A restaurant owner serious about selling should make every effort to keep their books in order. Your records should consist of clean and accurate profit and loss statements, balance sheets and corresponding tax returns. Having these basic financials is essential and extremely helpful to all parties involved.
An operator who has their books in order will receive an accurate evaluation of the restaurant’s value, and ultimately lead to a better deal in the end.
No one wants to purchase a restaurant that they wouldn’t want to eat at themselves. Maintaining a high-quality business while you position a sale is key to getting the proper value for your business.
Make sure the kitchen and the dining area of your restaurant are clean and in working condition. You don’t want a potential buyer to be turned off because you didn’t properly clean your walk-in fridge or range.
If something is broken, then make sure it is fixed before you show your business. A buyer is not going to purchase a business that requires thousands of dollars in repairs. You don’t need to invest money in expensive upgrades, you just need to ensure that you are conducting basic maintenance.
A restaurant with happy customers is more likely to be sold. While you are positioning your restaurant for a sale, make sure sales do not decline and our customers still enjoy eating there. Managing reviews on the online platforms, Google and Yelp; while also procuring new, 5-star reviews, is important and goes a long way in solidifying the goodwill associated with your restaurant.
A potential buyer can easily gauge the perception of your business and restaurants with negative reviews are not going to be appealing.
If your restaurant has negative online reviews, respond to those customers. This shows you take an interest in the customer experience. Improve on your customer service and encourage happy customers to leave a review online.
In my experience, many restaurant owners overvalue their business, which leads to some pretty hard lessons about the realities of selling a restaurant. Manage your expectations during the selling process by understanding that no restaurant is the same. If you know another owner who sold his restaurant for a certain amount it does not automatically mean you will get the same value.
A great way to manage expectations is to speak with your business broker and review your business in detail, look at market comparisons, trends and overall profits of the business to determine an honest evaluation of your business.
Working with your broker and understanding what the market is truly bearing will make it easier for you to navigate through the difficult process of selling your business.
What is the plan after you sell? Do you need another source of income or are you planning on retiring from the proceeds? What is the future value of the money from the sale and is that enough to get you to where you want to be? These questions are something you should know before you sell a piece of your livelihood, especially if this is your source of income.
What is your exit strategy? Are you going to take the money and start a new venture or set off into the sunset and retire?
I would recommend speaking with your financial advisor and creating a plan that maps out what you plan to do after you sell your business.
Selling your restaurant can be a difficult process, but following these steps will allow you to move forward with a better understanding of what to expect.
Brian Bond is the Principal of Strategic Business Brokers Group a brokerage firm in Scottsdale Arizona. Bryan Vitagliano serves as their leading restaurant broker and oversees all restaurant related transactions. Collectively, they have helped restaurateurs sell their business across Arizona.