By Briana Hilton, Contributor
Despite the ongoing economic crisis, more people are chasing their dreams to become a restaurateur. Recent data compiled by BizBuySells found that restaurant transactions increased in 2021 over the prior year by more than 1,000 transactions. The restaurant industry is still a thriving market, always presenting diners with exciting new styles and trends in food culture.
However, all good things must come to an end. Hopefully for restauranteurs like yourself, that means selling your business and moving on to retirement or the next new adventure.
If you are considering selling your restaurant business, make sure that you get the right professionals on board to help with your sale, so you can sell your business to the right investor. You should also make sure that you have all legal documentation ready before you put your business on the market.
Know Your Goals
What are you hoping for in selling your restaurant?
This is one of the first things you’ll want to figure out when it comes time to move on. Are you looking to offshore your business to the highest bidder or do you want your life’s work to go into the hands of someone you know and trust to carry on the legacy? How much are below market value are you willing to sell if it means going into the right hands?
Both are valid end goals, but you need to figure out what you want that final bow to look like early on. Otherwise, the rest of the process will be a mess.
Work with an Experienced Realtor
If you own the restaurant premises, getting a reputable realtor with specialist knowledge of the industry can help you make a profitable sale. They should be trustworthy and honest, with plenty of experience and a proven track record in sales.
A realtor who only deals with the sale of residential houses may not have a detailed knowledge of how the restaurant industry works and the intricacies regarding leases. You should appoint a realtor that has local market knowledge, and also make sure that you do your research with regard to the level of commission that they charge.
Don’t be put off by a higher rate of commission if a realtor has an excellent portfolio in the restaurant industry.
Keep it Quiet — Maybe
If you are selling your restaurant business as an ongoing concern, then keeping it confidential will likely be beneficial. If your restaurant staff know that you are selling, they may not be as motivated at work, and customer service standards could decline. If your customers know that you’re selling the restaurant, they may look elsewhere for somewhere to eat or become concerned that the food you are serving isn’t as good as normal.
A decline in your profits or the reputation of your restaurant could actually lead to a sale falling through, or you being unable to attract potential buyers. This will be particularly problematic if it takes a long time to sell your business.
This isn’t necessarily true of all restaurants looking to sell, of course. Your staff may feel abandoned if they find out you’re selling the business without telling them first, for example. It may be too difficult to go through the process without folks finding out, etc. You know your business, your staff, and your guests best. But it’s worth reflecting on how selling your restaurant will affect operations and business in the interim.
Organize Your Paperwork
Owning a restaurant business comes with a large amount of legal documentation and paperwork. Before you even consider putting your restaurant on the market, make sure that all your documentation and certificates are up-to-date. Investors will want to see copies of the premises license, safety certificates, and the lease.
You should also make sure that you have all your financial paperwork ready - potential investors will want to see accounts for the last three years showing the revenue and expenses. If your restaurant has been operating at a loss don’t try to hide this from buyers, it is essential that they see what the state of the business is so that they can identify how they can make it a profitable concern. It will also help you to have a recent market valuation done by a restaurant business broker or a local commercial agent, so you know what the restaurant is potentially worth.
Having the right realtor on board when you sell your restaurant could make all the difference to the ease of sale. With expert knowledge they can help you achieve the price you want for your business.
