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.
Read More
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.
Read More
Why use a Restaurant Broker? When selling a restaurant.
Why use a Restaurant Broker when selling a restaurant is a good question. Could you save on a commission and market your restaurant For Sale by Owner? Yes, but the reality about selling a restaurant is that only about 30%-40% of restaurants listed for sale will sell, and only about 2%-5% of the buyers looking for restaurants will buy.
A Restaurant Broker specializes in reselling independent-owned restaurants and franchise resales. Daily Restaurant Brokers analyze profit and loss statements, view POS sales reports, review commercial leases, analyze Sales Tax Filings and provide Restaurant Valuations.
Dallas Restaurant Broker Dominique Maddox says, “ I have a competitive edge compared to other Business Brokers because I only sell restaurants. I’m a Restaurant Resale Specialist in providing accurate restaurant valuations and selling them”.
Why should restaurant owners want to work with a professional full-time Restaurant Broker?
EATS Broker provides 3 Reasons to use a Restaurant Broker:
1. Restaurant owners are good at operating a restaurant but usually not good at selling a restaurant.
-Restaurant Brokers are trained negotiators – the best Restaurant Brokers are deal makers that ensure both parties get to the closing table. Finding a buyer can be the easiest part of the transaction, and bringing that same buyer to the finish line can be complicated.
-Restaurant Brokers are similar to Quarterbacks in football. A Restaurant Broker needs to know what all the parties all doing to help the deal get to the closing table, and they will correspond with the following parties throughout the process.
- Landlord
- Bank if lending required
- Closing Attorney
- Buyer
- Seller
- Buyer’s lawyer/attorney
- Seller’s lawyer/attorney
- Buyer’s CPA/accountant
- Franchisor
- Franchise Business Consultant
2. Restaurant Brokers have professional vendors to help deals get closed.
-An experience Restaurant Broker should be able to provide Restaurant Sellers with vendors to help close the deal. Restaurant Brokers will usually keep a list of the following vendors for clients
- Bank Lending Contacts
- Closing Attorney
- Escrow Companies
- 401K Providers to liquidate funds for the purchase
- Equipment Inspector
- E-2 Visa providers
3. Restaurant Broker understand the Franchise Approval Process
–EATS Broker Founder Dominique Maddox is a Certified Franchise Executive (CFE)
-Restaurant Brokers can help with the franchise approval. EATS Broker educates buyers about the following items when selling a franchise resale:
-Required Training Time
-Training Location
-Transfer fee
-Expectations for Discover Day
-Remaining years of Franchise Agreement
Ready to have a Restaurant Broker work for you? We can help.
EATS Broker is available to provide a 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 by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com
Read More
Bring your own bottle (BYOB). Is it good for restaurants?
Bring your own bottle (BYOB) policy can be good for restaurants, but it also has some significant downsides. If a restaurant has a BYOB policy, customers are allowed to bring their alcoholic beverage of choice to the restaurant. Strict licensing requirements and high taxes on alcohol sales have made the idea of restaurant owners to offer a Bring your own bottle (BYOB) popular.
Dallas Restaurant Broker Dominique Maddox says, “BYOB restaurants and bars are popular in Texas; this is a practice not commonly seen in Georgia, where I relocated from last year to Dallas, Texas. The concept of providing customers the freedom to BYOB is growing in cities like Philadelphia, Boston, Phoenix, and Dallas Fort Worth”.
EATS Broker provides a list of the pros and cons of owning a BYOB restaurant:
Pros:
-Does not require a state license to serve liquor (restaurant owners may have a beer and wine license). Restaurant owners can save money by not paying for a full liquor license.
-Can charge a corkage fee, usually, $3-$10 is the average cost, but the cost can go up to $20-35 depending on the city and state.
-Buyers tend to spend more money on food and desserts
-Customers like the freedom to bring their drink
-Can charge for glassware or mixture to compliment their drinks
-There are no statewide BYOB laws in Texas
-Less storage space is needed in the restaurant for liquor inventory
Cons:
-Liquor and cocktails are high-profit margin items on the menu
-When it’s time to sell the restaurant, BYOB concepts can be hard to resell to a buyer that prefers to have a full liquor license.
-Buyers can take advantage of the policy and order minimal food
-The server’s/waiters tips might be affected by lower check averages
-Customers can complain about the corkage fee
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.
Read More
What are the Hardest Restaurants to Sell?
The Hardest Restaurants to Sell have several issues that make it difficult to sell a restaurant. The grim reality is that only 30%-40% of restaurants listed for sale will be sold to a new buyer. Why do some restaurants sell, and others don’t?
We’ve seen it all, but these two concepts we will focus on for this blog can be the hardest to sell:
Not Profitable or Losing Money: Asset Sales
Selling a restaurant that is not profitable or losing money yearly is challenging. These types of sales are called Asset Sales.
Buying an existing restaurant sold as an Asset Sale is a quick path to Restaurant Ownership. The previous seller has done the hard work of building the restaurant, dealing with contractors, getting the permits, negotiating the term on the lease, and establishing the location as a restaurant.
CONS:
-Buying a restaurant that is losing money is a liability
-Lease Assignment is usually involved when selling a restaurant; the current tenant has already negotiated the lease terms.
-Buying used restaurant equipment, leasehold improvements, and goodwill. It can be hard to estimate restaurant value and offer price.
Sellers usually are only interested in what they “want” or “need” for the restaurant. The problem is that buyers don’t care and only put a value on the Furniture, fixtures, Equipment, and goodwill.
Restaurant Broker Tip: The Seller should be ready to negotiate on terms. The seller might not get the sales price and terms they originally wanted when listing for sale. Restaurant owners should consider the money saved on monthly payments for the remainder of lease obligations.
Example – Monthly rent $7,000 per month x 36 months left on the lease as personal guarantor
$7,000 x 36 = $252,000 savings!
Chef-Driven Concept:
Starting a restaurant is a Chef’s dream to have the ability to use their culinary skills to create unbelievable dishes. Chefs are trained to stand for hours and work in an intensive working atmosphere. Several chef-driven concepts don’t have written recipes; they are all in the Chef’s head.
Many chefs will burn out and want to sell to someone who can work demanding shifts.
CONS:
– Hard to find a trained chef with liquid assets to buy the restaurant and qualify for lease assignment with the landlord.
– Only a tiny minority of buyers looking to buy a restaurant are comfortable cooking in a commercial kitchen or have the desire to cook.
– The lack of documented recipes creates a problem with consistency
– Takes a certain level of culinary training and experience to be successful
Restaurant Broker Tip: These restaurant owners need to consider the importance of having a trained Sous Chef. The Chef needs to be skilled enough to operate the kitchen like the owner. When a buyer knows that an experienced Chef will stay on board once the restaurant is sold, it provides a certain level of comfort.
The restaurant owners need to have documented recipes with measurements to ensure consistency.
When trying to sell a restaurant that can be considered some of the Hardest Restaurants to Sell, owners should have realistic expectations.
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.
Read More
Restaurant Broker Dominique Maddox of EATS Broker sells Lenny’s Subs & Grill
Restaurant Broker Dominique Maddox of EATS Broker sells Lenny’s Subs & Grill in Humble, Texas. EATS Broker represented the seller and buyer for this transaction.
The seller had owned the location for 16 years before deciding to sell and retire. The new buyers are excited about the opportunity to own a restaurant in the United States. They were approved for an E-2 visa to purchase the franchise.
The E-2 Investor Visa allows an individual to enter and work in the United States based on an investment in a U.S. business. The E2 visa is valid for three months to five years and can be extended indefinitely. The investment must be “substantial,” although no legally defined minimum exists.
The city of Humble is home to some of the best-hidden gems in Texas. Rich in history, and located only 20 minutes from Houston, it’s known for the diverse community and family-friendly events and recreational areas.
Texas Restaurant Broker Dominique Maddox says, “to see someone have the ability to purchase a restaurant in America.
Receive an E-2 visa and start living the American Dream of business ownership is one of the reasons I’m in the business”.
The buyers plan to upgrade the restaurant with some visual changes and work in the restaurant daily as the Owner/Operator. Multiple members of the family plan to work in the business. If you are in the area stop by to grab a sub!
The buyers were trained to operate the restaurant in Memphis, TN, at the headquarters for Lenny’s Grill and Subs.
EATS Broker would like to thank Lenny’s Subs and Grill franchise development department for all the help in getting this deal to the closing table. The Franchise Department team made the process simple.
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.
Read More
3 Mistakes to Avoid in Selling Your Restaurant
Selling a restaurant can be a complicated process. What are the mistakes to avoid when selling your restaurant? The Restaurant Broker at EATS Broker has been selling restaurants for over ten years. This blog will provide insights for restaurant owners thinking about selling a restaurant.
Mistake #1 Listing your restaurant for sale too late
Ask the Dallas Restaurant Broker when it is time to list your restaurant for sale. The response will be when you start to think about it. It takes an average of 6-8 months to sell a restaurant in today’s market. Even once listing a restaurant for sale, it’s a process to get sold.
It’s human nature that once a person has decided the restaurant industry demands are not for them, the restaurant becomes a mental and physical burden. When people decide they are tired, bills are hard to pay, and mentally checking out, it’s time to sell a restaurant.
Restaurant Broker advice: Call a Restaurant Resale Specialist for a complimentary restaurant valuation. Discuss your options to list your restaurant for sale before deciding to close the doors to your restaurant forever.
Mistake #2 – Going to market without Good Books and Records
It’s a common saying, “time kills deals.” Once a buyer is interested in a restaurant for sale, it’s essential to provide the buyer with accurate financials. When a seller goes to market without the ability to give a buyer up-to-date tax returns and profit and loss statements, it always kills a deal.
Restaurant Owners that decide to list a restaurant for sale without the capability of providing financials in a timely matter are making a big mistake. The buyer will request some financials before making an offer and more during the due diligence.
Mistake #3 – Closing the doors
Buyers like to see the lights on, customers coming in the doors, and the cash register ringing. One of the biggest mistakes is to get a restaurant valuation and list your restaurant sale, only to close the doors months later.
Once a restaurant is closed reduces the value in the buyer’s mind. Instead of getting a turn-key restaurant, they are getting used equipment and rights to the lease. These types of transactions are harder to sell. 41% of buyers will be 1st-time restaurant buyers and favor an open restaurant.
Restaurant Broker advice:
List your restaurant for sale months before you decide to close the doors. Contact a Restaurant Resale Specialist to discuss the value before deciding to close your 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.
Read More
How to sell a restaurant? Tell your Restaurant Story
To sell a restaurant, one must first tell “The Restaurant Story” to the buyer that they believe and want to be a part of the story moving forward. Restaurant buyers want to know the story of the Restaurant and the owner. The “Restaurant Story” explains why, how, and opportunities for continued success to the buyer.
Most restaurant buyers will purchase a restaurant based on the opportunity to make a profit and the Restaurant Story. The most complex restaurants to sell are locations that are losing money or buyers don’t can’t relate to “The Restaurant Story.”
Dallas Restaurant Broker Dominique Maddox says, “The Restaurant Story is an opportunity to help buyers view themselves as part of the story. An experienced Restaurant Broker will explain the Restaurant’s financial, staffing, liabilities, food cost, and startup story to interested buyers”.
EATS Broker “Restaurant Story” Kit Includes:
– Restaurant’s startup story explains:
- Why was the Restaurant started?
- How was the Restaurant started?
- Who began the Restaurant?
- Success stories
- Failure stories-includes opportunities to improve business
– Financial Picture– Restaurant Profitable or not
– Liability Picture– Lease terms, franchise terms, UCC lien search, and financing liabilities
– Staff Concerns
- Labor Cost and why?
- Full-time vs. part-time?
- Legal workers or paying under the table?
- Employee benefits and perks
- Longevity of staff members
– Food Cost Concerns
- Food Inventory Cost and why?
- Food ordering system
Franchise Restaurants
– Royalty Fee and Marketing Fee
– Transfer Fee
– Required Training Time
– Store upgrades required by Franchisor
– Franchise has first right of refusal to buy (sometimes)
– Training location
– Years left of Franchise Agreement
Before a Restaurant Owner contacts a Restaurant Resale Specialist for a restaurant valuation or tries to sell by themselves, they should be ready to tell their Restaurant Story!
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 email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
Read More
When to sell a restaurant? 8 reasons why that start with D!
When to sell a restaurant is a difficult decision for most restaurant owners. Interesting fact that the reason a restaurant owner wants to sell a restaurant usually will start with the letter D! Buyers are always curious about why a restaurant owner wants to sell a restaurant?
The Dallas Restaurant Broker at EATS Broker explains the most common reasons to sell a restaurant. There 8 reasons to sell a restaurant:
1. Debt– A restaurant owner has multiple forms of debt. All these forms of debt can affect a restaurant owner mentally and physically. One of the biggest concerns of a restaurant owner is to avoid bankruptcy and sell a restaurant for a profit.
-Landlord Debt
-Bank loan Debt
-Vendor Debt
-EIDL Loan Debt
-PPP Loan Debt
-UCC lien
2. Disability- There are many types of disabilities, such as intellectual, physical, sensory, and mental illnesses.
3. Divorce- Restaurant ownership’s demanding physical and financial requirements can break up a happy home and lead to divorce. Many restaurants depend on an owner/operator to be present to be successful.
It’s common for a restaurant owner to work 50-60 hours a week and work on the holidays. The life of a restaurant owner requires sacrifices from the family and owner.
4. Death- Everybody deals with recovering from death differently. The thought of restaurant ownership after death could seem impossible.
5. Disinterest– It’s easy to get disinterested in a restaurant that is unsuccessful or doesn’t live up to the restaurant owner’s dreams.
6. Declining Sales- This is one of the biggest reasons for selling a restaurant business. Inflation is at an all-time high, labor costs are exploding, and rents keep increasing.
7. Dissension among owners-Once partnerships start to be unproductive, and the relationship between parties starts to crumble, it’s time to sell your restaurant.
8. Disaster- The pandemic is a good example of a disaster that happens and changes everything.
**Delivery of a child would be another good reason for selling a restaurant business**
To learn more about EATS Broker consulting services or receive a complimentary restaurant valuation, contact Restaurant Resale Specialist Dominique Maddox at 404-993-4448 or email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
Read More
Franchise Restaurants are growing in Nigeria
Franchise Restaurants are growing in Nigeria at a rapid pace. Franchise Brands have found the recipe for success growing in Africa’s most populated Country. The growing popularity of Pizza, Chicken, and Hamburgers is leading the franchise growth.
Dallas Restaurant Broker Dominique Maddox recently visited Nigeria in June. The last time Maddox saw the Country was in 2013, and so much has changed regarding Franchise Restaurants’ development and availability in Nigeria.
This blog will cover my recent experience enjoying the Quick Service Restaurant (QSR) Franchise scene in Abuja, Nigeria.
Abuja, Nigeria, has always had several indigenous fast-food chains like Mr. Biggs, Chicken Republic, and Tantalizers since my first trip to Abuja in 2007. The past 15 years have grown with popular American Restaurant Franchise brands.
I was able to find the following Quick Service Brands while visiting:
-Kentucky Fried Chicken
-Domino’s
-Cold Stone Creamery
-Wendy’s
-Johnny Rocket’s
-Pizza Hut
-Pink Berry
How was the food?
I consider myself a foodie and someone that provides great feedback when it comes to food. These are my following opinions:
Overall, the food taste was different than the franchise brand taste I was used to living in the United States. The interior design was like current franchise specifications.
CONS:
– The level of sweetness in the food is lower in sweets and ice cream
-The burgers have a lower level of fat content and flavor
– The pizzas did not have enough cheese, and the pepperoni was different in taste
PROS:
-The restaurant scenery felt like a franchise brand
-The employee training was good, systems were in place, measurements were used for food preparation, and some brands had uniforms.
-Most franchise brands have security guards outside to control traffic
-Food delivery times were similar to the United States
-Pizza Hut had premade tables with plates and dining ware to encourage dining in
-Pizza Hut offered Halal Meat on all Pizzas
–Good effort to recreate franchise brand taste while changing menu to fit the regional taste
-Food menus easy to understand and read
The explosion of popularity of the fast-food industry has reached Nigeria, and it’s growing. The current most popular fast-food chains in Nigeria are McDonald’s, Subway, and Burger King. It’s a lucrative opportunity to grow a Restaurant Franchise Brand in the Country.
Quick Service fast food is a universal language understood around the world. The franchise model is often described as working for yourself but not by yourself. Nigeria and Restaurant Franchise Brands have a partnership that will keep growing in popularity.
**This blog was dedicated to my Brother Ikhide, who recently passed away at the young age of 30. My trip to Nigeria was originally to celebrate his life**
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 email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
Read More
