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
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.
Read More
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:
- Lease
Review to understand the terms and conditions that the buyer must agree to before selling the restaurant.
Questions to know:
- When does the lease expire?
- How many option terms and years?
- Security Deposit?
- Assignment language-any specific qualifications net worth/experience/restaurant concept
- Guarantor language
- 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:
- Does P&L tell the same story as the Tax Returns?
- Does P&L include all sales?
- Did you include PPP loans in net sales? (remove)
- 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:
- Last time the restaurant was remodeled?
- Does the Franchise require an upcoming remodel?
- What estimated cost of upgrades would be required to transfer the store to the new owner?
- Do you plan to pay for upgrades, or will you require the buyer to pay upgrade costs?
- 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.
Read More
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.
Read More
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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
Read More
Step by Step Process to Buy a Restaurant Franchise
The Step by Step process to buy a restaurant franchise for sale can be a complex process with multiple guidelines, requirements, and documentation to read. Did you know the top restaurant brands have a Checklist that potential franchisees have to complete before they can purchase a Franchise Restaurant Resale?
The Restaurant Resale Specialist at EATS Broker will share information on the step-by-step process to buy a restaurant franchise resale.
Restaurant Broker 6 Steps to Buying a Restaurant Franchise Resale:
Step 1: Asset Purchase Agreement
When buying a restaurant for sale that is a franchise, it’s considered a resale/transfer. The buyer and seller will agree to terms on an Asset Purchase Agreement. Once both parties have signed the agreement and the buyer has deposited the escrow, the approval process with the franchise brand starts.
Step 2: Contact Franchise for Approval
- Submit an inquiry by:
- Inquiries are made online by visiting the company’s website to submit an inquiry
- The buyer will have to fill out a Contact Us form; information usually asked includes:
-Franchise State
-Timeframe for opening
-Liquid Capital to invest
- The Franchise will reach out to potential candidates for an initial conversation
Step 3: Initial Conversation with Franchise
- The Franchise Development Team will reach out to discuss your interest in the brand. This initial call is an excellent opportunity for buyers to ask questions about the brand.
- This conversation usually covers the following topics.
– The buyer’s background
-Familiarity with the Brand
– Current Financial Situation; Liquidity and Net Worth Requirements
-Time frame to buy/open
- Restaurant Franchise Resales-buyers will let the Franchise know that they are buying a Restaurant Franchise Resale and are currently under contract with the seller and the location.
***Most franchise brands Net Worth Requirements are lower for Restaurants for sale than new restaurant openings.***
Step 4. Complete & Submit Required Materials
- Items required for the franchisee approval process:
- Completed Application For a Franchise
- Prospective Franchisee Business Plan
– Plans should include an executive summary, operating plan, marketing, advertising plan, and financials.
- Signed Franchise Disclosure Document (FDD) Receipt
- Validation Documents
Step 4. A
Signed Franchise Disclosure Document (FDD) Receipt
- You will receive a PDF copy of the Franchise’s current FDD for signature.
- The Franchise Disclosure Document should be signed and returned to Franchisor.
- You must receive this Disclosure Document at least 14 calendar days before you sign a binding agreement with or make any payment to the Franchisor or an affiliate in connection with the proposed franchise sale.
- The FDD summarizes a company’s history, business experience, assistance, support, franchisee’s obligations, training, fees, estimated initial investment, financial performance representation, franchise agreement, and other essential information.
Step 4. B
Validation Documents:
- Documents are required for financial validation with your application. The necessary documents can include depending on the Franchisor:
- Photocopy of your ID
- Last 3-6 months of your bank statement – including Checking and Savings
- Pay stubs, W-2s for 2-3 years, or other proof of Income.
- 401Kor other retirement account statements.
- Authorization for Franchisor to complete a background and credit check.
- Discovery Day
- Buyer will fly to the headquarters of the Franchisor
- During the visit, buyers are introduced to the leadership team and representatives of every operational department who will train, support, and assist you as a franchisee.
- Face to face meeting with the decision-makers for franchise approval.
- Buyer should understand this is an interview to see if the Franchisor feels the candidate will be a good fit with the brand.
- Final Decision:
- Franchise Development Team member will contact buyer/candidate with approval.
- Franchisor will draft Franchise Agreement with buyer’s business entity information.
- Restaurant Buyer will sign the agreement and send Franchisor Transfer Fee.
- Franchisor will schedule a required training session for the buyer.
The transfer process can’t be completed until the restaurant buyer completes training. The required training depends on the Franchise Brand, which can range from 2 weeks – to 8 weeks.
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 by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
Read More
3 Biggest Mistakes Restaurant Sellers Make
The biggest mistakes restaurant sellers make are simple issues that can be addressed before a restaurant is listed for sale. The mistakes are based on facts, books, and records and lack of understanding of selling a restaurant.
Dallas Restaurant Broker Dominique Maddox says, “ the small details in the process to sell a restaurant make all the difference at the end. The lack of attention to the facts or books and records will make buyers not interested in buying the restaurant for sale.
The Restaurant Broker at EATS Broker listed out the Biggest Mistakes Restaurant Sellers Make:
- Leaving out the essential facts:
-Ownership of Furniture and Fixtures- what items are leased or owned by the landlord?
-UCC liens that can stop the sale of the restaurant and have to be paid before closing
-Filed tax returns that don’t match the profit and loss statements provided to Broker or buyer
-Restaurant upgrades that are required by Franchise( only applies to franchise restaurants)
-Behind on rent payments
- Clean Books and Records
-Sales Tax Filings don’t match Profit and Loss Statements
-Has two sets of books-provides different copy to IRS and provides the buyer with the accurate numbers
-Does not have a Profit and Loss statement to provide
-Slow to provide updated numbers
-Lack of clean books and records will not qualify for SBA bank lending
-Lack of transparency builds distrust in the buyer
- Not realistic about the selling a restaurant process
-Unlike residential sales, it can take 6-8 months to sell a restaurant
-Only 30%-40% of all restaurants for sale listings will actually sell to a new owner
– Everything is negotiable when it comes to price-need to be flexible
-Only 2% of buyers on the market looking for a restaurant for sale will buy; it can take multiple interested buyers before the actual buyer is found.
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
Steps for first-time restaurant buyer
What are the Steps for first-time restaurant buyers? This question EATS Broker gets multiple times weekly for buyers inquiring about restaurants for sale. Many interested buyers looking at restaurants for sale opportunities will be first-time restaurant buyers.
Many buyers are shocked about the difference between buying a home compared to buying a restaurant. The buying process from purchasing a home to purchasing a restaurant has completely different steps.
The restaurant sales transactions can be more complex where the smallest detail can make the difference from selling a restaurant or a restaurant for sale not selling.
Dallas Restaurant Broker Dominique Maddox says, “I enjoy educating restaurant buyers about the process of buying a restaurant. A big part of my job responsibilities is to educate and help buyers through the restaurant buying process.
The Restaurant Broker at EATS Broker provides a Five Step-by-Step overview of the First time Restaurant Buyer process:
- Research online:Restaurant buyers can get an idea of the inventory available on restaurants for sale in the local market on BizBuySell.com. The site is the internet’s largest business-for-sale marketplace.
Individuals interested in buying an existing restaurant can get preliminary information on the site like price, income, EBITDA, cash flow, gross revenue, rent, and year established.
- Have documents ready to show– When buying a home, the buyers will contact the bank and get pre-qualified before contacting a Real Estate Agent.
Many buyers are shocked when a Restaurant Broker asks for proof of funds before providing the name, address, and financials of a restaurant for sale.
Restaurant Brokers Golden Rule of Thumb
-If the listing is a franchise or over $100,000, a Restaurant Broker will want to see proof of funds (bank statement, 401K, or letter from bank). The franchise requires a certain amount of liquid funds before approving a potential franchisee.
The landlord will want to see proof that the new tenant can afford the lease. There is no need to provide financials to a buyer that can’t qualify.
-The bank statement, 401K statement, or letter from the bank should be within 60 days; close out your account number because a Restaurant Broker will only need to see your name and amount.
- Contact a Business Broker
A majority of the restaurant for sale are listed by a Business Broker or a Restaurant Broker. Buyers are required to sign a confidentiality agreement to access more information about the listing for sale.
A select number of restaurants for sale brokers will provide more information instantly once the non-disclosure is signed. Unfortunately, a large number of the listings will require a buyer to provide proof of funds.
Once non-disclosure is signed and proof of funds, the buyer will get a copy of the package. The package will have the name, photos, financials, details about the lease, and the restaurant’s location.
4. Visit the restaurant
A restaurant buyer gets to visit the restaurant as a customer. Some buyers will want to skip this step and schedule a meeting with the owner to ask questions and tour the kitchen area.
The Restaurant Broker at EATS Broker Tip:
A restaurant buyer should come to the seller-buyer meeting provided with questions. A buyer will learn more about the business and its long-term potential by asking the right questions.
- Evaluate and make a buying decision
During this step, a restaurant buyer will evaluate the information they have received from the seller. The buyer will decide whether to make an offer and the contingencies needed to feel comfortable. The buyer will start the due diligence process if the purchase agreement offer is accepted.
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 by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
Read More
Pros and Cons for a Restaurant Asset Sale
The Pros and Cons of buying or selling a restaurant as an Asset Sale can be a Win-Win situation for both parties. In an asset sale, the seller retains possession of the legal business entity name and stocks, and the buyer only purchases the company’s assets.
The assets include equipment, leasehold improvements, Goodwill, trade secrets, trade name, telephone number, website address, social media accounts, and lease assignment.
Dominique Maddox, a Dallas Restaurant Broker and Founder of EATS Restaurant Brokers, says, “there are only two ways to provide a restaurant valuation, selling a paycheck or selling as an Asset Sale.”
Restaurant Valuation – Two Methods
1st Selling a restaurant that is profitable with good books and records. The restaurant buyer can anticipate receiving a paycheck from the restaurant ownership. For example, restaurant nets a profit of $100,000 a year, the restaurant buyer can expect to receive that income.
2nd Selling a restaurant that is not profitable, open for less than 2 years, has terrible books and records is an Asset Sale. They are priced pennies on the dollar. A quick way to spot a restaurant for sale that is an Asset sale is to look at the cash flow or EBITDA. If these numbers are missing or show a $0, chances are good the restaurant for sale is an Asset Sale
Pros and Cons of buying or selling a restaurant as an Asset Sale
Pros for Restaurant Seller
- Can close quickly (if franchise training is not required)
- Requires cash buyer-don’t have to worry about lending
- Can ask the landlord to be removed as lease guarantor
- No longer has to worry about restaurant ownership
Pros for Restaurant Buyer
- Will receive the equipment free and clear of any UCC liens
- Easy to convert to a new concept
- Saves thousands of dollars on build-cost
- Can benefit from Goodwill like previous owners Google Reviews, website, and social media followers.
- Buying a restaurant for pennies on the dollar
- Transfer cost fee is less than the original new store franchise agreement cost
- The majority of Asset Sale deals are restaurants that are still open and have employees.
Cons for Restaurant Seller
- The listing price is usually a lot less than build-out expenses.
- A more significant number of restaurant sellers will take a loss to get out of restaurant ownership.
- Harder to sell a restaurant that is not profitable or shows a small amount of profit.
- Cash buyer required because banks will not finance an unprofitable restaurant for sale.
Cons for Restaurant Buyer
- Buying a restaurant that might not be profitable is risky
- Buying opportunities can be challenging to price correctly
- Lease Assignment is agreeing to the previous owner’s lease terms and obligations,
- Becoming a guarantor on the lease
Asset Sales can be a perfect opportunity for existing restaurant owners to expand or for new restaurant owners to save money on opening a new restaurant.
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 by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
Read More