Emerging Restaurant Brands- The challenges of selling a restaurant resale

Restaurant for sale

Selling a Restaurant resale, especially for an emerging brand, can present many challenges. An Emerging Restaurant Brand can be defined as a Franchise Brand with less than 100 units. Emerging restaurant franchise brands are newer ventures still enduring growing pains.

The Restaurant Business Broker knows that selling an Emerging Restaurant Brand in a new territory with limited brand recognition presents some common hurdles to overcome.

Restaurant Owners who usually agree to develop an Emerging Restaurant Brand in a State where the brand is currently not represented have an emotional bond to the brand. This affection comes from experiencing the brand, connection to the cause, love of the food, or seeing an opportunity to grow with the brand.

Dallas Restaurant Broker Dominique Maddox says, “The thought of bringing an Emerging Brand to a new state can be attractive, but most restaurant owners don’t think about the Restaurant resale process.

Emerging Restaurant Brands must develop a growth strategy, training program, support infrastructure, and recruit new franchisees. The main objective is to sell new units to increase the company’s brand recognition with customers and GROW.

EATS Broker lists the challenges of selling a restaurant resale:

Brand Recognition: Emerging restaurant brands may lack widespread recognition compared to established chains. Potential buyers may be hesitant to invest in an unfamiliar brand.  

Financial Performance: Buyers often scrutinize the financial performance of a restaurant before making a purchase. If the restaurant has struggled financially, it may be challenging to attract buyers. When a Restaurant Brand is unknown in a geographic area, the Franchisee could struggle to attract customers. Franchisees should expect it to take 2-3 years before they show a profit when introducing a brand to a new market.

Offering creative financing options can help when selling a restaurant that is not profitable.

Location and Lease Agreement: The restaurant’s location and lease terms significantly impact its resale value. A desirable location with high foot traffic can attract more buyers, while unfavorable lease terms, such as high rent, rent increases, or limited lease duration, may deter potential restaurant buyers.

Training: The Franchise will require the buyer to attend training to buy a restaurant. Emerging Brands usually lack training locations and will require the potential restaurant buyer to attend training out of state for multiple weeks.

This can easily be a difficult obstacle for buyers living in Texas or other states who are traveling to the company’s headquarters to stay for weeks to complete training. 

Competition: Standing out from other restaurants in a competitive market can be challenging. Emerging Restaurant Brands that don’t provide local marketing support for restaurant owners can hurt their chances of success.

Emerging Franchise Brands have several benefits like the following:

-More Territories available for development

-Investing early in a brand can be lucrative

-Have proximity to the Leadership team

Buying a restaurant as part of an emerging brand can be an excellent investment and opportunity. Buyers should know the potential issues and obstacles they will face when selling a restaurant business resale.

For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Restaurant Business Broker Dominique Maddox at 404-993-4448 or email at [email protected]. Visit our website at www.EATSbroker.com