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Advice on selling a restaurant

post #1 of 5
Thread Starter 

Hi everyone!! I'm trying to get some leads on selling a restaurant. My sister and her husband have created a very successful restaurant business. They have done it for 18 years and are dog tired. I'm trying to help them sell it. I know it's probably against the rules to mention any particulars so I won't. I would appreciate any advice, leads. I have no experience in the bizz:o)

TIA,

Jay

post #2 of 5
1)Get a realtor. A broker is not a realtor, a broker wil look onthe mls listings for a suitable business and then split the commission with the realtor

2) Never, ever advertise on craigslist or social media. I'll explain this in a minute

3) Lease is paramount to the sale. No one will buy a place with one year left on the lease, and then have to negotiate a new lease with the landlord

4) Sales figures determine the sale price. You have to back up your sale price with solid figures, no one wants to buy a job. If you can't prove your advertised sales figures, you will get lowballed like crazy.

IF you advertise on social media, I can guarantee several things happening. The first is suppliers will ask for c.o.d with their deliveries. The second is that staff will leave. The third is that customers will avoid coming. No one wants to be aboard a sinking ship, and any business for sale is a sinking ship.
...."This whole reality thing is really not what I expected it would be"......
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...."This whole reality thing is really not what I expected it would be"......
Reply
post #3 of 5
Thread Starter 
Thanks for the feedback food pump! They own the building. I am looking at a broker that specializes in selling restaurants. The reason why is for exposure.
post #4 of 5

Owning the building is great, but a broker can't put his stuff on the realtor's listings, nor will the broker look around the neighborhood to see what similar buildings have sold for, or see what kind of zoning the property is good for.  If the owners want to keep the property and just lease the business out, you will need a good lawyer to draft out all the details.  You should have this before you put the place on the market.

 

Remember what I said about exposure, it doesn't good any good for an operating business to let suppliers and customers and staff know it's for sale.  Very few, if any brokers will have a confidential agreement with any potential buyers/lookers.  If you're serious about selling, you need this.  Say I'm your competition, I wanna know what you're pulling in a month, how much you're paying for rent/mortgage, and how much you're paying you staff.  All this information is "in the books" which any prospective buyer will insist on seeing before they make an offer, and as your competition, I'll just pretend I'm interested in buying so's I can get a peek.

 

In my city, Vancouver, you have to figure on waiting 2 yrs for an offer that's 80% or more of your asking price.  If you want to sell fast, you'll be getting a bunch of low ball offers that will make you want to put your fist through the prospective buyer's face....

...."This whole reality thing is really not what I expected it would be"......
Reply
...."This whole reality thing is really not what I expected it would be"......
Reply
post #5 of 5

After selling our restaurant (land, building and business) my advice is that you let no one look at the books until they can prove they have the ability to buy. Too many prospective "buyers" show up full of grand schemes.

I will disagree with food pump on people's reactions if the sale is announced.

     When we decided to go public with our intent to sell, the local paper ran a brief article in their food section because we wanted to get the word out. Previous efforts with real estate people went nowhere for years. They claimed to have listed the business but we never got any responses.

     Once it was announced in the paper, more than a few people showed up with great plans but no money.  No purveyors ever called to change our accounts or ask for any change in payments. This may have been the result of 23 years of paying our bills in full but perhaps not.

Business wasn't affected in the least. People continued to come as they always had. There were occasional inquiries from long time customers about the status of a potential sale but more for conversations sake. 

None of our long term staff left and we continued to hire new part time employees with the full disclosure that the place was for sale. Every member of the staff had a new job before leaving but all stayed until the last day. 

     We showed the books to one or two people before realizing they were simply fantasizing and did not have the resources. We stated in the initial announcement quite plainly that we would not hold any paper. Several people tried to ignore that. 

     We finally sold at the price we wanted without a broker. Just a lawyer. Once the sale had gone through and it was announced that we would be open for one more week, the place was a mad house every day with people coming in for just one more meal. 

So your experience may differ but if you have a steady, established business, I don't see why announcing you want to sell would be a bad thing. It certainly worked well for us. 

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