commercial kitchen, sometimes called a “ghost kitchen,” used for delivery-only or pick-up restaurants. New restauranteurs and current restaurant owners are expanding menu offerings and increasing delivery orders by opening cloud kitchens.
The popularity of ghost kitchens has increased over the years. Today consumers ordering food online might be shocked to find out they have ordered from a ghost kitchen restaurant.
Ghost kitchen restaurants can be open for a fraction of the price versus a brick-and-mortar location. Cloud kitchen restaurants are considered a low-risk method to grow a restaurant business and menu selections. They handle the logistics and fulfillment while the restaurant owner only has to worry about the cooking.
Dallas Restaurant Broker Dominique Maddox says, “ cloud kitchens are opening opportunities for new or current restauranteurs to open restaurant concepts with less capital investment and risk.
Ghost kitchens are a popular business model providing a solution for restaurant owners to expand delivery areas and increase pick up orders”.
The Restaurant Brokers at EATS Broker compares Cloud kitchen restaurants vs. Brick and Mortar restaurants:
Capital Investment( upfront cost) Cloud Kitchens- $30,000 vs. Brick and Mortar $100,000-$300,000
- Staff required
Cloud Kitchens 2-6 employees vs. Brick and Mortar 10-30 employees
- Time required to open
Cloud Kitchens 2-4 weeks vs. Brick and Mortar 4 months-1 year
- Real Estate and Location
Cloud Kitchens- 200-300 sq. ft. vs. Brick and Mortar 1000-5000 sq. ft.
Cloud Kitchens-delivery hotspot with low cost and low traffic.
Brick and Mortar- high price, need prime location, good locations can be hard to find.
- Breakeven Point
Cloud Kitchens- 6 months – 1 year vs. Brick and Mortar- 2 years-5 years
Critical takeaways for Cloud Kitchens/ Ghost Kitchens
They provide excellent delivery and pick up opportunities
Allows restauranteurs to experiment with low risk
Allows restaurant owners to build multiple concepts out of one kitchen
Cuts costs for front and back of house labor costs
The kitchen features an exhaust hood, three comp sinks, prep sink, hand sink, and grease trap.
For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dallas Restaurant Broker Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
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