Restaurant Brokers Tag

What is the best time to sell a restaurant?

The best time to sell a restaurant can depend on various factors outside the Restaurant seller’s control. The elements can include specific circumstances of the restaurant business, market conditions, and your personal goals.

The Restaurant Broker at EATS Broker provides some considerations to help you determine the optimal time to sell a restaurant:

Financial Performance is key: The best time to sell a restaurant is when it’s profitable and has good books and records. Potential buyers will be more interested in a profitable restaurant for sale. Ensure your restaurant has a track record of solid revenue, profit margins, and positive cash flow.

Restaurant Broker Tip: The tax returns and profit and loss statements should tell the same financial story. During the due diligence period, buyers will sometimes request financial documentation directly from the IRS on the restaurant.

Market Conditions: Local and regional market conditions can significantly impact the sale of your restaurant. Factors like population growth, demographic changes, and competition can influence the demand for restaurants.

Lease Terms: If your restaurant operates in a leased space, consider the remaining lease term and whether it’s renewable. A long, favorable lease can make your restaurant more appealing to buyers.

Personal Goals: Your own circumstances and goals are essential. If you’re looking to retire or pursue a different business venture, that could be the right time for you to sell. Additionally, consider factors like your health and life events.

Seasonality: If your restaurant has a seasonal aspect, such as a beachfront location, the best time to sell may be at the end of a successful season.

Market Trends: Keep an eye on industry trends and consumer preferences. Selling while your restaurant aligns with current trends can be advantageous.

Brand Reputation: A strong brand and positive reputation can enhance the value of your restaurant. Selling when your restaurant is highly regarded in the community can lead to a better deal.

Financial Documentation: Ensure your financial records and tax returns are in order. Buyers will want to see accurate financial data before making an offer.

Consult with Professionals: Seek advice from professionals like business brokers, accountants, and attorneys who specialize in restaurant sales. They can provide insights into the current market and guide you through the selling process.

Exit Strategy: Plan your exit strategy well in advance. Selling a restaurant can take time, so start preparing at least a year or two before you intend to sell.

Ultimately, the best time to sell a restaurant will vary depending on your specific circumstances and the condition of your business. It’s essential to conduct a thorough assessment and seek professional guidance to determine the optimal timing for selling a restaurant.

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 sales@eatsbroker.com. Visit our website at www.EATSbroker.com

Thinking about selling a restaurant

When restaurant owners are thinking about selling a restaurant, it’s essential to approach the process thoughtfully and strategically. Every Restaurant owner has a different story about why they want to sell a restaurant, but some things are expected.

The restaurant business broker at EATS Broker provides steps to consider when thinking about selling your restaurant:

Determine Your Why: First, consider why you want to sell the restaurant. It could be due to financial hardship, health issues, personal issues, partnership disputes, or a desire to retire from the restaurant industry. Understanding your motivation will help guide the selling process.

Evaluate your Restaurant: Review the current financial health of your restaurant, including revenue, expenses, and profitability. Potential buyers will want to review your financial records. Restaurants that have accurate and up-to-date financials sell at a higher rate.

Prepare Documentation for sale: Gather all relevant documents, including financial statements, tax records, lease agreements, and any licenses or permits related to the restaurant. Having organized and complete Documentation will make the sale process smoother.

Dallas, Texas, Restaurant Broker Dominique Maddox says, “Getting an accurate restaurant valuation at the start of the restaurant selling process is critical. Selling a restaurant business can be challenging, and it takes an average of 6-8 months to sell a restaurant. Listing a restaurant for too high can negatively affect a restaurant for selling to a new buyer.”

Determine the Restaurant’s Value: This step determines the asking price for the restaurant. Restaurant owners can get a professional restaurant valuation through a professional business appraisal or by working with a business broker specializing in restaurant sales, like EATS Broker.

Market the Restaurant: Create a marketing plan to reach potential buyers. This will include listing your restaurant for sale online, working with a Restaurant Broker, and promoting the listing through various sales channels.

Qualifying Buyers: Screen potential buyers to ensure they are financially qualified and serious about the purchase. This will save you time and effort in dealing with unqualified buyers. When working with a Restaurant Brokerage, they will do all the screening for you.

Negotiate Terms: Once you find a potential buyer, negotiate the terms of the sale, including the purchase price, payment structure, and any contingencies.

Legal and Financial Due Diligence: Both you and the buyer will need to conduct due diligence to verify the accuracy of the information provided. This includes reviewing financial records, lease agreements, and other legal and financial aspects of the transaction.

Close the Sale: Once all terms and conditions are met, finalize the sale by signing the necessary legal documents and transferring ownership of the restaurant to the buyer. After the sale, work with the buyer to ensure a smooth transition. This may involve training the new owner and helping them adapt to the restaurant’s operations.

It’s essential to work with professionals like restaurant brokers, attorneys, and accountants to navigate the complexities of selling a restaurant. The process can take time, so patience and careful planning are essential. Be open to negotiations and stay flexible to reach a successful sale that benefits you and the buyer.

For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dallas, Texas, Restaurant Broker Dominique Maddox at 404-993-4448 or email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com

EATS Broker attends Black Franchise Symposium and Trade Show in Dallas, Texas

The President and Founder of EATS Broker Dominique Maddox attended the September African American Franchise Symposium and Trade show in Dallas, Texas. The event made history as the FIRST-EVER Black Franchise Symposium and Trade Show in the United States!

The event was held at Yum! Corporate Campus located in Plano, Texas. The Symposium was filled with powerhouse individuals in the Franchise Industry.

EATS Broker was the only Restaurant Broker at the event. EATS Broker was an exhibitor for the Trade Show and had a table in the exhibitor hall. Various Franchise Brands, like KFC, Smoothie King, and others, were at the event.

Dallas Restaurant Broker Dominique Maddox says, “ It was important for me to attend the augural African American Franchise Symposium and Trade Show. Representation and diversity matter in the Restaurant Brokerage industry”.

EATS Broker specializes in Restaurant Brokerage, which includes restaurants for sale, bars for sale, nightclubs for sale, franchise restaurants for sale, non-franchise restaurants for sale, and commercial real estate.

EATS Broker was founded in October 2019. Restaurant Broker Dominique Maddox started the company to change the status quo of the Restaurant Brokerage Industry and bring diversity.

EATS Broker sells restaurants in multiple states. The Restaurant Brokerage helps restaurant owners maximize their sale price when they’re ready to sell a restaurant.

For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dallas, Texas, Restaurant Broker Dominique Maddox at 404-993-4448 or email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com

EATS Broker sells Bobby V’s in Arlington, Texas

Dominique Maddox of EATS Broker sells Bobby V’s Sports Gallery Café located at 4301 S Bowen Rd, Arlington, TX 76016. EATS Broker represented the seller in the transaction.

Bobby V’s is one of the oldest sports bars in Arlington, TX, established in 1985 by former Texas Rangers head coach Bobby Valentine. Bobby V’s is a landmark location in Arlington, Texas, half sports bar, half sports museum, with over 50 TV’s.

The new owners will be only the third group to own Bobby V’s Sports Gallery Café. They plan to keep the concept the same, while making upgrades to the building.  The business has averaged over $1.6 million in sales for the past five years, the new owners expect to increase sales by offering new specials.

Dallas, Texas Restaurant Broker Dominique Maddox of EATS Broker says, “while growing up as a sports memorabilia fan, I could have never thought about selling a location like Bobby V’s.  I’m thankful the children of the former owner gave EATS Broker an opportunity.

EATS Broker is based out of Dallas, Texas. Our Restaurant Brokerage sells restaurants in over 15 states located in the South and East Coast.

For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at  www.EATSbroker.com

Selling your Restaurant: What should you know?

Are you selling your restaurant in today’s market? What should you know about selling a restaurant before you start? The Restaurant resale market is much different from the housing resale market. Only 2%-5% of Restaurant Buyers inquiring about restaurants for sale will purchase a restaurant.

Dominique Maddox of EATS Broker thinks restaurant owners are shocked to know the following data:

– Only 30%-40% of restaurants listed for sale will sell to a new buyer.

– Selling a restaurant is like a slower cooker, not a pressure cooker. The process can take 6-8 months when selling a restaurant.

– The Landlord is the KING/QUEEN of the transaction. Without a lease or purchase of the building, a transaction cannot close.

– The biggest between selling a restaurant and compared to residential real estate is that people need a house/shelter to live and survive. People don’t need a restaurant but want a restaurant.

EATS Broker describes additional points to consider when it’s time to sell a restaurant:

Confidentiality: When a restaurant is listed for sale, they are put on sites like BizBuySell.com, BizQuest, Business for Sale, Loopnet, and others. The address is not provided to the general public when selling a restaurant without signing a non-disclosure for most listings.

Experienced Restaurant Brokers will request buyers that want additional information on the restaurant for sale to sign a non-disclosure agreement. The Restaurant Broker at EATS Broker will usually pre-screen buyers by requesting a copy of a bank statement, 401K statement, or Letter from the Bank before providing financials and the name of the restaurant for certain listings depending on the listing price.

Broker Commission is paid by the Seller based on the listing agreement signed by Broker and Seller. When selling a restaurant listed under $1 million, restaurant owners should expect to pay a Restaurant Broker 10%-15% of the purchase price. Once the listing price is over $1 million, Restaurant Brokers tend to use a tier commission structure.

A Restaurant Broker does not get paid a commission on the following items:

-Inventory Cost: The items on the inventory listed included meats, dairy products, liquor, wine, beer, dry products, and frozen products. Inventory includes all the items used to make the food or serve the drinks.

-Security Deposits: Any deposits held by the landlord, vendor, supplier, or misc. source a Restaurant Broker does not get paid a commission on.

For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dallas, Texas, Restaurant Broker Dominique Maddox at 404-993-4448 or email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com

When it’s time to sell a restaurant, do you have an Exit Strategy?

When it’s time to sell a restaurant, most restaurant owners don’t have an exit strategy. Some Restaurant Owners think they can sell their Restaurant anytime, like a residential property. The hard fact is that only about 20%-30% of restaurants listed on the market will sell.

Restaurant owners with a plan when it’s time to exit, are usually more successful than those without. An exit strategy consists of clean books and records, updated-looking restaurants, understanding the lease, and knowing the status of the PPP loan, Economic Injury Disaster Loan (EIDL), an SBA loan.

Dallas, Texas, Restaurant Broker Dominique Maddox says, “The lack of exit strategy planning for restaurant owners is common. Most restaurant owners plan to sell a restaurant once an unexpected event triggers them”.

When it’s time to sell a restaurant: Two essential factors to consider: 

Do you have an SBA loan, and your restaurant sale proceeds will not cover the balance? 

Restaurant Broker advice: Contact your SBA lender to let them know you are selling your Restaurant. Find out your options if the sale proceeds will not cover your loan balance. The lenders usually agree to drop the lien on the assets when the Restaurant is sold to a buyer.

The remaining balance Restaurant owner would have to pay back like a personal loan and would be a personal guarantor on the remaining balance.

 Example 

Balance owed $200,000.

Sell the Restaurant for $125,000 and receive $112,500 after Broker’s Commission.

Personal Guarantor for $200,000 – $112,500 = $87,500

Do you have an Economic Injury Disaster Loan (EIDL)?

The EIDL loan cannot be forgiven, and the payments usually begin 30 months after the disbursement date. Even if the Restaurant closes, the lender can claim and sell your personal assets. The lender can claim the assets of any individual that signed the loan documentation as a personal guarantor.

 Restaurant Broker advice: Know the balance of your EIDL loan. Contact an experienced Restaurant Broker for a complimentary restaurant valuation. Knowing the restaurant valuation will help the restaurant owner understand the potential value of the Restaurant and if it makes sense to try to sell the Restaurant.

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

EATS Broker sells a Pizza Franchise in Crawford, Georgia

Dominique Maddox of EATS Broker sells a Pizza Franchise in Crawford, Georgia. EATS Broker represented the seller and buyer. The seller is a repeat client; he bought the restaurant in 2021 with the assistance of the Restaurant Broker at EATS Broker.

The new owners bought the building and the Pizza Franchise for Sale. They plan to convert the location to a non-franchised pizza restaurant and open it in the next 60 days. The Crawford, Georgia, residents have been visiting this location for over 30 years.

Dallas, Texas Restaurant Broker Dominique Maddox of EATS Broker says, “Health issues can force a Restaurant Owner to sell immediately. I’m thankful Dan remembers using our services when he bought the restaurant and decided to use EATS Broker when it was time for him to sell a restaurant”.

The Restaurant Seller was filled with emotions about selling his restaurant. Still, he is pleased with the new buyers and believes they will do great in the business. Dan plans to enjoy his retirement and get the medical treatment he needs to get healthy.

It’s a common practice for restaurant owners to buy an existing restaurant and convert the location into a new concept. This approach helps restaurant owners not to go broke on the build-out and allows them to open the doors for business faster.

In the Restaurant Brokerage industry, the ultimate compliment is when a previous client returns for help. EATS Broker will always be thankful for Dan believing in our company and allowing us to help him sell a restaurant!

EATS Broker is based out of Dallas, Texas. Our Brokerage sells restaurants in over 15 states located on the South and East Coast.

For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Dominique Maddox at 404-993-4448 or by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com

5 Benefits of Buying an Existing Restaurant

The 5 Benefits of Buying an Existing Restaurant have many positive attributes. The current restaurant owner has built a proven business model, established a client base, and gone through the headaches of the initial building-out phase of the restaurant space.

The harsh reality of the restaurant industry is that 60% of restaurants will close their doors in three years. How to improve your chances for long-term success, the Restaurant Broker suggests not going broke on the build-out.

Buyers can learn a lot from the successes and failures of the current restaurant owner. Buyers can ask questions about the restaurant industry without going thru the growing pains.

Dallas Restaurant Broker Dominique Maddox says, “Buying an Existing Restaurant is a cheat sheet to success. The Restaurant Owner provides sales data, vendor relationships, landlord relationships, and stories of success and failures”.

EATS Broker provides a list of benefits of Buying an Existing Restaurant:

1. Employees: An operating restaurant will have trained employees, including cooks. Employees will usually transfer will the sale of the restaurant.
2. Customers: Established Customer base that is familiar with the concept
3. Cash Flow: Restaurants with a positive cash flow provide a paycheck for the buyer.
4. Time to open: Some buyers want to buy an existing restaurant to convert to a new concept.
5. Vendor Relationships: The restaurant owner will provide a list of current vendors. Buyers can decide to use the same vendors or find an alternative.

Buying an existing restaurant eliminates some of the build-out time, stress and anxiety that come along with the process.

EXTRA Benefit 

Bank Lending: A bank will be more willing to lend to a buyer purchasing an existing restaurant than a start-up restaurant concept.

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

4 Worst Decisions when selling a Restaurant

Do you plan to sell a restaurant? What are the worst decisions when selling a restaurant? EATS Broker will provide an inside look at why some restaurant sellers can be disappointed when it’s time to sell a restaurant.

Did you know only 20%-30% of the restaurants listed on the market will sell to a new owner? With the odds stacked against a restaurant owner for success, there are strategies to use to increase the chances of success when selling a restaurant.

Texas Restaurant Broker Dominique Maddox says, “I always ask a restaurant owner before providing a restaurant valuation, how much do you think your restaurant is worth? The response I receive helps me understand the mindset and expectations of the restaurant owner”.

EATS Broker turns down several potential restaurant for-sale listings because of 4 reasons:

1. Overpriced Restaurant for Sale-Over pricing a restaurant for sale lowers the chances of a

restaurant selling. Buyers are more educated than ever regarding restaurant valuations and multiples used to create a listing price.

Restaurant owners are known to list with Restaurant Brokers or Business Brokers based on the Brokers providing the listing price they want rather than what the restaurant is worth. The practice of putting overpriced listings on the market is common.

This strategy increases the number of days it takes for a restaurant to sell, and qualified buyers will avoid the listing because they are educated about the market.

2. Being unrealistic as a restaurant owner-Restaurant owners have to understand selling a restaurant is like a slower cooker and not a pressure cooker. It takes an average of 6-8 months to sell a restaurant. Only 20%-30% of restaurants listed for sale will actually sell to a new buyer.

Restaurant owners should know they must be ready to negotiate terms with a ready, able, and willing buyer. Every deal is different, and all deals that go under contract will not close.

3. Books and records-Buyers are interested in the financials when buying a restaurant and want to check and verify its performance. Restaurant owners with books and records that are not clean, organized, and available to provide to buyers usually will not sell.
4. List for buildout cost– Buyers don’t buy a restaurant based on the buildout cost. One of the worst decisions a restaurant owner can make is to justify the listing price based on the money spent on the restaurant’s buildout.

The restaurant can easily cost $300,000-$1,000,000 to build out the restaurant before opening the doors and making one dollar of profit. Most improvements to the restaurant’s leased space belong to the landlord because they are attachments to the building.

60% of restaurants close within 1-3 years of opening the doors, and 80% close within five years. A restaurant that is not profitable is listed on the market as an Asset Sale, which gets sold for pennies on the dollar.

Restaurant Broker Tip: Restaurant owners are shocked when they learn they don’t own the hood system, walk-in coolers, and other attachments. Whether the restaurant owner paid for the items during the buildout phase doesn’t matter.

**Don’t go broke on the buildout**

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

Time to sell your restaurant? How to defend your listing price

When it’s time to sell your Restaurant, how do you plan to defend your listing price? This question is excellent for anyone considering hiring a Restaurant Broker or For Sale by Owner.

It’s easy to think of a random number, list a restaurant for sale, and answer buyer inquiries. Selling a restaurant is like fishing; it’s time to make the catch when a customer is interested (a fish bite). 

Dallas Restaurant Broker Dominique Maddox says, “The Restaurant Story is an opportunity to help buyers visualize 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”.

The 3 rules of defending your listing price:

Rule #1 

Tell your Restaurant Story: The number one question buyers ask a Restaurant Broker when inquiring about a restaurant for sale is, why are they selling? Once this happens, it’s time to tell the Restaurant Story. 

The Restaurant story is the message/description of opportunities that should be provided to the buyer. Buyers want a background of the Restaurant’s current and past operations, growth opportunities, and why the restaurant owners are selling? It’s time to sell the “Sizzle” of the Restaurant to the buyer. 

Each Restaurant will have a different Restaurant Story, but the core of the stories will be the same. They will include the total expense of the rent, labor, and cost of goods (COGS); these three categories should be 60%-70% of gross sales. 

Rule #2

Clean Books and Records make a BIG difference: Good bookkeeping and accounting help the odds of a restaurant selling. Once the seller and the buyer agree to the terms of the Purchase Agreement, the due diligence process starts. 

Buyers will request several financial documents to verify the Restaurant’s operations and profitability. 

The documents most requested from buyers include:

-Tax Returns

-Profit and Loss Statements 

-Sales Tax Filings

-POS Sales Reports

-Franchise Royalty Reports

-Bank Statements

-W-2s for Owner/Operator or manager replacing an absentee owner

When it’s time to sell a restaurant, owners should check and verify all financial documents tell the same Restaurant Story. A Restaurant Owner can make or break a deal if the financials tell multiple stories. Buyers are looking at financials with suspicion and analyzing every line item. 

Restaurant Broker Tip: The Restaurant Owner keeping two sets of books and records or cheating the IRS on tax payments will hurt the chances of your restaurant selling. 

Rule #3

Repair and Maintenance-The lack of maintenance in a restaurant can hurt the chance of the Restaurant selling to a new buyer. Buyers will inspect the Restaurant and equipment for flaws and repairs needed. 

A neglected restaurant appearance or broken equipment gives a buyer a great reason to reduce the offer price. Restaurant owners should focus on the Restaurant’s presentation before listing a restaurant for sale.  

These three rules help any restaurant seller defend its listing price when it’s time to sell a restaurant. 

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.