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 Broker 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 Broker. 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 [email protected]. Visit our website at www.EATSbroker.com
