Why do Restaurant Brokers prequalify buyers
Why do Restaurant Brokers prequalify buyers before providing the restaurant name and financials? The answer is simple to protect the confidential information on the restaurant for sale. Restaurant buyers sometimes don’t understand the process of buying a restaurant and what’s involved. Many potential buyers understand they must first sign a Non-Disclosure Agreement (NDA) or confidentiality agreement.
After the Non-Disclosure Agreement (DNA) is signed, restaurant buyers expect instantly to get the name and financials of the restaurant for sale. Buyers sometimes will request a copy of tax returns, profit and loss statements, a copy of a lease, etc. A professional Restaurant Broker should now ask buyers to provide proof of funds once this occurs.
Why do Restaurant Brokers prequalify buyers? The short answer is that only 2% of buyers that inquire about a restaurant for sale will buy. A Restaurant Broker usually must communicate with 60-75 buyers before a restaurant is sold.
Dallas Restaurant Broker Dominique Maddox says, “we prequalify buyers by getting proof of funds in the form of a bank statement, brokerage statement, 401K, or letter from a banker before providing their name, address, and financials on our restaurant listings”.
EATS Broker reasons to qualify a buyer:
- To protect the confidentiality of the listing agreement, limit the number of buyers with the information on the listing.
- Ensure the buyer has enough liquid assets to be approved by the landlord.
- Ensure the buyer has enough liquid assets to be approved by the Franchisor.
- To confirm, buyers can put down 10%-20% for SBA lending
Protecting the confidentiality of our client’s listing is a top priority at EATS Broker. Once the buyer signs the non-disclosure agreement and submits proof of funds, we provide the name and financials of the restaurant for sale.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
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Thinking about selling a restaurant in 2023
It’s the time of the year when restaurant owners are thinking about selling a restaurant in 2023. It’s been a challenging year with increased labor costs, supply chain issues, food price inflation, and a lack of government financial assistance.
At the end of the year, some Restaurant owners must sacrifice time spent with their loved ones to work in the restaurant during the Holidays. It’s a time of the year some Restaurateurs think about life after restaurant ownership.
Dallas Restaurant Broker Dominique Maddox says, “if a restaurant owner wants to sell a restaurant in 2023, I would advise getting a Restaurant Valuation now”. Talking with a Restaurant Broker now can provide restaurant owners with excellent points to discuss with their tax professional, to help them get the highest restaurant valuation.
EATS Broker provides three tips on how to get ready to sell a restaurant.
1st Get your documents in order– This is one of the essential steps in getting a restaurant ready to sell. Buyers will request several financial documents during the due diligence process, and sellers should be able to provide several copies promptly. Remember, time kills deals; buyers want information provided quickly.
Restaurant Brokers Checklist for documents to collect:
Three years of tax returns
Three years of Profit and Loss statements
Equipment List- should only include items owned by the seller
A copy of the lease and all amendments
Copy of Vendor/Supplier List
Copy of Employees with pay rates
POS Sales Reports
Sales Tax Filings
Franchise Disclosure Document (if franchise)
2nd Check Restaurant Equipment-the presentation of how the equipment looks and works will help or hurt the chances of a restaurant selling. Before listing a restaurant for sale, restaurant owners should inspect all restaurant equipment to ensure it’s working correctly.
Deep clean equipment
Clean hood system
Replace any missing knobs or handles
Broken restaurant equipment should be removed
Any equipment not included in the sale should be removed.
3rd Be Patient– Selling a restaurant could be a marathon at times if the restaurant even sells. Only 30%-40% of restaurants listed for sale will sell, and it could take 6-8 months to sell a restaurant. January-March is the busiest time of the year for restaurants to go under contract.
Thru the process, restaurant owners should operate their restaurants as usual and not relax on the standards and procedures because the restaurant is listed for sale.
EATS Broker is available to provide free, confidential restaurant valuations for all restaurant owners thinking about selling a restaurant.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
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