Are you ready to sell a restaurant and wondering what documents you need to prepare? You’re not alone. After a challenging year for many operators, marked by rising costs, labor shortages, and tighter profit margins, restaurant owners across the country are beginning to consider their restaurant exit strategies seriously.
The end of the year is the ideal time for restaurant owners to review their financials, consult with a Restaurant Broker, and prepare for a potential sale at the beginning of the following year.
Whether you want to retire, downsize, or move on to a new opportunity, one thing will determine how smoothly and successfully your resale process goes. It’s how organized your documents are.
Dallas Restaurant Broker Dominique Maddox says, “In restaurant brokerage, we say time kills deals. When a buyer requests information and it takes weeks to provide it, interest fades, momentum dies, and the likelihood of closing drops dramatically. Sellers who prepare their documents early not only sell faster, they often sell for more”.
The Restaurant Brokers at EATS Broker provide a comprehensive overview of the complex process of buying or selling a restaurant, emphasizing the critical nature of due diligence and proper documentation.
Why Being Organized Matters When Selling a Restaurant
Every restaurant buyer, along with their accountant, Attorney, lender, and even family members, will carefully analyze the details of your restaurant business. Missing documents, inconsistent financials, or delays in providing information raise red flags.
EATS Broker emphasizes the importance of detailed checklists for both sellers and buyers, outlining the required financial records, such as tax returns and profit and loss (P&L) statements, as well as operational information, contracts, and lease details for the restaurant selling process.
Documents needed to sell a restaurant are a critical part of the due diligence period. Expect every item to be reviewed and verified by the buyer.
Here are the most critical documents restaurant owners should gather:
1. Financials: “Show me the money”
-Tax Returns for 2-3 years: Tax returns validate the accuracy of your financial statements. Banks require these for SBA lending. Buyers will accept the tax returns provided to them, but banks will request a copy directly from the IRS.
-Profit and Loss Statements for 2-3 years: Buyers want to see historical performance to understand trends in sales, costs, and profitability. Clean, organized P&Ls are essential. The tax returns and profit and loss statements should be telling the same story.
-Sales Tax Filings
-POS Sales Reports
-Franchise royalty reports
-Bank Statements (sometimes)
-Credit Card Statements
2. Furniture, Fixtures, and Equipment (FF&E): it’s also known as the Equipment List.
-The Equipment List only includes items that will transfer with the sale of the business. Restaurant owners should not include items attached to the building, as those typically belong to the landlord.
Restaurant Buyers want a detailed list of items included in the sale. When applying for SBA lending, the bank will require the make and serial number for any item valued over $5,000.
Restaurant Broker Tip: There is a difference in selling a restaurant based on its profitability versus an Asset Sale, which typically yields less value than selling a profitable restaurant.
3. Create a vendor list that includes suppliers and Contractors with their contact information. Restaurant buyers will typically continue to utilize most of the restaurant seller’s existing contacts. Buyers will also request insurance policies to evaluate coverage types, limits, and renewal dates.
Restaurant Broker Tip: Gather your contracts and invoices from your suppliers. This helps restaurant buyers understand ongoing obligations and relationships.
4. Outstanding Loan Agreements:
-A large portion of main street Restaurant Brokerage( $100,000-$5,000,000) deals include an Asset Purchase Agreement. The agreement requires restaurant owners to transfer the restaurant equipment free and clear of liens. Restaurant owners should disclose any known liens to the Restaurant Broker and buyers.
Restaurant Broker Tip: The Escrow Attorney/Closing Attorney will conduct a UCC lien search before closing to confirm that there are no liens on the equipment. Any liens that arise need to be removed before closing, or the deal may not close. If liens can’t be cleared before closing, the Attorney can hold the money in escrow until the lien is removed, allowing the deal to close still.
5. Lease-the lease is the key to the transaction; landlords kill more deals than anybody because they have the power. Restaurant owners should contact their original lease and any amendments signed to provide to the buyers.
Other notable documents to contact when selling a restaurant are:
– Operations Manual / SOPs: A manual describing daily procedures increases buyer confidence and helps with a smooth transition.
– Pricing Models & Menu Strategy: a breakdown of how you price food, beverages, catering, or services.
– Employee Certifications: especially for managers, bartenders, food safety handlers, or cooks who may stay on after the sale.
-Recipes: one of the most valuable components in a restaurant’s sales. Buyers need consistency after ownership transfer.
– Passwords & Digital Access: includes website, Google Business, social media, delivery platform dashboards, and others
Restaurant Brokers tip: When restaurant owners are fully prepared, it has the following effects:
-The sales process is faster
-Banks approve loans quickly
– Your Restaurant Broker can present a stronger restaurant valuation
-You maintain leverage during negotiations
Well-organized documents tell buyers, “This restaurant runs professionally and is worth what you’re asking.”
Restaurant buyers focus heavily on two key formulas:
Seller’s Discretionary Earnings (SDE)
Used for owner-operator restaurants
Annual Revenue – COGS – Expenses + Owner Salary = SDE
EBITDA
Used for multi-unit or investor-run operations
Annual Revenue – COGS – Expenses – Salary for Operating Manager = EBITDA
Knowing which financial metric applies to your restaurant is crucial for an accurate restaurant valuation.
EATS Broker BEST Tip
Contact a Restaurant Broker before you file your 2025 tax returns.
Your accounting decisions can significantly affect your restaurant’s valuation. A Restaurant Broker can provide guidance on:
- How to present financials
- Adjustments needed to show actual earnings
- What buyers and banks look for
A well-prepped seller always receives stronger offers. Selling a restaurant isn’t like selling a home. It takes 6–8 months, requires detailed documentation, and demands complete transparency.
But when you’re prepared, organized, and working with a Restaurant Broker who specializes in restaurant resales, the process becomes smoother, faster, and more profitable.
If you’re thinking about selling in 2025, the time to start preparing is now.
Thinking about selling your restaurant?
Contact EATS Broker today for a complimentary restaurant valuation and guidance on preparing your documents for a successful sale. Visit www.EATSBroker.com for more information on selling a restaurant.