How best to liquidate a food service establishment is a matter of debate. Some sources say to price an establishment low so it will move quickly, while others say to price it competitively and wait. There are several ways to sell food service establishments, but some strategies aren’t a matter opinion. If a seller doesn’t use them, the chances of an establishment selling quickly for a fair price are slim. Below are eight essential strategies for selling your restaurant.
How to sell a restaurantin eight steps
Try to sell during a period of good business. Sometimes this isn’t an option. But if you aren’t in a hurry to sell, waiting until your eatery has at least two years of good business behind it is ideal. While declining restaurants sell just the same as robust ones, a profitable eatery can generate more interest and draw a higher sale price.
Fix all maintenance issues. From leaky faucets to crumbling tuck-pointing, almost every eatery has a few maintenance issues to fix. Fixing these issues prior to selling has two benefits: it shows that an establishment won’t require further investment, and it keeps buyers from wondering if there are hidden maintenance issues. Considering its effect on buyer confidence, fixing maintenance issues is well worth the price.
Perform small property improvements. If your restaurant’s property could use some care after years of neglect, make an investment in its curb appeal. Inexpensive measures such as fixing cracked sidewalks, planting new flowers and shrubs, replacing cracked windows, and laying mulch will help your property make a good first impression.
Make equipment leases transferable. If you lease kitchen and bar equipment, making the leases transferable offers a buyer the convenience of keeping your restaurant’s present equipment.
Have a business valuation performed. Performed by a business valuator, a business valuation assesses your restaurant’s fair market value (FMV) based on several factors, including: its real estate value, its present revenue, its future revenue potential, and its customer base. Your restaurant’s FMV is critical to setting a fair sale price.
Draw up a financial disclosure statement. Presenting a financial disclosure statement to potential buyers upfront will speed up the sales process. By reviewing the finances of potential buyers upfront, you can avoid dialoguing with ones that don’t have the means, or would not receiving the financing, to make the purchase.
Draw up a purchase agreement. Having a purchase agreement ready will also speed up the sales process. When preparing the agreement, an attorney will insert blanks where specific terms and information will be typed after you find a buyer.
Hire a broker that can sell a restaurant
Hiring a broker that can sell a restaurant usually means hiring a restaurant broker. Without the help of a restaurant broker, most sellers experience the disadvantages of not having nationwide realty contacts, strategic knowledge about real estate listings, or professional negotiating power with other realtors. Although hiring a broker will result in a broker’s fee, not hiring one could be even costlier in the long run.