Preparing a Restaurant for Sale

On August 8, 2011, in Business Sales Process, Business Valuation, How to Sell, Restaurants, by Shelli Margolin

If you are considering selling your restaurant, preparation is essential in order to make the sale easier, faster and more profitable. Buyers will usually estimate the value of a restaurant beyond a wonderful menu and steady clientele.   Their assessment will determine what they are willing to pay.    Having all aspects of your restaurant in order [...]

If you are considering selling your restaurant, preparation is essential in order to make the sale easier, faster and more profitable. Buyers will usually estimate the value of a restaurant beyond a wonderful menu and steady clientele.   Their assessment will determine what they are willing to pay.    Having all aspects of your restaurant in order is the key to a successful sale.

Many of the steps below may seem like no brainers.  However, often restaurant owners are so engrossed in their day to day operation that they over look simple things that can drastically effect how buyers will perceive their restaurant.

It is crucial to look at your restaurant through the eyes of a buyer and ask yourself some key questions:

  • Are your books & records organized?
    • Can a buyer clearly understand how much profit you make?
      • Is your profit provable on paper?
      • Do you have cash sales?  Can you easily prove those sales to a buyer?
      • Can you show on paper what your costs are (food, labor, waste, etc)?
  • When the restaurant is closed to the public, what does it look like?
    • Is it clean?
    • Are the chairs, tables and décor in good shape?
    • Is the kitchen spotless and free of clutter?
    • Are the bathrooms spotless?
    • Is all your equipment operational?
  • When the restaurant is open, how well does it function?
    • Is your staff friendly & knowledgeable?
    • Is the environment pleasant to customers?
  • Are all your permits and licenses valid?
    • Is the restaurant in compliance with the County of Los Angeles’ new food handler’s regulations?
    • Do you have any outstanding violations?

If you answered no or wavered on any of these questions, then you need to take corrective measures before you place your business on the market.  In order to sell your restaurant for the best price, all of the aforementioned elements need to be in place.

Coherent financial data is vital.  There are ways to mitigate messy books and records.  However, if buyers can’t determine your revenue, costs and profit, then selling your restaurant becomes extremely difficult and you most certainly won’t get the price you want.

Buyers will want to tour the restaurant when guests and staff aren’t around in order to ask questions and assess the furniture, fixtures and equipment (FF&E).   You’ll want to take whatever steps are feasible to make the restaurant as presentable as possible.   Buyers need to have a positive emotional response on first sight. The cleanliness of a restaurant affects the overall desirability and thus the ultimate price.

While you are cleaning, take a second look at your staff and overall operations.  Buyers will be scrutinizing how your restaurant runs.  If they are sophisticated buyers, they will not only come in to get the costumer experience, they will send others to check out the service and environment too.

During due diligence, the potential buyer will want to see your permits and licenses.  You’ll want to make sure they are all valid and any violations are corrected well before the due diligence period.  If they aren’t in order, your risk losing the sale.

There is a lot that goes into selling a restaurant, much more than many other types of business.  For a free consultation, please don’t hesitate to call Restaurant Broker, Shelli Margolin at (310) 882-2200 ext. 128.  I’m happy to help.

 

 

By Shelli Margolin | BizEx Business Broker Profile | 310-882-2200 Ext 128

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