It’s not uncommon for people in the restaurant industry to sell their establishments after a certain period. Sometimes it’s due to problems. Other times, the owner just wants to do something different. Regardless of the group you belong to, the best way to sell a restaurant isn’t straightforward.
After all, you didn’t build your restaurant in a day, a week, or even a month. It must’ve taken a lot of planning, time, effort, and money.
Why rush to sell it and risk all of that investment? Besides, selling a restaurant can be quite fruitful if you follow the right steps. So, let’s get straight to the point.
Risks To Know Before Searching for Ways To Sell a Restaurant
While this discussion is about ways to sell a restaurant, you should first be aware of the risks. After all, you can’t avoid something if you don’t know it exists. So, here’s what you need to know.
Firstly, as with selling any business, you’ll be at a financial risk when selling your restaurant.
This is especially true if you made a lot of investments when building it. The price you get must be equal to or greater than what you have spent to open your restaurant. However, that’s not always the case, so negotiate the price carefully.
Secondly, you might face legal troubles related to property, permits, liquor licenses, etc. Even if you’re sure you have everything in place, it’s better to work with an experienced lawyer. They will be able to judge the situation better and help you take the right steps to fulfill the legalities.
Thirdly, if word gets out to your employees, they might become restless and leave before you sell the business. This is not ideal, considering the neverending restaurant worker shortage.
While it won’t always be the case, it’s possible. And if it happens, you’ll have an even harder time selling it. Buyers usually want the whole package, not just the venue.
And lastly, there’s an emotional risk. If you’ve spent a lot of time running the restaurant, you might have a hard time giving it to someone else.
Selling your business is no joke. So, preparing an effective exit strategy should take into account multiple factors.
How To Sell a Restaurant: 5 Steps to the Most Favorable Price
Whenever people hear about someone selling their company, they immediately think it’s because they’re running out of business.
But in the restaurant industry, there might be other reasons for selling your business.
However, if you’re not aware of the right steps, you might end up losing money after the selling process. So, here’s how to sell a restaurant for the most favorable price.
1. The Best Way To Sell a Restaurant Starts With Knowing the Real Value
The first step to the best way to sell a restaurant is knowing how much it is worth. You can’t just decide on a figure and market it as your asking price.
That’s because potential buyers don’t want a restaurant that doesn’t have much sales.
One of the most important factors here is how your restaurant is performing during the time of the sale. For that, you’ll have to refer to your accounts, search for any loopholes there might be, and make changes.
Increasing restaurant sales in this phase might be a worthy initiative as you can ask for a higher price. Moreover, you have a lot of equipment and furniture at your venue. If you’re selling your restaurant as a whole, you’ll have to figure out the worth of your assets as well.
See how much you paid for those things when starting your restaurant. Then, add that to the asking price. Your location also plays a role here. If your restaurant is in a popular place, it will have more worth. Using a restaurant value calculator might be useful to have a fair number. However, you should use your gut as there are factors that are not quantitative.
2. Review Your Lease and Financials
Once you know your restaurant’s worth, it’s time to review your lease and financial records. Some buyers are very thorough and might ask you for all your restaurant’s documents. So, here’s the paperwork you need to gather.
- A list of equipment, furniture, and any other assets
- Copies of all applicable licenses
- Architectural plan of the restaurant
- Financial statements
- Profit and loss statements
- Health inspection records
- Lease copy
- Tax returns
- Account information of at least a year
Depending on the buyer, you might need more documents, but these are the most important ones.
After gathering these documents, review your lease agreement. Sometimes, landlords don’t allow you to sell the property without their permission. Or you might have some time left on your lease. If that’s the case, talk to your landlord and see what options you have.
It would be a good idea to involve a lawyer at this stage. Otherwise, you might face legal risks.
As mentioned earlier, potential buyers want a restaurant that’s performing well. So, the next step is to make your restaurant worth selling. Here’s how.
Start by reviewing your accounts and see if you have recorded everything. In case something’s missing, consult your lawyer for options. Also, see where your restaurant is lacking in sales.
Once you have a clear view of where you’re lacking, make efforts to make things right. You won’t be able to do this if you decide to sell your restaurant at the last minute.
So, give yourself at least a year after making the decision to get your restaurant ready for selling. People don’t want to eat in an untidy restaurant, let alone buy it.
Clean things up and focus on your unique selling point. What makes your restaurant different from others? You might have asked yourself this question when marketing your restaurant to diners. Marketing to buyers is somewhat the same thing. You must make your restaurant appealing to buy.
4. Find the Right Customer
When it comes to buying a restaurant, anyone can do it. You don’t have to look in the industry to find a potential buyer specifically. It might be a friend or a family member who buys it from you. So, spread the word about your decision. Even if you don’t have any buyers in your close circle, they might know someone. But make sure the buyer’s intentions align with yours.
However, don’t let your employees know just yet. You don’t want to scare them into leaving. But subtly prepare them for the new business owner.
When the time nears, let them know and help them find a new job if they want.
Moreover, talk to a restaurant real estate specialist. They have better insights into where the market is performing well. So they’ll be able to refer you to the right person.
5. Negotiate the Best Price
The last step is negotiating with potential buyers. You might find yourself in a situation where the buyer asks you to lower the price. So you must be ready to negotiate. Understanding the logic of restaurant buyers might be useful to prevent and address questions.
Don’t let your ego or emotional attachment to the restaurant interfere with the process. The restaurant is close to your heart, but for the buyer, it’s just an asset that will bring them money. Therefore, they will be looking for the lowest price and most return.
Keep a balance between lowering the price and knowing your restaurant’s worth. Otherwise, you might end up making the wrong deal.
Again, it would be a good idea to involve an experienced broker to help you strike that balance.
Is It Even the Right Time To Sell Your Restaurant?
The best way to sell a restaurant is not straightforward and might leave you disappointed. Nonetheless, by working on it and making it appealing to buyers, you might close a great deal.
Timing is crucial here. If you’re selling your restaurant because you’re facing big problems, your expectations should not be high. A restaurant facing problems will be harder to sell. Hence, the market will not always be in your favor.
If you want to revamp your business before selling and making it more appealing, try out Beambox. It helps you automate your marketing campaigns and grow your online reputation. Beambox requires no additional hardware and has no hidden fees. Start your thirty-day trial now!
Get Started With Free WiFi Marketing
Beambox helps businesses like yours grow with data capture, marketing automation and reputation management.
Sign up for 30 days free