What the buyer is paying for
Restaurants are valued on the cash left after one working owner is paid, then a multiple. Buyers look hard at food and labor cost, because small shifts in either wipe out the profit.
They also want a full year of sales, so seasonal swings from tourism and school calendars show up in the numbers.
The lease decides the deal
A restaurant without a long, assignable lease is hard to sell. Lenders and buyers want years remaining, a clear renewal rate and landlord approval of the transfer.
Month to month occupancy is a red flag. So is cheap rent that sits far below market, since buyers price the business at market rent.
Who makes the food
Buyers ask whether the cook is the owner, a relative or a trained crew. Recipes and prep steps written down are worth real money, because they let a new owner serve the same plate.
Staff who stay through the sale keep customers coming back. Plan how and when you tell them.
Licenses and permits
Food and alcohol permits generally do not move on their own with a sale, so the buyer applies for what applies to them. The agencies set the steps, and your attorney can confirm which ones fit your location.
Books that match the register
Cash heavy businesses draw extra scrutiny. If sales are underreported, buyers cannot pay for income they cannot prove, and lenders will not finance it.
Reconcile the register to the bank every month so the history is clean.
Our guide to how buyers read your books shows how a restaurant's numbers are recast.
Getting ready
Keep the books current and reconcile the register to the bank. Read about lease approval, then request a price range.
Who Writes the Check
- Multi unit restaurant operatorWants another location and a proven menu it can add to its kitchen and purchasing.
- First time owner with SBA financingOften a manager or chef who needs clean books and a lease the lender will accept.
- Local investor who already owns real estateLikes a restaurant that pairs with a building it controls and a steady tenant.