Selling your restaurant is a complex endevour, and you may have a lot of questions about what to expect. We have compiled some of the most commonly asked questions into this blog to help you understand more about the process from start to finish. Feel free to reach out to me at jim@restaurantrealty.com if you have additional questions or would like to discuss any of my answers in further detail.
Let’s Get your Questions Answered…
How long will it take to sell my restaurant?
Many of my clients want to know how long they should expect to wait to sell their restaurant. The truth is that the length of their wait will vary. However, it usually takes a restaurant seven months on the market to find a buyer. Some restaurants will take even take longer. Having good books and records will speed the process along.
Is this a good time to sell a restaurant?
Around the first of the year, we see an increase in buyer interest in restaurants. But, of course, I have seen restaurants sell year-round. So, if you’re interested in putting your business on the market, there is no need to wait.
What does it mean to have a turnkey restaurant?
A restaurant that is ready to use and that currently exists in a condition that allows for immediate operation is a "turnkey business." The term “turnkey” refers to the concept of turning the key to unlock the doors.
How much taxes will I have to pay when I sell my business?
You will have to pay taxes on the profit you make from selling the business. Theprofit received from the sale of business assets will most likely be taxed at capital gains rates, while the amount you receive under a consulting agreement will be ordinary income.
What is a restaurant asset sale, and how do you price it?
The term asset sale applies to when the business shows no income, is losing money, or the seller can't prove the profits of a cash-driven business. In this case, the restaurant seller will benefit more from an exclusive listing. The listing price is usually a percentage of the gross sales.
How much should I sell my business for?
The majority of businesses will sell for two to three times the seller's discretionary earnings. For example, the selling price will likely be between $600,000 and $400,000 if the annual cash flow is $200,000.
Will using a Restaurant Broker help sell my business faster?
Hiring a restaurant broker to sell your business can significantly reduce the time that your restaurant will be on the market. A qualified restaurant broker will be able to more effectively market your business to the right buyers and manage the sales process until the deal is done.
Are terms a good idea for a restaurant seller to consider?
The time it takes to from listing to sale decreases significantly with reasonable terms. Surveys show that a seller who asks for all cash gets seventy percent of their asking price, while sellers who accept terms can get 100 percent. Forty-five percent of transactions have some form of seller financing.
Should I cut back operations when we get a buyer onboard?
It is vital that performance doesn't suffer at this critical juncture because selling a business can be complex. More offers and a higher selling price can be achieved with the help of a restaurant broker.
Should I list my restaurant confidentiality?
Yes, this is very important in most circumstances. 95 percent of all our listings are confidential.
It is wise to hire a professional business broker regardless of your experience in the restaurant industry?
A business broker has a network of contacts and potential buyers.
Does seller financing help you sell your restaurant faster?
Yes, offering seller financing will help you sell your business more quickly and for the best price. The financials are an essential part of selling a business.
How can a Restaurant Broker help me with the deal?
Once the business listing is ready for sale, a restaurant broker will screen potential buyers to verify their financial strength and business experience. This ensures that you don’t waste time dealing with unqualified leads.
How can I help my Restaurant Broker?
During negotiations, an experienced business broker can be helpful, but you need to do your part as well by continuing to successfully run your business until the sale has been completed. Also offering back of the house tours tends to be very useful in the selling process, so your broker may need your assistance with that aspect as well.
Is it easy to sell a restaurant these days?
Selling a restaurant is more complicated than selling a business in general. That is why it is such a good decision to hire a brokerage professional who has extensive experience in the restaurant industry.
When should you start planning your restaurant sale?
A restaurant owner should begin the selling process at least six months before the sale. It's essential to have a plan when selling a restaurant. You need to tell yourself why you're thinking about selling.
How should you choose a Restaurant Broker?
A good rule of thumb when searching for a business broker is to look for one that has sold restaurant businesses. Successful restaurant brokers have connections to buyers in your industry and understand the nuances of the restaurant industry. The seller, buyer, broker, lender, and government entity are all involved in the process of selling restaurants. It is likely that a business broker's success rate will be higher if they have more resources and relationships.
Feel free to Book a Call with me. Let’s get your questions answered today. We can save you time & Money. I look forward to hearing from you!
