Restaurant Sellers – Top 7 Tips


Here are the best practices and tips for selling your restaurant, this is the secret to your success:

1. Anticipating the sale always helps in pushing a successful sale. Buyers will buy on the basis of the quality of the sales and cash flow of the restaurant, as well the equipment and property lease of the restaurant. This assumes the location is great and there is goodwill for the business. Clients should prepare for the process selling their business up to one year before the time of listing the business comes up. This time will be used to fix processes, enhance sales, bolster cash flow and reduce expenses. It is also a great time to review the property lease to clarify any issues that might come up for future buyers.

2. The Pricing Is Right! Either have an expert help you make the judgment call or use the rule of thumb for pricing a restaurant: list for 2 or 3 times adjusted cash flow or 25-50% of average of annual sales. You also want to take into consideration comparable restaurants’ selling prices, lease matters, equipment condition and a host of other important items. Remember! If you price it too high – your business will take too long to sell and price it too low and buyers will wonder what’s wrong! 

3. List exclusively! Assistance of trained real estate and business brokerage professionals come in handy when it comes to selling a restaurant especially if that person specializes in restaurant sales. As a seller, you are paying for a savvy, knowledgeable individual that will get you top dollar and understands the marketplace, how to reach great buyers & have a great understanding of how to market the sale of your restaurant. 

4. Sellers who basically decide to list their restaurant and sit back and relax and wait for someone to come buy the property are missing the vital connections. In restaurant brokering, as in any business relationship, the client has a right to communication and knowledge of what is happening. Insist on regular verbal or written activity reports and help the broker in any way possible to facilitate the flow of information among all parties.  

5. Buyers will pay attention to the financial health of a restaurant and they also pay attention the physical condition of the premises, furniture, fixtures and equipment. Selling a restaurant is almost comparable to selling a house. Clean it up, fix it up, make repairs, make it shine and keep it neat and orderly, especially during a showing.

6. Don’t be shocked by the offers that come in that might be below asking or have different terms of what you were expecting. Rarely do buyers offer exactly what is being asked for a restaurant business. The seller might want all cash but the buyer might require financing. The seller sets a price and the buyer offers all cash, discounting the price as much as 25%. There are no rules. Complete flexibility. When you speak with your advisors and brokers, determine what your final line is, what you are expecting, etc.

7. The only way to destroy a potential sale is to not cooperate or provide the necessary documentation to assist with selling the price, completing the business analysis and determining value. During the process, provide whatever additional information necessary. Find a good, confidential way for prospective buyers to tour the business. 

In real estate and business brokerage, there’s a saying, “time is of the essence,” which means DO IT NOW or run the risk of losing an opportunity.