Dominique Maddox featured in Voyage Dallas Magazine
In the February issue, the founder and President of EATS Broker Dominique Maddox was featured in VoyageDallas magazine Local Stories. This is Dominique’s second time being featured in the Voyage magazine; he was featured in VoyageAtlanta in 2020.
Voyage Dallas magazine’s goal is to highlight the best of Dallas people, businesses, organizations, and events. The Voyage Group of Magazines is based out of Los Angeles; they have magazines that feature local hidden gems in multiple states.
The company’s mission is to build a platform that fosters collaboration and support for small businesses, independent artists and entrepreneurs, local institutions, and those making different cities interesting.
Dallas Restaurant Broker Dominique Maddox says, “the opportunity to be featured in VoyageDallas is a blessing for my company. The article allows people to get to know me personally and learn more about EATS Broker.
I talk about my struggles as a Restaurant Broker and starting my Restaurant Brokerage firm. I moved from Atlanta, GA to Dallas, TX in August 2021 to grow my business”. http://voyagedallas.com/interview/exploring-life-business-with-dominique-maddox-of-eats-broker/
EATS Broker is a boutique restaurant brokerage specializing in exclusively selling restaurants, bars, and nightclubs. Our brokerage is known as Restaurant Resale Specialists that are Subject Matter Experts in the selling a restaurant and the buying a restaurant process.
We help our clients through the complex process of buying or selling a restaurant. Our company specializes in selling Restaurant Franchise Resales and Restaurant ReSales. We also help clients with Restaurant real estate site selection, Tenant Representation, Franchise Consulting, and Restaurant Price Evaluations.
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 by email at sales@eatsbroker.com. Visit our website at www.EATSbroker.com.
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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.
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Restaurant Broker- What I like about the business
Restaurant Broker what I like about the business is a blog written from my viewpoint after being a successful Restaurant Resale Specialist for almost ten years.
I’m currently the Founder and President of EATS Restaurant Brokers, a brokerage firm specializing in selling Franchise Resales, independently owned restaurants, bars, and nightclubs.
The problematic fact about being a Restaurant Resale Specialist is that the average time to sell a restaurant is 6-8 months. The harsh reality is that only about 20%-30% of all restaurants listed for sale will actually sell to a new buyer. Most locations will be closed and returned back to the landlord.
The average survival time for a Restaurant Broker working full-time as a Restaurant Resale Specialist is less than 2 years.
You might be asking yourself, what do I like about the business if everything is negative?
My career as a Restaurant Broker started in 2010; I was told during the interview that it would take 6-8 months before I received a commission. I was broke at the time, but I believed in myself, and I was interested in becoming a franchise resale specialist.
Fast forward to October 2021, and EATS Restaurant Brokers is based out of Dallas, Texas. Our company sells restaurants in over 15 states. We hold a Brokers Real Estate License in Texas and Georgia.
EATS Restaurant Brokers and www.EATSbrokers.com, only established in 2019, have quickly become a popular resource as a franchise resale specialist and restaurant broker nationwide.
What do I like about the business as a Restaurant Broker?
- Affect Peoples Lives– People usually want to sell a restaurant because of personal reasons. When a restaurant owner can sell a restaurant, their personal life is generally affected positively.
The restaurant owner’s life can be draining on an individual’s personal life. Sometimes selling a restaurant will help multiple personal issues, but it can’t solve all problems.
On the buyer side, they have just realized the American Dream of business ownership. Buyers come into restaurant ownership with new energy and commitment to be successful. Buyers are fulfilling a life dream, buying for income, having a family recipe, and etc.
- Selling restaurants in multiple states– Every state requires a real estate license to sell real estate or real property but doesn’t for the sale of a business. Currently, 19 states require a Business Broker to hold a real estate license in the state to sell restaurants; most are located on the West Coast.
EATS Restaurant Brokers sells restaurants in Texas, Georgia, Oklahoma, Iowa, Missouri, Indiana, Ohio, Kentucky, Tennessee, Arkansas, Louisiana, Kentucky, North Carolina, South Carolina, Virginia, and Alabama.
- Eating at Various Restaurants– I’m a self-proclaimed Foodie, so I choose the right industry. Part of my job description is to try several different restaurants weekly. When I’m working with a client or trying to become a franchise resale specialist for a Franchisor, I like to experience the food.
This year I flew to Indianapolis, IN, to visit a client that owns a franchise restaurant and drove to Clark County, OH, to meet with another client and enjoyed some great BBQ.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dallas Restaurant Broker Dominique Maddox at 404-993-4448 or by email at sales@eatsbrokers.com. Visit our website at www.EATSbrokers.com
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EATS Restaurant Brokers expands to Dallas, Texas
EATS Restaurant Brokers is growing and has expanded its headquarters to Dallas, Texas. One of the nation’s specialized Business Brokerage firms, EATS Restaurant Brokers, has obtained a Real Estate Broker License in Texas and now are Restaurant Brokers in Dallas, TX.
Dominique Maddox worked with one of the nation’s largest Restaurant Brokerage Firms for seven years before starting his Restaurant Brokerage.
EATS Restaurant Brokers was established in Atlanta, GA, in October 2019. Less than two years later, EATS Restaurant Brokers is moving its headquarters to Dallas, Texas.
EATS Restaurant Brokers are among the few and far between Restaurant Brokerage firms that hold a Brokers Real Estate license in multiple states and hold a Certified Franchise Executive (CFE) designation.
Dallas Restaurant Broker Dominique Maddox, President of EATS Restaurant Brokers, said, “ Texas is a tremendous state for us to expand and grow our restaurant brokerage firm.
I’m excited to add the Lone Star state to our list of targeted markets for future growth. I have sold multiple restaurants for sale in Texas while living in Atlanta. Texas has one of the largest restaurant resale markets in the nation, with over 600 restaurants listed for sale now. “
Texas has substantial growth in the restaurant industry; the state has one of the fastest-growing population numbers in the nation. Dallas Restaurants, Houston Restaurants, and Austin Restaurants are known across the country. It’s an exciting time to be in the Restaurant Business in Texas.
EATS Restaurants Brokers is excited about living in Texas and connecting people with opportunities in the restaurant industry. We can help you sell a restaurant or buy a restaurant.
To learn more about restaurant resales or to receive a complimentary restaurant valuation, visit our website at www.EATSbrokers.com. EATS Restaurant Brokers assist buyers and sellers in the market to buy or sell a restaurant.
Contact Restaurant Broker Dominique Maddox at 404-993-4448 or sales@eatsbrokers.com
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Selling a Restaurant-Mistakes to Avoid
If you are selling a restaurant, there are mistakes to avoid that can become obstacles to reaching the closing table. To increase the odds of a restaurant for sale getting to the closing table, the Asset Sale Purchase agreement needs to be adequately prepared by a trained professional.
The sales price is only the start of a complex negotiating process that the small details are a BIG determining factor for success. The restaurant resale process negotiations include language that must be agreed upon by both restaurant seller and restaurant buyer.
Once the price has been agreed upon, the knots and bolts of the deal still need to be finalized. Most are not familiar with the critical items that should be addressed in a purchase agreement.
EATS Restaurant Brokers are Restaurant Resale Specialist that understands the critical items on the Asset Purchase Agreement that need to be negotiated upfront between both parties. This blog will cover the essential details that should be addressed in an Asset Purchase Agreement.
Texas Restaurant Broker Dominique Maddox says, “We have a high closing rate because, after ten years as a Restaurant Broker, I have extensive training in restaurant sales negotiations. I understand the critical details to address upfront.
We recently moved our headquarters to Dallas, Texas; we are excited about helping restaurant owners in Texas to avoid mistakes that stop them from selling a restaurant and getting paid at the closing table”.
EATS Restaurant Brokers Top Mistakes to Avoid
Equipment List: The equipment list is usually an itemized list of restaurant equipment and decorations included in the restaurant sale. The list is created by the restaurant owner and provided to the interested buying parties.
The equipment list is an essential part of the restaurant valuation, Asset Purchase Agreement, and assets a buyer will receive. Buyers should understand that fixtures attached to the building belong to the landlord and not the tenant.
Grease trap, hood system, walk-in cooler, walk-in freezer, water sink, and built-in bar should not be included on an equipment list. When an Asset Purchase Agreement is fully executed, it contains a list of equipment that will transfer ownership.
Mistakes to Avoid: Check items on the equipment list to confirm ownership. Restaurant equipment is commonly rented (mainly dishwasher); a restaurant owner can’t sell something they don’t own. Read the lease to ensure the landlord does not own the equipment and the current tenant didn’t lease a fully equipped restaurant space.
Fees: Who Covers them?
Attorney Fees
Who pays the attorney fees and why? In residential real estate, it’s common for both parties to split closing attorney fees in residential real estate, or the Seller will sometimes pay the fees.
Restaurant Brokerage is different; it’s the buyer’s cost and responsibility. It’s beneficial for a restaurant buyer to pick and pay a closing attorney that understands business brokerage. A closing attorney is not needed to close a simple deal if a deal does not involve bank lending or franchise ownership transfer.
Mistake to Avoid– Choose a closing attorney that charges a flat rate compared to an hourly rate. Confirm the services the attorney will provide for the agreed price. Do not use a closing attorney that is not familiar with UCC lien searches or business brokerage deals. Always use a closing attorney for a restaurant sales transaction.
Inventory Cost:
The inventory on hand on the day of closing belongs to the buyer, but actually, they need to pay the restaurant owner first. Several buyers have a misunderstanding that the food inventory is included in the purchase price.
This understanding is far from the truth unless clarified at the beginning of the negotiations. The standard process is that an inventory count is complete the night before closing or the morning of closing. The buyer will pay inventory costs for the food items or other inventory.
Buyer and Seller take inventory together, and the buyer pays a separate check for the final sum. Occasionally a Restaurant Broker will put an estimated number on the Asset Purchase Agreement (for example, $5000). Once the inventory count is final, both parties will finalize the underpayment or overpayment for inventory.
Mistake to Avoid– Confirm restaurant owner will have a copy of recent inventory delivery invoices with current prices. I would suggest not paying for items that are almost gone.
Transfer Fee
A transfer fee is required when reselling a franchise restaurant for sale. The current restaurant owner has already agreed to this fee on the franchise on the Franchise Disclosure Document(FDD).
The transfer fee will cover the buyer’s required training, ranging from 2-10 weeks, depending on the franchise. The transfer fee does not directly go to the restaurant seller; buyers are expected to pay the transfer fee. This fee can range from $5,000-$50,000.
Mistake to Avoid– Confirm Transfer fee upfront and put language in the Asset Purchase Agreement for the party responsible for payment.
Want more help selling a restaurant? Contact Restaurant Broker Dominique Maddox at 404-993-4448 or by email at sales@eatsbrokers.com. Visit our website at www.EATSbrokers.com
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How to Sell a Franchise Restaurant?
The decision to sell a franchise restaurant can be challenging in today’s market. The good news is that if you own a Restaurant Franchise, buyers are lining up with interest. Close to 60%-70% of the restaurants for sale in Georgia that sell are franchise concepts.
Franchise concepts are growing right now, while independent owned restaurants are declining. Franchise Restaurants are popular because they come with a proven system, support, business model, logo, IT support, and reputation.
When it is time for a Franchisee to exit the business, they have a couple of choices on how to sell their restaurant. One of the most significant considerations when selling a franchise restaurant is, do I sell to a current franchisee? Or do I sell to a non-franchisee?
Dominique Maddox, a Restaurant Broker and Founder of EATS Restaurant Brokers says, “ selling a franchise restaurant to a current franchisee is much different from selling to a new franchisee. Current franchisees understand the brand; new franchisees need much information to educate them on the Franchise Brand, process, qualifications, training, and closing process”.
Who do you sell your restaurant to, a current Franchisee or a Non-Franchisee? EATS Restaurant Brokers discuss the Pros and Cons:
PROS Selling to an existing Franchisee:
-Dealing with an educated buyer about the franchise
-Has already been approved by the franchise
-The capability of closing a deal fast because they don’t require the standard 4-6 weeks training.
CONS of Selling to a current Franchisee:
-They usually undervalue the business
– They understand the operation of the franchise brand
-They are harder to impress
-It can be challenging for them to get financing
PROS Selling to a Non-Franchisee:
– Can get a higher offer price
– They are excited about the new opportunity
– Usually are not experienced, restaurant owners
– Can sell them the opportunity for growth or proven sales numbers
CONS Selling to a Non-Franchisee:
– Lots of education about the buying process is needed
– Have to get approved by Franchisor
– Have to do the required training before a new franchisee can complete the sale. Training process is usually 4-6 weeks
– Closing process can take 2-4 months
Thinking about selling a restaurant contact EATS Restaurant Brokers. 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@eatsbrokers.com. Visit our website at www.EATSbrokers.com
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Thinking about Selling a Restaurant?
Do you have an exit plan when it’s time to sell? Thinking about selling a restaurant is only the beginning of a process that can take 6-12 months to complete. Preparing a restaurant properly before hitting the sales market can make the difference between, receiving a solid offer from a buyer or selling at a considerable loss.
The lack of details when it comes to the presentation of the restaurant will make all the difference between a restaurant selling or not. On an average only 30%-40% of restaurants listed actually sell to new ownership.
Improve your changes of your restaurant selling by following the EATS Restaurant Brokers–How to prepare a restaurant for sale TIPS:
Tangible Items:
Back of House– Make sure all equipment is cleaned and in working condition. Clean the hood systems, service the high-ticket equipment, and CLEAN. Remove any items that are not working or can be seen as an eyesore. Make a list of any items that are leased with the vendor’s contact information with pricing and terms.
Front of House– Remove furniture, tables, and chairs that are dirty, broken, or torn. Hire a professional cleaning company to clean carpet, flooring, walls, windows, if you can afford. Remove decorations that can be seen as dated or that are dirty or broken. Clean or updated bathrooms.
Mechanical Systems– Have an HVAC company service HVAC system and keep documentation.
Non-Tangible Items: Documentation is not only needed it’s required!
Financial Books and Records- When it comes time to prepare a restaurant for a potential sale, restaurant owners need to buckle down and collect and organize financial information. Clean financial records are one of the most important factors in selling a restaurant for top dollar.
Most buyers will want to see three years of Profit and Loss statements, and year-to-date monthly profit and loss statement. Once the buyer has signed the non-disclosure agreement and provided the Restaurant Broker with proof of funds, they want the financial information ASAP. Time KILLS deals, financial documents should be prepared to share once the buyer has been financially qualified.
Professionally trained Restaurant Brokers only represent the financial information provided to the IRS and not the 2nd set of Books of Records that is unreported.
Menus & Recipes- Create a recipe manual with all the recipes and measurements to provide to the new buyer. Restaurants that come with systems and manuals are more attractive to buyers that are new to restaurant ownership.
Vendor List- Create a vendor list to provide to the new buyer. The vendor list should include all utility companies, food vendors, and other vendor’s company name, contact information, and any lease arrangements with monthly price.
Equipment List- Create an equipment list for only items that a buyer can lift and take with them if they decide to move locations. Do not include any items that the landlord owns, these items will include attached fixtures like hood systems, walk-in coolers, sinks, and grease trap.
A professional trained Restaurant Brokers can assist restaurant owners in the preparation of listing a restaurant for sale. A Restaurant Broker with help with the overall marketing package for the restaurant to be listed on the buyer market for sale.
Who has time to pre-qualify prospective buyers, educated restaurant buyers about the buying process, and help all parties reach the closing table? The answer is a Restaurant Broker!
Thinking about selling or buying a restaurant contact EATS Restaurant Brokers. 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@eatsbrokers.com. Visit our website at www.EATSbrokers.com
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Thinking about selling a restaurant?
What should you know today if you are thinking about selling a restaurant? The restaurant resale market has drastically changed from January 2020 to now. The Covid-19 pandemic has reset the restaurant market for available restaurant lease spaces, restaurant price valuations, and increased buyer’s negotiating power.
Dominique Maddox a Restaurant Broker and Founder of EATS Restaurant Brokers says, “ Restaurant owners have to be honest with themselves about the value of their restaurant in today’s market. The Covid-19 pandemic reduced the 2020 restaurant valuations based on 2019 sales numbers for a majority of restaurants.
Some of the buyer’s offers I receive today to present to sellers would have been offensive and considered low in January are now being accepted by sellers in July and August.”.
Financial Books and Records– buyers have an enhanced curiosity regarding the restaurant sales Pre-Covid and Post-Covid. Restaurant Buyers will still request 3 years of income statements, sales tax filings, and POS sales reports.
The most requested information now is monthly sales reports for 2019 and 2020 to compare, and sales information for 2020 thru July. Sellers should have these documentations prepared before listing the restaurant for sale.
Bank Lending– banks are lending in today’s market but they are requiring much more information from buyers and sellers. The newest requirement is a plan for recovery from the pandemic if the restaurant was negatively affected. Pre-Covid banks did not require a semi business plan for recovery and guidelines from seller’s.
Buyer’s negotiating power– savvy buyers are mindful of the economy and challenges restaurant owners are facing to keep the doors open. The buyers looking for restaurant resales are optimistic about the economy recovering. They understand restaurant price valuation has been reduced due to a reduction in sales.
A handful of restaurants that showed a strong profit in 2019 and were listed to sell in 2020 are now shutting down the business and filing for bankruptcy. Other restaurant owners are trying to sell to get out of the lease obligations. Sellers whose cardinal intention is to get out of the lease are settling for lower prices to remove the stress of the lease payments.
Thinking about selling a restaurant contact EATS Restaurant Brokers. 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@eatsbrokers.com. Visit our website at www.EATSbrokers.com
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What is a Pocket Listing Agreement?
In the real estate industry in the United States, a pocket listing or hip pocket listing is a property where a broker holds a signed listing agreement (or contract) with the seller, whether that be an “Exclusive Right to Sell” or “Exclusive Agency” agreement or contract, but which is never advertised nor entered into a multiple listing system (MLS) according to Wikipedia.
Restaurant Brokers will usually require an exclusive listing agreement ranging for 6-12 months before working with a restaurant owner. Why would a Restaurant Broker want an exclusive agreement? Why would a seller want a pocket listing or open listing agreement?
Dominique Maddox a Restaurant Broker and Founder of EATS Restaurant Brokers says, “selling a restaurant as a pocket listing can be challenging. Not advertising a restaurant for sale on the major business brokerage websites puts a restaurant at a major disadvantage of selling. Our firm feels like a pocket listing should only be considered on listings over $2 million listing price”.
Pocket Listing Agreement- How to find them?
The reasons for a seller choosing the option of a pocket listing may vary from the need of privacy, worries of the public finding out, employees finding out, or overall fear. Selling a restaurant vs selling a home as a pocket listing or finding listings has some different challenges.
Residential- real estate agents can easily go on the Multi Listing Services (MLS) to find a list of homes that have expired, canceled, or withdrawn. Knock on home-owners doors, or send a mailer with advertisement to gauge interest.
Restaurants- restaurant brokerage does not have a Multi Listing Service (MLS) to view expired, canceled or withdrawn listings. Restaurants usually will not have an open house or sign in front of the restaurant. Finding the owner is not as easy as knocking on the door.
Restaurant Brokers will usually have clients contact them directly to explore the option of selling a restaurant as a pocket listing.
Pocket Listing vs Open Listing Agreement
The biggest differences between the two are a Broker has signed a listing agreement (or contract) with the seller, whether that be an “Exclusive Right to Sell” or an “Exclusive Agency” agreement or contract. Brokers agree not to advertise restaurants for sale to the public but only offer exclusive buyers.
Open listing can refer to a restaurant for sale whose owner is using multiple Restaurant Brokers in order to find as many potential buyers as possible. The Broker who brings in the ready, able and willing buyer for the restaurant collects the commission. Restaurant Brokers will be reluctant to take on an open listing because of the lack of commitment by the seller to work with them exclusively.
Pocket Listing- Pros and Cons
Pros
– Privately shop the buyer market to find out initial interest
– Chance to test listing price
– Exclusive buyers want to be the first to know about a successful restaurant going up for sale
– Less chance of anybody finding out about sell
Cons
– Not listed on The Internet’s Largest Business for Sale Marketplace
– Finding a buyer can be more challenging
– The lower success rate of selling
– Restaurant Brokers usually pay less attention to these listings
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@eatsbrokers.com. Visit our website at www.EATSbrokers.com
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What are the Benefits of Buying an Existing Restaurant?
The million-dollar question for buyers should be,” what are the benefits of buying an existing restaurant”? The Restaurant Industry has a high failure rate, around 60 percent of new restaurants fail within the first year. And nearly 80 percent shutter before their fifth anniversary according to CNBC.com
Knowing these tremendous odds of failure, there are precautions prospective restaurant owners can take to help their odds of being successful. The biggest precaution is to limit your exposure to unknown expenses. How do you accomplish this task? The answer is to buy an existing restaurant for sale or 2nd generation restaurant lease space.
Dominique Maddox of EATS Restaurant Brokers says, “ I have a countless number of horror stories of new restaurant owners going broke on the build-out of restaurant space. I recommend to my buyers to look for an established restaurant to keep or convert to a new concept. I have seen restaurant owners spend over $500,000 on a build-out and sell a year later for less than $100,000.”
Eats Restaurant Brokers provides 5 Reasons to Buy an Existing Restaurant:
1. Established an Open– Why wait to open a restaurant when you can buy one and be open the same day of the closing day? When you buy an established restaurant that has been open for a significant amount of time, it comes with an established customer base and goodwill.
Why wait to build up Google Reviews when you can buy a location with great reviews and an online reputation. Some restaurants come with professional websites, great social media following, and email customer marketing lists.
To a restaurant owner the sound of the POS sales system taking orders, delivery orders coming in, and pick up orders on the 1st day of ownership is a priceless feeling.
- Staff- One of the hardest tasks for new owners is to recruit, hire, and train staff members. Established restaurants usually come with a trained employee workforce, these individuals are trained on the basic skills that are necessary for performing their roles. Inheriting experienced employees can be a valuable asset.
- Existing Business Relationships– The current owner has established relationships with food vendors, suppliers, printers, insurance companies, service companies for restaurants, and banks. Some of these relationships can easily be transferred at the time of closing.
- Price and Expenses– The current seller usually has everything in place for a new buyer to take over the operations. When purchasing an established business, the buyer knows exactly what he or she is getting for the price. The buyer in most cases can review the seller’s profit and loss statements and learn from the seller’s success and failures with expense control.
- Furniture and Fixtures– One of the biggest misconceptions for restaurant owners is that they own everything in the building. Restaurant owners can spend hundreds of thousands of dollars to install a grease trap, hood system, walk-in coolers, walk-in freezers, and sinks. Only to find out once they are ready to sell all the leasehold improvements belong to the landlord (read your lease). Building a new restaurant requires you to convert an existing space into a restaurant.
Why go thru the troubles and heartburn of a build-out when you can buy an existing restaurant, that is fully equipped with restaurant equipment for pennies on the dollar.
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@eatsbrokers.com. Visit our website at www.EATSbrokers.com
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