Selling a Restaurant

Restaurant Broker Dominique Maddox of EATS Broker sells two Schlotzsky’s

Restaurant Broker Dominique Maddox of EATS Broker sells two Schlotzsky’s franchises in Galveston, Texas. EATS Broker represented the seller and buyer for this transaction.

The seller, a multi-unit owner, had experience selling their restaurants for sale by the owner in the past. After researching EATS Broker, they decided to give the Restaurant Brokerage Firm located in Dallas, Texas, an opportunity.

Texas Restaurant Broker Dominique Maddox says, “I really enjoyed this transaction. The seller was previously For Sale by the Owner. After a free phone consultation and a free restaurant valuation, they decided my Restaurant Brokerage was the best choice.

When I decided to start my Restaurant Brokerage in October 2019, I was challenged with a 2-year non-compete agreement in Georgia (which expires in October 2022). Low startup funds and the pandemic starts six months; later, in March 2020!

I will be forever thankful to Mr. Jain and his organization for giving my company an opportunity. This was my first Texas Restaurant for Sale I have sold since my relocation to Dallas, Texas”.

The buyer has an established history of success in the local market. Upgrades to the exterior and interior of both restaurants are coming soon. The new owner acquires the franchises for sale at the perfect time; summer tourism is booming in Galveston, Texas, right now!

Galveston is an island city on the Gulf Coast of Texas. It’s known for its restaurants that line Galveston Island Historic Pleasure Pier on the south shore. West is bird-rich Galveston Island State Park, with its trails, kayak launches, and fishing spots. Stewart Beach and East Beach are on the island’s eastern end.

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 email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.

Are you selling your restaurant? Are you ready?

Have you thought about selling your restaurant? Are you ready to sell and let go? Selling a restaurant can be a mentally tough and draining decision. Several restaurant owners view ownership of a restaurant as having a child, an business identity, a way to provide for the family, and a legacy.

According to Forbes, baby Boomers, defined as people born between the years 1946 and 1964, account for approximately 40 percent of small business or franchise ownership.

Forbes also states that the Baby Boomer generation accounts for an estimated 2.3 million small businesses in the United States, employing over 25 million people. Many of these businesses are thriving, and nearly 60 percent have no succession or transition plan in place.

The Baby Boomer population today is listing restaurants for sale or looking for a restaurant valuation to consider their options to sell a restaurant.

Reasons for Baby Boomers to Sell a Restaurant:

1. Pandemic
2. Work labor shortage
3. Inflation
4. Retirement
5. Health
6. Divorce
7. Partnership Issues

The Dallas Restaurant Broker Dominique Maddox states, “EATS Broker provides restaurant owners with a complimentary restaurant valuation. Numerous restaurant owners will inquire about a restaurant valuation but are not ready to sell”.

Today’s Restaurant Owners must be honest with themselves if they are ready to sell a restaurant? The Restaurant Broker provides some questions to consider when thinking about selling a restaurant.

How to know if you are ready to sell a restaurant? Ask yourself these questions:

1. Is the restaurant ready for a sale?
2. What are my plans after I sell my restaurant?
3. Am I ready to sell a restaurant?
4. What happens if I don’t sell my restaurant?
5. Who can help with selling a restaurant?
6. Should I try For Sale by Owner or hire a Restaurant Broker?
7. What sales price will I need to be happy?

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 sales@eatsbroker.com. Visit our website at www.EATSbroker.com.

Closing Attorneys for Restaurant Sales Transactions

Closing Attorneys for restaurant sales transactions are an essential part of the selling a restaurant process. Closing Attorneys act as neutral third parties in the transaction. Since they don’t represent either buyer or seller, as an attorney would.

Closing Attorneys are known by multiple names like Escrow agents and Real Estate attorneys. The Closing Attorney’s job is to ensure a smooth closing transaction, UCC-1 lien search, and wire closing proceeds to all parties.

Dallas Restaurant Broker Dominique Maddox says, “picking an experienced Closing Attorney that understands the Asset Sale Purchases is extremely important. Yes, you can close a deal without a Closing Attorney but EATS Broker always recommends a buyer to use a trusted Closing Attorney”.

Duties of a Closing Attorney
– Hold escrow deposit, and disburse closing proceeds to all parties
– Prepare Settlement Statement
– Prepare Bill of Sale
– UCC-1 lien Search
– Prepare Escrow Agreement
– Form of Restrictive Covenant Agreement-(sometimes)
– Prepare Representations and Warranties of Seller and Principal(s) (sometimes)

Closing Attorneys have to confirm that multiple tasks are completed before they will release escrow and send closing proceeds to all parties.

EATS Brokers provides a list of tasks that are completed or confirmed by an experienced Closing Attorney before closing:

Asset Purchase Agreement signed by all parties
All amendments are provided to Closing Attorney
Equipment List provided
Landlord’s Approval of Assignment or New Lease
Final inventory amount (if the purchase price is to be adjusted)
Prorations or Adjustments (if needed)
Franchise Agreement Approval
Wiring instructions for Franchise Transfer Fee
Wiring Instructions for Seller
Wiring Instructions for Broker
Allocation of Purchase Price-(8594 Form)-Asset Acquisition Statement
Buyer Funds-wired directly to the escrow account
Release of Liens or Payoff Letters
Lender’s Instructions (if third-party financing)

When selling a restaurant, EATS Broker always recommends contacting a closing attorney specializing in business transactions rather than residential transactions.

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 sales@eatsbroker.com. Visit our website at www.EATSbroker.com.

Preparing to Sell a Restaurant-What you Should Know

The decision to sell a restaurant is the first step and figuring out how to sell a restaurant is the second step. When preparing to sell a restaurant, what should you know before starting the process?

Baby boomers at record numbers are planning to retire and want to sell a restaurant. The preparation to sell a restaurant can start a year in advance, but mostly it happens unplanned or forced to happen.

What makes a restaurant for sale listing attractive to buyers? EATS Broker explains the key factors that make restaurant for sale listings stand out from the crowd.

What makes an excellent restaurant for sale listing?

1. Does the restaurant make a profit?– Profitable Restaurants have a greater chance of being sold than unprofitable restaurants. Only 20%-30% of restaurants listed for sale on www.Bizbuysell.com are sold. Restaurants for sale that show a profit stick out from the crowd and make themselves attractive to buyers.
2. Has an excellent Restaurant Story– Part of branding for a restaurant is being able to tell the restaurant’s story. The largest Franchise brands in the world make sure that people understand the company’s story.

The Dallas Restaurant Brokers says, “The restaurant’s story is vital to a company’s success. People relate to stories and remember stories. Independent-owned restaurants need to do a better job of telling the restaurant story. I suggest that any restaurant focus on the following points:

• How did the restaurant get started?
• Family-owned business?
• Where did the recipes come from?
• What makes the restaurant different than other restaurants?
• How is the cooking method different?

3. Can anybody operate? When selling a restaurant, it should be set up where anybody can handle the restaurant. Several Corporate America refugees are entering the restaurant industry, and most don’t have restaurant experience. How can you sell a restaurant to an individual that doesn’t have experience?

• Create systems and templates
• The restaurant should be easy to operate
• If the restaurant is a Chef-driven concept, make sure to have a Sous chef and replacement chef for the next owner
• Provide training to the new buyer

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 sales@eatsbroker.com. Visit our website at www.EATSbroker.com.

4 Tips – How to Sell a Restaurant

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:

1. Lease

Review to understand the terms and conditions that the buyer must agree to before selling the restaurant.

Questions to know:

1. When does the lease expire?
2. How many option terms and years?
3. Security Deposit?
4. Assignment language-any specific qualifications net worth/experience/restaurant concept
5. Guarantor language

2. 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:

1. Does P&L tell the same story as the Tax Returns?
2. Does P&L include all sales?
3. Did you include PPP loans in net sales? (remove)

3. 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:

1. Last time the restaurant was remodeled?
2. Does the Franchise require an upcoming remodel?
3. What estimated cost of upgrades would be required to transfer the store to the new owner?
4. Do you plan to pay for upgrades, or will you require the buyer to pay upgrade costs?

4. 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 sales@eatsbroker.com. Visit our website at www.EATSbroker.com.

What is Restaurant Prime Cost?

Restaurant Prime Cost can be described as the most critical number a restaurant owner should know to operate a profitable restaurant. Restaurant Prime cost should get extensive attention on the profit and loss statement because the category is highly volatile.

Today’s restaurant industry is faced with increasing labor wages and an explosion in food costs. These factors stress restaurant owners’ net profits because it’s expanding the Restaurant Prime Cost.

What is Restaurant Prime Cost?

The formula for Restaurant Prime Cost is: COGS + Total Labor = Prime Cost

Restaurant Prime Cost should be reviewed monthly and, at worst quarterly, to monitor any changes that can negatively affect the Profit and Loss statement. Many successful restaurant owners actually calculate and evaluate prime restaurant costs weekly.

Dallas Restaurant Broker Dominique Maddox says, “the first items I review on a profit and loss statement is the Cost of Good Sold “COGS” and the total labor cost total percentage cost. Prime cost should be 55%-65% or less (total sales)”.

Breakdown of Restaurant Prime Cost:

Cost of Goods Sold:

The cost of goods sold (COGS) in a restaurant includes the price of all products, materials, and condiments used to create a dish or drink.

Total Labor Cost:

Total labor cost includes employees’ wages and benefits. This category contains hourly employees, salaried employees, payroll taxes, and employee benefits.

Restaurant Broker Tips:

-Training managers to be proactive in monitoring food loss, employee scheduling, and comps.

– Provide proper training for new employees

– POS System and technology should be up to date with inventory count

-Increase food prices

-Review restaurant numbers weekly

-Owner/operator or General Manager operated

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.

Dominique Maddox featured in Voyage Dallas Magazine

In the February issue, the founder and President of EATS Broker Dominique Maddox was featured in VoyageDallas magazine Local Stories. This is Dominique’s second time being featured in the Voyage magazine; he was featured in VoyageAtlanta in 2020.

Voyage Dallas magazine’s goal is to highlight the best of Dallas people, businesses, organizations, and events. The Voyage Group of Magazines is based out of Los Angeles; they have magazines that feature local hidden gems in multiple states.

The company’s mission is to build a platform that fosters collaboration and support for small businesses, independent artists and entrepreneurs, local institutions, and those making different cities interesting.

Dallas Restaurant Broker Dominique Maddox says, “the opportunity to be featured in VoyageDallas is a blessing for my company. The article allows people to get to know me personally and learn more about EATS Broker.

I talk about my struggles as a Restaurant Broker and starting my Restaurant Brokerage firm. I moved from Atlanta, GA to Dallas, TX in August 2021 to grow my business”. http://voyagedallas.com/interview/exploring-life-business-with-dominique-maddox-of-eats-broker/

EATS Broker is a boutique restaurant brokerage specializing in exclusively selling restaurants, bars, and nightclubs. Our brokerage is known as Restaurant Resale Specialists that are Subject Matter Experts in the selling a restaurant and the buying a restaurant process.

We help our clients through the complex process of buying or selling a restaurant. Our company specializes in selling Restaurant Franchise Resales and Restaurant ReSales. We also help clients with Restaurant real estate site selection, Tenant Representation, Franchise Consulting, and Restaurant Price Evaluations.

To learn more about EATS Broker consulting services or 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.

7 Most Common Restaurant Sale Deal Killers

The most common restaurant sale deal killers are items that are usually out of the hands of a Restaurant Broker. The process to sell a restaurant can feel like a marathon that many participants will have fatigue and not finish the race.

It’s a known fact in the Restaurant Brokerage industry less than 50% of businesses that go under contract will close. Some Restaurant Brokers might advertise hiring closing rates, which could be possible.

The Restaurant Broker at EATS Broker Dominique Maddox said, “some deal killers can be addressed upfront if they are known; it’s the unknown details that kill deals.

How will the landlord, bank, and Franchisor react to the new potential buyer? Did the seller provide all the details? Over my ten years of selling restaurants, I have seen it all”.

Restaurant Broker list of Common Restaurant Sale Deal Killers: 

1. Landlord- The landlord is the KING for restaurant sale deal killers. The landlord owns the property, and transactions cannot be completed without a lease assignment or lease. A majority of the landlords are simple to work with because they want a guarantee they will continue to receive monthly rent.
2. Bank-When a restaurant for sale can qualify for SBA lending, the chances of that restaurant selling increase drastically. That’s the good news; the bad news is that it takes some serious legwork and patience to get a deal to funding.

Banks have several qualifying requirements a buyer must be able to pass. There are many reasons why a buyer may not qualify for lending. Example credit score, lack of liquidity, no collateral or don’t want a lien on collateral, etc.

3. Franchisor: Franchise approval is only an issue with Franchise Restaurants for Sale. Franchise resale listings are popular with restaurant buyers, but the buyer has to get approved by the Franchise.

Franchisors have many requirements before they approve a buyer to become a franchisee. If a restaurant is a franchise for sale, the sale cannot be completed without the Franchisor’s approval of the buyer. Franchise resales require the buyer to travel to the Franchisor headquarters for a discovery day. 

The Franchise can schedule training in a different state than the restaurant for sale. Buyers are responsible for paying the transfer fee, travel arrangements, and housing accommodations while attending training. The training time can range from 2-8 weeks depending on the Franchise Brand.

4. Restaurant Buyer Expectations: Rule #1 Buying a restaurant differs from buying a home. The majority of buyers that purchase a restaurant are first-time buyers and don’t understand the buying process.

Buyer fatigue and misunderstanding is a fundamental reason why some transactions fall apart. The buyer should educate themselves about the buying process and work with a Restaurant Broker thru the process.

5. Restaurant Seller Expectations: Restaurant sellers can misunderstand the restaurant sales process. Sellers have to understand that everything is negotiable for a buyer’s offer (except rent terms). Restaurant owners have to be willing to negotiate, provide supporting documentation, be patient, and be trustworthy.

Restaurant sellers have to understand if the documentation they provide to a Restaurant Buyer during the due diligence period doesn’t check out, the buyer might want to submit a counteroffer and renegotiate.

6. UCC liens: A UCC-1 financing statement is a legal form that a creditor files to give notice that it has or may have an interest in the personal property. Restaurants for sale should have the ability to sell a restaurant that is free and clear of liens.

The closing attorney will conduct a UCC lien search on the business weeks before closing. If a UCC lien is discovered, the restaurant owner will have to pay the fees before closing or at the closing table.

7. Time: It’s a known fact in selling a restaurant that Time Kills deals. The longer the process to sell a restaurant, the greater the deal’s chances of falling apart. Buyer fatigue and seller fatigue become an issue if an agreement is dragged out.

Buyer and seller work off a closing checklist, and both parties must work together to meet deadlines.

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.

How is Selling a Restaurant like Fishing?

Are you asking yourself how is selling a restaurant like fishing? The best fishers in the world know that they are not guaranteed to catch a fish every time they go fishing. The art of selling a restaurant is a process that is not guaranteed to end successfully for the restaurant owner.

If there were guarantees in fishing, they would call it catching. Fishing can be defined as the activity of trying to catch a fish. Selling a restaurant could be described as trying to catch the RIGHT buyer.

When it’s time to sell a restaurant, the owner needs patience, just like if they were going fishing. It can take an average of 6-8 months to sell a restaurant, and only 20%-30% of all restaurants listed for sale will actually sell.

When fishing, bait is used to attract the fish to bite the hook. When selling a restaurant, the lure is the details about the restaurant for sale to attract buyers.

Dallas Restaurant Broker Dominique Maddox says, “ providing a buyer with the cash flow, gross revenue,  EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and asking price is the bait to attract a buyer.”

While fishing, a person can get a bite from a fish, and the process of securing the fish starts. The restaurant for sale listing can get multiple inquiries from interested buyers before the restaurant is sold.

The Restaurant Broker at EATS Broker knows it takes talking/emailing to anywhere from 60-75 buyers before finding the buyer that will actually buy the restaurant for sale. Only 2% of buyers looking to buy a restaurant will purchase a restaurant for sale.

Once a qualified buyer has signed the non-disclosure agreement and sent proof of funds to qualify for the listing, and decides to make an offer, the process of getting that buyer to the finish line starts.

Just because a fish bites the hook does not mean fresh fish is for dinner. The fishing line can break, get snagged on debris, or the fish just gets off the hook.

Every buyer that goes under contract for a restaurant for sale does not end in a closed deal. The due diligence period for a buyer and seller would be equivalent to a person struggling with a fish on the hook.

Unlike fishing, the wrestling match between the fish and person fishing is usually done within an hour. When selling a restaurant, the due diligence process is usually 10-30 days for deals under $2 million.

The conclusion in fishing is that you catch a fish, celebrate with a delicious meal, or if you don’t catch a fish, you just have stories to tell.

When selling a restaurant after the deal closes, The restaurant seller gets a check at the closing table, and the Restaurant Broker receives a commission. But if the deal doesn’t close, it’s time to go fishing for the next buyer.

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.

Meet Dallas Restaurant Broker Dominique Maddox

The title Dallas Restaurant Broker Dominique Maddox is a title I’m still getting used to hearing. I relocated from Atlanta, Georgia, to Dallas, Texas, in August 2021 to expand my Restaurant Brokerage firm.

My story starts in Anchorage, Alaska, where I lived from 1981-2000; I received a football scholarship to attend Morehouse College in Atlanta, GA. After high school, I actually thought about attending culinary arts school to become a chef. My ambitions of a culinary arts career ended when I visited Atlanta, Georgia, on my football recruiting trip to Morehouse; I knew Morehouse was for me.

My life is full of examples of my ambitions and goals of always “betting on myself.” I left Corporate America in 2008 to go full-time in Real Estate. Well, I couldn’t have chosen a worse time to get introduced to residential home sales.

During this time, homes in Atlanta, Georgia, were selling for unbelievable discount prices; I would always get the investors looking for homes in the price range of $10,000-$100,000. The first home I sold in Atlanta was for $10,000 in an area that sells for over $200,000 today’s market.

I always had dreams of getting into Commercial Real Estate. My life changed in September 2010; I received a random email asking if I ever thought about being a Business Intermediary and selling restaurants?

Well, I had never thought about selling a restaurant, but I was very interested in the opportunity. My interview was a couple days later, and the next thing I knew, I was a Restaurant Broker.

I worked with the Nation’s Largest Restaurant Brokerage firm for 7 years, ranging from Restaurant Broker to Sales Development Manager. I began to notice I had reached a glass ceiling with the opportunity and wanted change.

I opened EATS Restaurant Brokers in October 2019 in Atlanta to bring a new flavor to the Restaurant Brokerage Industry and bring diversity. I decided to change the company name to EATS Broker in December 2021.

Dallas Restaurant Broker Dominique Maddox biggest lessons:

1. Selling a restaurant is like a combat sport; the Restaurant Broker has to contact buyers. It’s game day when it comes to selling the restaurant to a new buyer on the phone or by email.
2. Only 30%-40% of restaurants listed for sale will actually be sold, and only 2% of buyers on the market looking for a restaurant to buy will actually buy.
3. The platform of owning EATS Broker has given me a purpose to help people realize the American Dream of owning a restaurant or selling a restaurant.

I have also been blessed and humbled by the people that have reached out to me for guidance on selling a restaurant, buying a restaurant, or leasing a restaurant.

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.