If you are thinking of selling your restaurant, you might wonder where to start.  You may also wonder about how you can ensure you get the best price.  Fortunately, there are a number of tips that you can use to help you sell a restaurant, starting naturally with an experience business broker.

Before even you start interviewing business brokers, though there are general things all the best pros are going to tell you to do before they can give you a Broker Opinion (aka the value of your business)

The First Impression

When you sell a restaurant, you need to think about the first impression that potential buyers have.  As with selling a house, the first impression is where the transaction begines. An aesthetically pleasing front makes the enterprise look successful and therefore more valuable. Unless you are looking to attract an investor who wants to take on a fixer-upper, you need to pay keen attention to the exterior of the restaurant.  and, of course, while you are fixing up the “first impression” for buyers you are also presenting a potentially more appealing look to current customers.

When your restaurant has a bad first impression, it will deter potential buyers from looking further into the business.  This means that while you may have amazing financials or returns,  potential buyers will never know – they’ll be put off by the poor appearance.   To avoid a good buyer passing you by, consider fixing the appearance of the business.

Consider how people pass by the restaurant: how does the parking area look? Is it clearly signposted?  Are there people lurking around that are clearly NOT  customers?  Is the landscaping neat, seasonally trimmed and welcoming?

Take the time to get the parking lot power-washed.  If you don’t know who to ask, look for a gas station with a clean forecourt.  Gate gas stations, for example, keep a local power washing company on retainer to keep the forecourt clean and prevent an ugly build up of spilled oil and trash that missed the receptacle when thrown.  If you have a good one nearby, maybe stop in and ask for a referral?

How are the windows?  Could they do with a quick clean or a touch-up of paint around the trim.

The Kitchen

It could be said that the kitchen is the most important space in any restaurant – it’s where the magic happens!  Of course you keep the kitchen clean (in case of random inspections from the local Health Department).  Now, put yourself in a potential buyer’s shoes?  Does the kitcenh look organized?  Is the flow obvious, with established pathways for how hot food gets to the table?  What about the equipment?  Is it all in good working order, or are there bits broken or missing?  To get the best price for your business, it neeeds to look like a thriving concern that has been well-manged with an excellent crew who can manage as easily as without you.

Broken or missing equipmentnot only gives a bad impression, it allows potential buyers to jump to one of two conclusions: 

1.  you have given up on the business. 

2.  you could be persuaded the business was a fixer-upper and that you would be open to a low-ball offer.

Neither are good.  Sometimes all it takes is a shift in focus.

More on CLEAN…

Don’t forget to get the windows cleaned. A deep clean of the grout on any tiled floors, and shampooing the carpet also contribute to the overal sense of cleanliness.  It all makes a much bigger difference than you would think, and current customers will enjoy the improvements. (Of course, they might be worried the menus are about to reprinted with keener pricing!)   

Looking like a thriving concern!

Clean, and in top working order.  Wtih logical flow and an organised system.  These are pretty obvious that most restaranteurs are doing as part Standard Operating Procedure.

Now, how do you look thriving concern  – a popular place, with a wait list –  whether you are or not?

What are signs that tell us intuitively that a place is popular?

1. Place to sit and wait – often with beverage service. Two wooden benches with an ashtray stand (oh, did you remember to check that the parking lot, and around the front door are free of piles of cigarette butts? Not nearly enough people have given up smoking yet!) and a flowering planter are enough.

2. A waiting list, with a call system announcing who’s next. This doesn’t have to be an elaborate or expensive loudspeaker system.  (Though, if you are in an area with neighboring retail establishments, it can’t hurt to hear names being called from time to time.)  Equally, a member of the wait-staff with a clipboard shouting a name  through a few groups standing around can give an impression of a flourishing business, too.

Photos of Family vs. Celebrities

If your restaurant has any personal items in it, you will need to remove them.  Only leave items that you intend to include in the sale.  This will help you avoid any misunderstanding with your buyers.  This is less the signed photograph on the wall of the chef with a celebrity and more the personal laptop you have on your desk that you use for the business should be taken home.  A potential buyer may assume that it is part of the business assets that are included in the sale.

Get Your Finances In Order

Having a good-looking restaurant is important, but it means nothing if you cannot present good financials to the potential buyer.  Getting your finances together will also help you determine the value of your restaurant.  Any potential buyer is going to want to see your finances during their due diligence and you have to be able to show this to them without any issues.

 Ideally, you will have been keeping up to date with your bookkeeping and will have all of the records available.  If you do not have the records from the start of the business, you will need to arrange financial records for at least 1 year.  This minimum will show the buyer that the restaurant will have long-term potential and how the business has been performing. 

Profit 

Your potential buyer is likely to ask for a profit and loss as well as the balance sheet.  If you do not know what this is or how to create one, you will need to hire a professional to help.  Your accountant should be able to provide this information for you.  You should get these documents prepared in advance, so you do not feel under pressure during the sale or appear to be disorganized. 

Set A Realistic Asking Price

 When you have your financials under control, you will be able to set a realistic asking price.  The price you set will determine how easily you sell the business.  If you overprice your restaurant, you will not sell quickly and you will not be able to provide justification for the price to buyers.

 When setting the price, you need to distance yourself from the emotional attachment you might have to the business.  If you focus on your emotions, you are more likely to overprice your business and this will scare off buyers.  Of course, if you have had a lot of problems, you could end up undervaluing the business and this also brings problems.

 When you undervalue the business, potential buyers may think that you have not been doing very well.  This can lead to them asking how much work they will need to do to make a profit.  These thoughts can scare off potential buyers.

 If you are unsure about how to value your business, you can get professional help.  There are brokers who specialize in business sales and some that will only work with restaurant sales.  They will know what to look for in your performance and financials to set the right price for your sale. 

Look At The Lease

 If you do not own the building your restaurant is in, you will have a lease that you need to consider.  If you know that your lease is coming to an end, you will not have to worry about this.  However, if you are trying to sell part-way through the lease, you have to consider this.

 In most cases, you will be able to talk to your landlord about the potential implications of a sale.  Your potential buyers will generally want to continue in the same space and will want to continue the lease.  Letting your landlord know you are selling will help with this transition.  If there are no problems, the new owners of your business will generally be able to take over the lease that you have.

There are a lot of tips that you need to know about which help you sell your restaurant.  The appearance of the business is important and you need to ensure that all the equipment is in working order.  Having your financials in order is vital and you need to look into the lease of the property before you sell.

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