Setting the proper value

  • Tricky, to say the least. We can use a number of formulas to include multiple of earnings, percentage of sales, replacement value but at the end of the day it generally boils down to “what the traffic will bear”.

How Lease Terms affect the sales

  • The lease terms are significant factor in making a final decision to buy or not to buy. The main lease terms are the rent/cam and the term. If they are out of whack it is really difficult to sell. The current concept may be paying “too much rent”. More than likely the “too much rent” relates back to the sales the seller is doing in their business. If the business is underperforming the rent/cam are “too high”. But a new concept the rent more than likely is satisfactory.

Things to prepare

  • 3 years of operating statements both IRS version and in-house version which may be from QuickBook’s.
  • Equipment and furniture list
  • The lease with any addendums
  • Floor Plan. It is better to have a full set of drawings for buyer’s general contractor to be able to review. There is a longer list with more minutia in it but this list covers the big items.

Things to improve for maximum value

  • I’m not sure there is much one can do but just like any presentation you must put your best food forward. A general cleaning from top to bottom is imperative so that the space front and back are “spotless”.
  • All items that need repairing should be repaired.
  • Restrooms should be spotless and be odorless.
  • Things like worn out booths, carpets, etc. probably should not be repaired because the buyer is going to do that (the buyer will more than likely ask for a discount).

Why an experienced agent matters

  • Please use an agent who has been successful in selling restaurant businesses. A cautionary word is that a newer agent can not navigate their way through these waters to maximize your selling price and terms of the sale. There is a ton of negotiation back and forth to consummate any deal getting done and the agent has had to have done this many, many times for you to realize your sale objectives.

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