Selling your restaurant business is a huge decision and isn’t something you can rush. Even if your restaurant is incredibly successful or in a great location and there are numerous interested buyers, the selling process isn’t as simple as you may think.
In an ideal world, you want to start the planning at least a year before, as it often takes a few months to make the sale. In order to prepare your business to be put on the market and sold at a price you’re satisfied with, you may want to seek the services of a professional.
Today we look at what to consider when selling your restaurant business to help the process run as smoothly as possible and help you get the best result.
Is selling my restaurant the right thing to do?
Owning a successful restaurant can be incredibly rewarding, as you’ll enjoy the creative freedom to develop your business however you like. But the job can be demanding and take up much of your time. Working late into the night and at weekends isn’t uncommon and the high amount of responsibility can result in high levels of stress.
So maybe you want a lifestyle change, or a career that is less straining on your personal life? You need to assess whether you’re still truly dedicated to the success and growth of your business. If not, your best bet is to sell.
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Getting the restaurant ready to be put on the market
If your restaurant hasn’t been doing as well in recent years and is not reaching its full potential, you will want to think of ways to make it more profitable before you sell. This way, when you present prospective buyers with financial documents such as profit and loss statements, it will look more appealing to them.
It may seem daunting trying to increase the value of your restaurant business without spending heaps of cash. But there are a couple of simple tricks that can make a huge difference to the price that your restaurant sells for.
Value your restaurant
When you do come to valuing your restaurant, you need to be realistic. After spending years of putting your heart and soul into the growth of your business, there’s a chance that you’re going to be emotionally attached to the restaurant. It is important to decide a fair price if you want to receive interest from buyers, so getting the help of a professional will help you get a more objective view of the true value.
This will largely be based on your assets and goodwill (the reputation of the business that is considered a quantifiable asset), as well as the number of diners you attract each night (known as covers), dating back several years. This can be recorded easily on an established POS system.
Ways to increase the value of your restaurant
Focus on how presentable and clean your business is. It doesn’t take too much time or resources to make sure your restaurant’s hygiene is immaculate. A buyer will soon be put off by an unclean space or one with a vermin infestation.
Documents you need to prepare for the buyer
Below we have listed the documents you will need to compile to present to the buyer at some point during the sale.
Which documents do I need to gather?
• Health inspection records
• Lease agreement
• Architectural plans
• Financial statements and any important financial documents
• List of assets. This could include tangible assets like kitchen equipment and intangible assets like logos, websites and trademarks.
• Details of employees including right to work documentation for non-UK citizens
Importance of Well-organised Paperwork
By getting these in order and up to date, you’ll get a clearer picture of what your business looks like from the buyer’s perspective. It should also highlight if there are any areas not covered that you need to deal with. Check that licenses and assessments are up to date. This might include alcohol, music, fire safety and health inspection records.
Potential buyers will most likely want to see financial records for the past year, so ensure to organise these in an orderly fashion. Included in this are bank statements, tax documents, profit and loss statements, cash transactions and inventory of equipment and assets. Presenting documents flawlessly will give a good impression to potential buyers. This is also why it is advised to start preparing a year in advance, as gathering them can take a while alongside running your business full-time.
You need to disclose liabilities, including debts, repair costs etc. If you don’t sell with absolute transparency, there is a chance you could face court charges.
It’s likely that the new business owner will want to keep your current staff. If they do, make a schedule of each employee’s individual wages, working hours, holiday entitlement and how long they’ve been with the company for. For non-UK citizens you may need to provide right to work documents, so make sure you’ve got these in order.
How should I market my restaurant business?
There is an abundance of marketing platforms you can use when selling your restaurant business. You could use the local newspaper, social media, online advertisements, word-of-mouth, or a business broker (someone who helps with the buying and selling of a business).
Make sure you emphasise the benefits of buying your restaurant specifically. For example, if it’s close to public transport, in a heavily populated area, has a stage for live music, an outdoor seated area, brand recognition, fabulous view etc.
Who shall I market my business to?
It isn’t always previous restaurant owners or entrepreneurs from the hospitality industry looking to buy a restaurant for sale. Sometimes investors with no experience in the industry look to buy restaurant businesses if they see their potential. Therefore, be sure to get news of your restaurant sale out to a diverse audience, as you never know who could be interested.
Becky Martin, Point Franchise ©