restaurant broker Tag

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.

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. 

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.

1. Landlord
2. Bank if lending required
3. Closing Attorney
4. Buyer
5. Seller
6. Buyer’s lawyer/attorney
7. Seller’s lawyer/attorney
8. Buyer’s CPA/accountant
9. Franchisor
10. 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

1. Bank Lending Contacts
2. Closing Attorney
3. Escrow Companies
4. 401K Providers to liquidate funds for the purchase
5. Equipment Inspector
6. 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 

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.

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.

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.

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.