Preparing for the Sale of Your Restaurant (And How to Evaluate its Worth)


You’ve made the decision to sell your restaurant, but you’re not sure how to go about it. Preparing for the sale of your restaurant is made up of a variety of tasks, and the more careful you are, the quicker and more successful your sale will be.

Evaluating the Worth of Your Restaurant

When evaluating the worth of your restaurant, take the following into account:

1) Physical assets: Do some research about new and second-hand prices of restaurant equipment and come up with realistic values of what you own.

2) Financials: Buyers want to see bank statements and profit and loss accounts, so undertake an in-depth check to see how your business is doing. For rented premises, a cost-effective lease that has a good time to run is usually appealing to potential buyers.

3) Location: If your restaurant is situated where there is lots of foot traffic made up of potential customers, it’s likely that your business will be worth more than if it’s tucked away in a quiet corner of a suburb.

4) Presence: A restaurant that has furnishings and equipment that have been well maintained makes a much better first impression, so take this into account when deciding on the worth of your restaurant. An online presence on social media platforms and an established website are also factors to consider.

5) Management and staff: Are the existing management and staff willing to stay on with the new owner? Taking over an up-and-running restaurant is easier than one where the new owner has to work long hours to keep the outlet going.

Related: How to Make Your Restaurant Stand Out

Preparing to Sell

A restaurant, like any small business, is not sold overnight. Be prepared to wait around three to six months or more before your sale is finally through.

Once you know that you have a genuine buyer (and not someone who is curious), you’ll need to reveal all your current and future financial liabilities.

Have a seller’s disclosure statement prepared that catalogues all the physical assets included in the sale, the terms of the current lease as well as details about licences and permits. This statement needs to be well presented with no typographical errors or grammar and spelling mistakes.

Gather together financial statements, including bank statements, profit and loss accounts (preferably audited), list of debtors, stock inventory, forecasts about the future of the business and tax records that go back at least three years if possible. It’s very important that all these records are accurate to avoid potential disputes.

A good guide for the value of the business is to multiply your annual income after essential expenses by between 1.5 and 3 depending upon the location and future prospects of the business.

Put out feelers to find who may be interested in buying your restaurant. It’s best to keep this information confidential, so choose your method carefully; often using your existing contacts such as your accountant, lawyer or real estate agent is a good way to start.

Thorough preparation is necessary when you’re selling your restaurant. Evaluating the worth of your business is the first step, followed by ensuring that all your financials and records are up to date and accurate. Taking your time over these stages means your chances of a successful sale are much higher.

Now it’s your turn. How would you evaluate your restaurant’s worth? Share with us below.

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