HOW TO SELL A RESTAURANT BUSINESS

How to Sell a Restaurant Business: Your Step by Step Guide

If you are thinking about selling your restaurant business, it’s important to think about how to prepare your business to be sold for the most money. As well as how to attract the right buyer at the right price. If you are thinking about selling your restaurant, it can be a complex process that will be made much easier by hiring a business broker. A business broker doesn’t earn any money, unless your restaurant sells, in which case they will earn an agreed upon commission. Just like selling a house, your business broker only makes money when you get paid for the sale of your restaurant business. A business broker knows the market, knows the buyers, and knows how to list and market your restaurant to potential buyers to get it sold as quickly as possible at the highest possible price. Below we provide you with the a step by step guide to help you prepare for and sell your restaurant to maximize the return on your investment (ROI).

Steps to Sell Your Restaurant Business

1. Sell Your Restaurant Business with A Business Broker 2. Understand Your Restaurant Building Lease Agreement 3. Building Value: Preparing for Your Restaurant Sale 4. Choosing the Right Time to Sell Your Restaurant Business 5. Enhance Your Restaurant’s Curb Appeal 6. Enhance Your Restaurant’s Indoor Appeal 7. Evaluate and Upgrade Your Restaurant Business 8. Examples of What to Evaluate 9. Tighten Up Your Financials 10. Now It’s Time To Put Your Restaurant Up For Sale 11. Hire a Business Broker To Sell Your Restaurant 12. Preparing the Correct Documentation 13. Negotiating Your Business Sale 14. Selling Your Business: Placing Your Ad 15. Reason You Are Selling Your Restaurant 16. Finding The Right Buyer For Your Restaurant 17. Potential Buyers Ready To Buy Your Restaurant 18. You Sold Your Restaurant - Now What?

1. Sell Your Restaurant Business with A Business Broker

Michelle Mendenhall Professional Business Broker, IBBA Commercial Real Estate Sales & Leasing Associate Phone: 916.459.7526 DRE #02116152 LocalGirlGoesCommercial.com michelle.mendenhall@localgirlgoescommercial.com michelle.mendenhall@expcommercial.com

2. Understand Your Restaurant Building Lease Agreement

If you do not own your restaurant property and building, then it’s very important to understand the terms and conditions of your lease to make sure that there are no clauses in your lease agreement that could prevent you from selling your business. If there is, you need to resolve this issue with the owner, so that you can sell your restaurant business without any issues with the buyer of your restaurant to be able to be added to the lease, or to sign a new lease, so that they can continue to run the restaurant business as it is when they buy it.

3. Building Value: Preparing for Your Restaurant Sale

Now that you are ready to sell your restaurant, it’s time to think about what you think your restaurant is worth. You will need to be fully prepared to justify the highest asking price possible. Now is the time to take the steps below to help to make sure you are ready to sell you restaurant at the right time to make the most profit.

4. Choosing the Right Time to Sell Your Restaurant Business

The first step to selling your restaurant is to determine when you should sell. Whether it’s when you hit a certain profit goal to show any potential buyer the value of the business, or a certain time of year that gets you through the busy most profitable season or month. Timing is everything.

5. Enhance Your Restaurant’s Curb Appeal

It’s important to think about how your restaurant will look to any future buyer. This is typically referred to as “curb appeal,” which is the appearance of your restaurant from the outside. A quick and easy clean up, or wash down, adding some bark and taking care of your landscaping can do wonders to the look and feel of your restaurant. Replace or repair any broken, cracked, or chipped windows or doors. Touch up the paint to give that clean new restaurant feel.

6. Enhance Your Restaurant’s Indoor Appeal

The inside of your restaurant is equally important to get ready to present to any potential business buyers. You want any potential buyers to be able to quickly glance at your restaurant space and easily envision how it could look if they applied their design ideas and make it their own. A quick touch up will do wonders. Cleanliness is important, but now is also the time to shampoo the carpets, and the tile, and if the walls are greasy to get the grease and grime cleaned up. Things build up over time in the cleanest of business establishments with the daily grind and busy dinner rushes, but try to give it a touch up even if you don’t think it needs one.

7. Evaluate and Upgrade Your Restaurant Business

When you are ready to put your restaurant up for sale, it needs to be in the best shape as it possibly can be. You should have it ready to have your business broker or commercial real estate agent present it to any potential buyers and have it show the value that they will be getting to demand the highest price possible. You should evaluate your entire business operation to see what needs to be fixed or upgraded to make the business easier to sell.

8. Examples of What to Evaluate

Are your tables, chairs, and booths clean, in good shape, and of high quality? Is the dining area clean and offer a warm welcome? Is everythign up to code? How is your lighting, ceiling fans, and decor? Is the flooring clean, and in good shape? Are your heating and air conditioning vents clean? Is the kitchen and reception areas clean and in good shape? Are your kitchen equipement and appliances clean and in good shape? Are your bathrooms clean and smell nice? How are your website and social media profiles, it may be the time to provide some updated posts and content. Now walk through your restaurant, and around the outside of your business, and take note of anything a potential buyer may see and not like. If you can resolve the issues by cleaning, fixing, or replacing, it is a good time to get that done so that when your potential buyers start walking through, they will appreciate your restaurant as much as you do and be willing to buy it for the highest price. If you invest time and money into your restaurant, it will help you to sell it faster, and for the most money. You will have to weigh the cost vs the benefit and probably should replace or upgrade everything if it is not going to help make you the most money.

9. Tighten Up Your Financials

Any serious potential buyers will want to see your financial records. It’s important to have a complete set of financials to be ready to present to your business broker to present to the potential buyers. To receive this information they will need to sign a non-disclosure agreement. Depending on the depth of the financials, you might only need to provide it to them after the contract is signed for them to buy the business, during the due diligence period. This is your time to shine, and show the buyer just how much value your business has. How much business sales, and how much profit. The higher the profit, the higher the value of your business.

10. Now It’s Time To Put Your Restaurant Up For Sale

Now that everything is ready, and you are ready to have buyers walk through your restaurant and look through your books, it’s time to list your restaurant business up for sale.

11. Hire a Business Broker To Sell Your Restaurant

One of the best decisions you can make for yourself is to hire a business broker to handle the selling of your restaurant business. A business broker is a commercial real estate agent that can sell the business itself, as well as the commercial property, if you are selling the property too. They don’t cost you any money up front. They only get paid a small commission if the business actually sells. Their knowledge of the market, and access to potential buyers, and business selling listing websites are a big help to getting your business sold. They also have access and provide visibility of your listing to other agents in the industry to increase your chances of finding the right buyer.

12. Preparing the Correct Documentation

Selling your restaurant business is complex and will require a lots of documentation, accurate and up to date reporting and paperwork. The buyer needs all of this information to be able to make an informed decision. It’s important to have all of your documentation in order and ready to hand out to potential buyers. Your business broker will advise you on what documents to prepare to get ready to proved to potential buyers. You should be prepared to share copies of many of the following types of documents as you move forward. • Monthly balance sheets • Bank Statements • Local health inspection records and evaluations • Relevant licenses: liquor, sidewalk table occupation permits, etc. • Your rental or lease agreement • Tax documentation • Expenditures, debts, investments, and other assets owned by the restaurant • Documentation that shows all of the employees legal right to work

13. Negotiating Your Business Sale

Your business broker will become invaluable at this point. A good broker has extensive experience negotiating great business deals for their clients. It’s important to listen to any advice that they offer you during this process. It’s easy to get trapped into a figure that you had your heart set on, but just remember that your business is worth what someone is willing to buy it for. It may be more than you were thinking, or could even be less than you were hoping for.

14. Selling Your Business: Placing Your Ad

Your business broker will ask you some details about your business and come up with a valuation for your business. You can decide on the listing price, and they will put together some marketing materials and present them to you before placing the advertisements to get your restaurant business listed for sale.

15. Reason You Are Selling Your Restaurant

Something has made you decide to sell your restaurant. Every potential buyer will have this question at the top of their list of questions that they will want you our your business broker to answer. Why do you want to sell your business?

Some of the more common reasons to sell a business are:

• Retirement • Death or Illness • Problems Between Business • Partners Tired or Overworked • Loss of Interest • Not Profitable (this will lower the value of the business) • Moving Out of the Area • Conflict of Interest • Wanting To Invest In A New Business

16. Finding The Right Buyer For Your Restaurant

Selling your restaurant may take a few months, and in some instance it may take a year or more depenging on the market conditions for buying a business. Sometimes finding the right buyer for your business can be a challenge. This is where it helps to get in touch with a business broker that will give your business for sale listing more exposure to a larger network of potential buyers.

17. Potential Buyers Ready To Buy Your Restaurant

Now that you have a buyer, don’t stop there. You should continue trying to sell your business until your business is sold. It’s good to have two or three potential buyers ready to make an offer which could increase the sales price. It will also give you a better chance of getting another offer immediately if the first deal falls through.

Restaurant Sales Documentation:

• Types of Documents You May Encounter During The Sale: • Bill of Sale - Transfers The Business And Assets To The Buyer • Assignment Of A Lease - You May Need To Help With Landlord Discussions • Security Agreement - If Seller Retains A Lien On The Business • Non-Compete Agreement - Buyer May Ask You To Sign This

18. You Sold Your Restaurant - Now What?

Now that you have sold your restaurant, you can breathe easy and relax. You should take some time to enjoy your new free time that you never knew you were missing. You may want to invest your profits into buying another business, or into some income producing assets.

Some Investment Opportunities:

Buy Another Business Buy An Online Business Build A Website Business Monetize Your Website Buy Income Producing Assets Invest In Or Make Your Own NFTs Invest In A Revenue Share Business Opportunity One of the most exciting opportunities to invest in is a revenue sharing business opportunity. With this type of investment, you do not have to do any of the day to day work of the business, and instead you are investing in the revenue of the business. If you pick the right revenue sharing business opportunities you can sit back and earn profits on your investment. A great way to spend your early retirement, freeing up your time to enjoy your retirement.

How to Sell a Restaurant FAQs

1. How Do You Sell A Restaurant With A Business Broker? 2. What Are the Steps for Valuing A Restaurant? 3. How Much Does It Cost to Sell a Restaurant? 4. How To Sell a Restaurant Quickly 5. How Do You Sell a Franchise Restaurant Business? 6. How Do You Sell Your Share of a Restaurant Business? 7. The Bottom Line About Selling A Restaurant Business

1. How Do You Sell A Restaurant With A Business Broker?

A business broker is easy to find and work with. A quick phone call, email, or text will get the conversation started. They will walk you through the process. They will talk to you about your restaurant business, and let you know what documents and other information that they will need. You will sign a contract with the commercial real estate agent business broker, and then they will get your listing ready to publish and shared with potential buyers. Get started with a business broker today.

2. What Are the Steps for Valuing A Restaurant?

Your business broker will research other listings that are similar to your restaurant business. They will go over your profits, and your financial documents, assets, and other relevant information, to help come up with what you should list your business for sale for. Other things that can impact the business value are the number of years in business, market and customer base growth, and multi- year contract values.

3. How Much Does It Cost to Sell a Restaurant?

A business broker will typically charge you ten to fifteen percent of the sales price as a commission on a successful sale. You may encounter other fees such as attorney’s fees, accountant fees, costs for getting the business ready to sell such as improvements and repairs. There may be fees associated with the lease for the new owner, but those would typically be paid by the new owner, unless a change is required before the transaction closes escrow.

4. How Do You Sell a Restaurant Quickly?

The quickest way to sell your restaurant business is by having all of your documents in order, and engaging with a business broker. Tell them the urgency in selling quickly, and they will do everything they can to speed up the process for you. Transactions take time, so it won’t be an immediate sale and transfer, but you can have a quick close of escrow and negotiate a short due diligence period, if the buyer will agree to these terms of the sale.

5. How Do You Sell a Franchise Restaurant Business?

When you are looking to sell a restaurant business franchise, you will need to work in conjunction with your business broker and your franchiser. The franchiser will probably need to determine if the buyer is appropriate to be a franchise owner, and the business buyer will need to sign a franchise agreement with the franchiser. There may be fees and rules associated with owning or selling a franchise that can be found in the FTC’s compliance guide.

6. How Do You Sell Your Share of a Restaurant Business?

If you are looking to share a share of a restaurant business that you have with other business partners, there is typically a common ownership transfer method, especially for small business. Working with your partners to have an agreement in place with your business partners ahead of the sale will help to ensure a smooth business transition to the new owner. This will also help to ensure that the existing partners and the new business share owner will all benefit from the transaction and continue to have a successful and profitable parntership together.

7. The Bottom Line About Selling A Restaurant Business

Selling a restaurant business is a time consuming task, and it can also be an emotional time. If you have worked long hours, for a lot of years, building up your business into a successful and profitable business, it can be hard to let it go. With your hard work and preparation ahead of time, and picking the right buyer, you will ensure that your business will have a smooth transition to it’s new owners. If you pick the right buyer, you will be able to ensure it is going into some good hands as well. At ViralStudioX, we highlight products and services that you might find interesting. We frequently receive free products from manufacturers to test. This does not drive our decision as to whether or not a product is featured or recommended. If you click a link on this page, then go on to make a purchase, we might receive a commission – at no extra cost to you, and does not impact the purchase price of any products that you may purchase.