How to Sell a Restaurant and get the highest and best offer can be challenging. Restaurant owners can help themselves sell a restaurant by checking their “restaurant paperwork” details before listing it for sale!
When selling a restaurant, the real work starts before the restaurant has been listed for sale. An experienced restaurant owner should know the details, expiration dates, and options available in crucial restaurant paperwork.
Today’s buyers are more educated than ever when buying a restaurant. The internet provides information on restaurant valuations and lists of items that buyers should collect during the due diligence period.
Restaurant owners have to remember that the buyers are looking for Problems, Opportunities, and Lies when verifying information provided to them for review.
The Restaurant Broker provides 4 Tips – How to Sell a Restaurant– Items to review:
- Lease
Review to understand the terms and conditions that the buyer must agree to before selling the restaurant.
Questions to know:
- When does the lease expire?
- How many option terms and years?
- Security Deposit?
- Assignment language-any specific qualifications net worth/experience/restaurant concept
- Guarantor language
- Profit and Loss Statements (P&L)
An income statement or profit and loss account is one of a company’s financial statements and shows the company’s revenues and expenses during a particular period.
P&L is the document that tells the story of the restaurant. The restaurant owners should understand the story the paper is telling and why?
Questions to know:
- Does P&L tell the same story as the Tax Returns?
- Does P&L include all sales?
- Did you include PPP loans in net sales? (remove)
- Restaurant Upgrade Requirements (Franchises only)
Several franchises require franchisees selling a restaurant to bring the location up to current company specs and standards.
The restaurant upgrade requirements can include new signage, new chairs, tables, cooking equipment, painting, and more.
Questions to know:
- Last time the restaurant was remodeled?
- Does the Franchise require an upcoming remodel?
- What estimated cost of upgrades would be required to transfer the store to the new owner?
- Do you plan to pay for upgrades, or will you require the buyer to pay upgrade costs?
- Franchise Agreement (Franchises only)
Franchise owners should know how many years are left on the Franchise agreement and how much it costs to extend the Franchise Agreement, and for how many years.
It helps if the seller also knows the Transfer fee amount because usually, the buyer will be responsible for paying this fee.
To learn more about EATS Broker consulting services or to receive a complimentary restaurant valuation, contact Texas Restaurant Broker Dominique Maddox at 404-993-4448 or by email at [email protected]. Visit our website at www.EATSbroker.com.
