Think it's easy to sell a restaurant? Think again. Though you hear the occasional story of a business selling in days for full price, the reality is that it takes work on the part of both the seller and the restaurant broker to make a deal happen.
Want to help your Restaurant Broker Sell Quickly? Here are Five Things You Can Do:
1) Provide books and records that are clear, accountable, accurate and verifiable. If you plan to sell on a cash flow basis, expect the buyer to ask good questions and hire a CPA to assist in due diligence. Your great personality and winning menu won't cut it with those guys; it's all about the numbers. Your restaurant broker also needs good data to do a valuation on the restaurant and at the right price, businesses sell.
2) Clean Your Restaurant! You wouldn't list your house for sale without a spruce up that might include cleaning, patching holes in the sheetrock or maybe hiring a stager. Restaurants don't have to be remodeled, but they should be clean. Look up and down when evaluating your restaurant. Ceiling tiles with water stains from a leak fixed two years ago or lint on the air conditioning vent signals an owner that is not on top of things. Don't let something simple that can be solved with one or two new tiles and a good dusting keep you from getting offers.
3) Evaluate your curb appeal. Don't limit your review to the front of the house. Look outside. Hire someone to wash the windows and check out the patio space. Take a good look at the business through someone else's eyes before it goes on the market.
4) Check online. The first thing a buyer will do is "google" your restaurant and check your online reviews. What are your customers saying? If you have bad reviews, either challenge them or bury them with good ones and get your clients supporting you online.
5) Offer Seller Financing. The challenges of enough capital to purchase is a consequence of the tough lending environment over the last few years. Consider some level of owner financing to improve your chances of selling.
Take care of these five items and a strong restaurant broker can help you sell your restaurant quickly and closer to your asking price.
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Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.
If you’ve ever had heated seats in your car, you know the enjoyment you can have on a cold wintry day when you get in, push a button and feel the seat become toasty. Well, stepping up from a range or counter top oven to a convection oven has that same effect! That toasty circulating heated air changes the thermal characteristics of the cooking process allowing for more products to be cooked at one time.
A full sized standard convection oven has typical interior dimensions of 29″ x 28″ x 20″ coming with 5 oven racks. A half sized convection oven has a typical interior cavity of 15″ x 21″ x 20″ and also comes standard with 5 oven racks.
If you are producing less then 100 meals per day, a half sized unit should be considered. If you are preparing up to 400 meals per day, you should consider a full size oven. If you are preparing up to 750 meals per day, consider two full size ovens. If you’re producing up to 1000 meals per day, consider three full size ovens. For all you heavy hitters producing 1,000 plus meals, you should consider a roll-in rack convection oven.
Another way to determine your needs is the sizing of the product. A standard convection oven holds five full size sheet pans. When you calculate the area of your daily needs, you can determine the amount of racks you need. Be careful when cooking, as some items could be destroyed in a convection oven. Some desserts are fragile like souffles and some merengue’s.
If you have items that require moisture, you could dedicate one rack with a pan of water. If you require controlled moisture, think about stepping up to a Combi oven which could be a better choice.
If your calculations indicate the need for more pan capacity, some manufacturers offer additional oven racks as an option. This might save you the cost of an additional oven. Full size ovens will hold up to 11 full size sheet pans and half size ovens up to 9 half size sheet pans.
If your preparation schedules require a product to be held prior to serving, you may want to consider a cook and hold feature offered by some manufacturers. If considering a cook and hold feature, be sure that you are well briefed on the health and safety requirements for holding food.
If your oven will be in close proximity to a fryer, char broiler, or other piece of equipment producing grease laden vapors, you should specify stainless steel sides and top for easier cleaning. While on the subject of cleaning, FSIL recommends using quick disconnects on all gas ovens and utilizing casters wherever appropriate to facilitate the cleaning of oven backs, the wall behind the oven, and the floor.
If the products you are preparing do not create grease laden vapors and if you are specifying an electric oven, check local codes for hood and fire system requirements. This situation is most applicable where you can show that your oven will be strictly used for cook and hold preparations. If your oven has the potential for temperature setting higher than those used in cook and hold ovens, you might find that the code interpretation is that you could use the oven for preparing products that create grease laden vapors and therefore be required to protect the oven with an approved hood and fire protection system.
Convection ovens can be as simple or as complicated as yo wish. Be sure that your installation procedures match the options and features that you have specified. These ovens also tend to be large, awkward, and heavy. Be sure you have a suitable support system. We recommend using the legs provided by the manufacturer if you are using an upright model or using a reinforced stand with casters for countertop models.
If a hood is required, be sure you have the space to install it. Be sure that you have an adequate supply of water and a drain. Remember, if you choose a gas model, electric will still be required.
Because of its size and weight, think about how you will get your new convection oven into your building and to its final location. Are the doors wide and /or high enough? Are there any steps to go up? Down? Equally important, have you made arrangements for the hookup of your convection oven? Are the locations immediately adjacent to a power source?
As with all pieces of equipment, thoroughly check for damages or shortages when delivered. Be sure any damage is noted on the freight bill before you sign it. Common practice dictates that the consignee file any claims for damage or shortage.
Take the time to read the manual that comes with your convection oven and to complete and return the warranty cards to the manufacturer. You may save yourself some time and aggravation later by completing these very simple steps.
It is recommended to request a start up demo by the manufacturer’s representative. Have questions prepared for the demo and have any potential operators or maintenance personnel present.
Be sure to wash the inside daily with a mild soap and rise well. Keep slides clean and free of build up. If you moisturize products, be sure to clean the interior with a commercial deliver every so often to maintain the best possible heat transfer, thus maximizing your energy dollars.
This article was authored by Richard Gorowitz, Sales Manager at
Atlanta Fixture and Sales Company.
Atlanta Fixture has been servicing Atlanta and the Southeastern United States for over 70 years. They are industry leaders in the distribution of foodservice supply products. ___________________________________________________________________________________________________________________________________________________________________________________________
Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.
Robert Wagner, CPA has released his quarterly report on Atlanta restaurant sales and the news is good once again. His survey shows that same-store sales increased 6.8% over the same time period measured in 2011. 
The NetFinancials survey of 79 independent Atlanta restaurants has been compiling comparative data for five straight quarters and the trends continue to improve. Last year this time, Wagner reported that Q1 2011 sales were positive but at a lower rate, increasing 5.3% compared to this year’s 6.8% gain.
As restaurant brokers, we are constantly sifting through news and information from multiple sources including food and alcohol distributors, equipment suppliers, along with restaurant sellers and owners. We find the NetFinancials data to be right on target with the feedback we are receiving. Our clients tell these Atlanta restaurant brokers that sales are trending upward especially in the fast-casual and casual segments.
One of the most powerful call outs from the survey is the percentage of restaurants reporting gains. As seasoned restaurant brokers, we see this as the strongest overall indicator that the market is thriving. Last year Wagner states that less than one in five (19%) of the restaurants surveyed for first quarter had increases. This year, in an amazing change of events, 81% or more than 8 out of 10 says they are trending in positive territory. That means the tide is rising for all operators and signals overall growth in the market.
What do restaurant owners attribute the growth to? Wagner states, “Restaurateurs tell us there are three reasons for the impressive Q1 sales gains: customer counts were up, check averages were up and more businesses and groups were dining out.”
He also says that warmer early weather is prompting restaurants to open their patios and capitalize on customers. We have heard the same thing from many of our operators with outdoor spaces on a wait as early as February and March with unusually warm temperatures.
May is a huge month for the industry with both Cinco de Mayo and Mother’s day in the mix. With warm weather forecast for both, clients are looking for record results this month.
Robert Wagner, CPA is president of NetFinancials, Inc. which provides a full range of tax and accounting services for restaurant companies. Email: bob.wagner@netfinancials.com. www.netfinancials.com Direct: 404-874-7002
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Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.
Some restaurant pundits predicted that growlers might be a short lived trend but the restaurant brokers at We Sell Restaurants are telling you Growlers are here to stay. In case you’ve been living in a cave and haven’t heard, ‘growlers” are refillable glass containers (usually thirty-two or sixty-four ounces) you take to an establishment (now being commonly called the same thing as the container or “Growlers”) to refill with fresh draft beer. This is not just for the extreme beer lover; this is a trend several years in the making that’s moving mainstream.
Growlers are now established within the metr
o Atlanta area everywhere from downtown (Hop City Craft Beer & Wine on Marietta Street, Ale Yeah in Decatur) to the suburbs (Marietta’s Moondog Growlers and Beer Growler in Avondale Estates). Independents aren’t the only one getting into the act. There’s a growler station open in the Whole Foods store on Ponce de Leon Avenue and Merchant’s Walk in east Cobb with more to come.
If you need proof of exactly how mainstream the trend has become, consider that Sunoco Gas Stations started offering a beer exchange program in July 2011 in several dozen locations and expanded rapidly in New York State. They announced plans yesterday to increase their “growler to go” program to the state of South Carolina where you will soon be able to fill up your gas tank and refill your growler in the same stop.
Atlanta metro municipalities are working quickly to amend their liquor license laws since some ordinances on the books never contemplated this form of alcohol delivery. Dunwoody and Alpharetta separately undertook a review in the last 30 days of their laws to accommodate the trend.
What does all this mean to restaurant buyers? It depends. Putting your new Atlanta restaurant next to a growler might not be a smart strategy if the customers drop in and then go home with their beer. On the other hand, is there an opportunity to pair a local market and food to go with the idea? What about dining plus Growler combined? As restaurant brokers we are always intrigued to see the creativity associated with the industry. One thing is sure; we are not looking at a short term trend. So get your Growl on Atlanta and let us know what you think.
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Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.
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Here are the Top 10 Restaurants for Sale in Atlanta in April 2012. We measure the top 10 by the number of confidentiality agreements viewed, buyer inquiries and website views.
Pricing was key in making the April 2012 list. Another big stand out was location. Unlike those that are sandwiched between other businesses in a shopping center, a free standing space commands strong attention. Almost half the top restaurants for sale in Atlanta last month were free standing buildings.
The most popular listing (3673) in the market is a fully equipped restaurant with a low monthly rent and zero cost to take over the assets. Why didn't it sell? It did. Multiple times. This restaurant had several offers but the landlord is being very choosy about who he wants in the space so it remains available until we get the perfect fit.
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Listing 3673
Southwest Atlanta Restaurant For Sale is Fully Equipped with Great Rent
Lease: 5 yr term + 5 yr option
Monthly Rent: $1550
Inside Sq. Ft. 1250
Outside Sq. Ft.
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Price:$0
City:Atlanta
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The second most popular listing was released in the last week of April. Priced under $50,000, another fully equipped but closed restaurant space. This free standing location in Marietta looks like it's going fast.
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Listing 3713
Former Chicken Wings and Deli Restaurant for Sale. Turn Key Opportunity.
Lease: 3 yr + 3 yr option
Monthly Rent: $2800
Inside Sq. Ft. 2000
Outside Sq. Ft.
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Price:$49,999
City:Marietta
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Another offering under $65,000 and we're in negotiations on this one with a buyer now. Free standing building again.
| Listing ID:3658 |
Share this listing ID: 3658 |
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Marietta Georgia Restaurant for Sale in Cobb County is Priced to Sell
Lease: Expires July 2016 + 5 year option
Monthly Rent: $$4500 all in
Inside Sq. Ft. Approx. 4500 Sq. Ft.
Outside Sq. Ft. Approx. 250 Sq. Ft.
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Price:$64,995
City:Marietta
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This former Starbucks coffee shop location in Dunwoody was a hit with buyers. There's no equipment but the location made this one a stand out.
| Listing ID:3669 |
Share this listing ID: 3669 |
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Coffee Shop for Lease is Former Starbucks Location. Potential Free Rent
Lease: 5 yr term + 5 yr options
Monthly Rent: $4100
Inside Sq. Ft. 1800
Outside Sq. Ft.
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Price:$0
City:Dunwoody
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For the second month in a row, this free standing restaurant that is fully equipped and ready to turn the key and operate made the top ten.
| Listing ID:3675 |
Share this listing ID: 3675 |
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Bar and Restaurant for Sale Sandy Springs - Metro Atlanta - Great Deal!
Lease: 5+5
Monthly Rent: $6,420
Inside Sq. Ft. 5,200
Outside Sq. Ft. 5,200
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Price:$49,995
City:Sandy Springs
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East Cobb seemed to be a popular choice for many of the top ten listings including this one - also fully equipped and under $65,000.
| Listing ID:3621 |
Share this listing ID: 3621 |
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Restaurant for sale in East Cobb. Great Location and Rent.
Lease: expires Sept. 2013 + 3 yr option
Monthly Rent: $3650
Inside Sq. Ft. 2520
Outside Sq. Ft. 300
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Price:$59,999
City:Marietta
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There's no better word in advertising than FREE and that brought this out of the way restaurant (Helen, Georgia) into the top 10.
| Listing ID:3674 |
Share this listing ID: 3674 |
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Georgia Restaurant for Sale Outside Atlanta is FREE to Qualified Tenant
Lease: 5 plus 5 year term
Monthly Rent: $4200
Inside Sq. Ft. 3500
Outside Sq. Ft.
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Price:$0
City:Helen
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Another listing that made the top 10 in both months was this incredible Midtown Deli. This one is already under contract. Another Atlanta broker had this on the market for almost a year and we put it under contract less than two weeks after listing it.
| Listing ID:3700 |
Share this listing ID: 3700 |
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Midtown Atlanta Deli for Sale in Office Building Earns Six Figures
Lease: 5 plus 5
Monthly Rent: $4200
Inside Sq. Ft. 1612
Outside Sq. Ft.
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Price:$275,000
City:Atlanta
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Six figure earnings are always popular and this brand new listing in the month of April was no exception. Great interest already on this restaurant.
| Listing ID:3701 |
Share this listing ID: 3701 |
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Fayette County Georgia Restaurant and Bar for Sale Earns 6 Figures
Lease: Month-to-Month
Monthly Rent: $4900
Inside Sq. Ft. 3600
Outside Sq. Ft.
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Price:$225,000
City:Tyrone
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When we say franchise, our buyers say, "which one?" All are popular and the latest, this cookie franchise for sale was no exception. It rounded out the ten most popular listings in Atlanta for the month of April.
| Listing ID:3712 |
Share this listing ID: 3712 |
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Franchise Cookie Business for Sale Features Gourmet Gift Baskets
Lease: 2014 plus 5 year option
Monthly Rent: $2131.24
Inside Sq. Ft. 1375
Outside Sq. Ft.
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Price:$89,995
City:Marietta
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If you're in the market to buy a restaurant, check out these listings and dozens more online at our website. We are getting new listings every single week and the ones we have on hand are moving quickly. What are you waiting for? Call the restaurant brokers at We Sell Restaurants for information on this and other businesses coming soon.
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Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.
Here are ten things a restaurant buyer should never do if they want to be successful in buying a restaurant.
Violate Confidentiality.
First on the list of "nevers" is violating confidentiality. The agreements signed by buyers are legally enforceable and there are many cases of legal action taken by the seller for damaging the business by a restaurant buyer.
“Stalk” the restaurant
Some buyers will insist they never spoke directly to anyone at the business. They are very obvious, however by parking themselves in the restaurant for days and hours on end with minimal orders. It is pretty easy for a savvy waitress or bartender to figure out what’s going on.
Talk to employees
This is a violation of a restaurant buyer confidentiality agreement. Servers, bartenders and sellers are smart and know when someone’s just “asking” about business that they have an ulterior motive and it’s usually that the restaurant is on the market.
Assume no one else is looking
We often work with restaurant buyers that we call multiple times for feedback. They promise over and over again to follow up to write the offer. When they finally surface weeks after a showing, they seem surprised to learn the business is already under contract. If you are a serious restaurant buyer, get the opportunity under contract and then do your due diligence, not the reverse.
Discuss the opportunity inside the restaurant
Often a restaurant buyer will visit the business with his wife or partner. That’s encouraged and expected. Don’t make the mistake of discussing the opportunity or pulling out any paperwork when servers and bus boys are all over the dining room floor.
Use unqualified “experts” to help
A restaurant buyer should definitely involve his or her attorney or CPA. Make sure, however, that they know what they are doing. A CPA unfamiliar with restaurants or an attorney that primarily handles real estate can kill good deals because they don’t understand the industry.
Negotiate directly with the restaurant seller without the broker being present
There is no advantage to a restaurant buyer by going directly to the seller and in most instances, it can backfire. An expert restaurant broker preserves the deal by keeping up with all agreements and getting them in writing so deals don’t fail at the final hour.
Assume the rent can be reduced and factor that into the offer
Many restaurant buyers go into the deal thinking they can get the rent reduced. That’s flawed thinking. Restaurants are priced based on earnings calculated on current rent and any savings would be reflected as a price increase. If you’re able to negotiate a deal, that’s a bonus but it shouldn’t be a deal killer.
Assume the seller is desperate
Most sellers have plenty of time to wait for an offer. A restaurant buyer that believes they are desperate will be disappointed with the seller turns down their low ball offer and refuses any future negotiation.
Use a residential real estate agent instead of a restaurant broker
A restaurant broker brings a very specialized knowledge base and skill set to the table. A restaurant buyer that uses a residential agent to broker a restaurant transaction is choosing a dangerous path.
Pay attention to these ten things a restaurant buyer should never do and you’ll be much more successful in your search to buy a restaurant
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Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.
An article in today's Atlanta Journal Constitution confirms what restaurant brokers at We Sell Restaurants have been saying for a while. Landlords aren't desperate. The latest numbers reveal that Atlanta's vacancy rate is improving faster than other parts of the
country. While the rest of the nation had a vacancy rate that improved by .1 percent (a decrease) in the last three months, Atlanta's fell at three times that rate or was down .3 percent.
The Atlanta Journal Constitution published the article bearing these statitics today from Reis, Inc. a commercial real estate analysis firm. The average national vacancy rate is 10.9% versus Atlanta's 14.1% but for our region, the rate been on decline for two straight quarters.
That's two pieces of good news for Atlanta. A rate falling faster and six months of a positive trend. Our restaurant brokers and have experienced a resurgence in activity around restaurants for lease over the past six months. We predicted in fourth quarter of 2011 that the best deals in Atlanta had peaked. That's in line with this research.
This doesn't mean you can't still get a good deal on a restaurant for lease. There are plenty of spaces available. It is not realistic however, to believe you can walk into prime areas and take over a prior owner's furniture, fixtures and equipment for free AND get a great lease rate.
Landlords are also asking for more from prospective tenant. It's a good idea to be prepared up front with a current credit report, personal financial statement, business plan and a menu.
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Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.
Crowdfunding – we talked about it on our blog months ago and now thanks to the JOBS Act just passed, it’s closer to being a reality for those buying a restaurant and looking for financing.
The Jumpstart Our B
usiness Startup or the JOBS Act was signed into law by the President on April 5. The message had bipartisan support with a 73-26 Senate vote and a 380-41 House vote. The purpose of the JOBS Act is to jumpstart a whole new way to loan money – from thousands of investors at a time – through Crowdfunding.
It’s exciting because that means someone buying a restaurant has an entire new way to borrow money. Here’s how it works. You post your cash needs online through a web platform. Then any interested party (the online “crowd”) looks at your idea and decides whether to invest. It’s like pitching your idea of buying a restaurant to hundreds of thousands of angel investors at the same time and having them instantly transfer money to your bank account.
One expert in the arena of crowdfunding (Rory Eakin, founder of CircleUp, a crowdfunding platform) was quoted in Forbes Magazine saying, “Currently, less than one percent of U.S. small businesses receive Angel investments. By opening up restrictions around general solicitation and introducing crowdfunding…these investments create up to six jobs per investment.”
There will doubtless be an entire industry grown around this idea after all, there will be web platforms to develop, marketing pitches to perform and a lot more scrutiny if you’re looking for money. But all of that is good news for those looking to buy a business and get a loan.
The bill now moves to implementation with the Securities and Exchange Commission getting 270 days to come up with regulations around the concept. It’s a safe bet that there will be a LOT of safeguards to protect investors but we’re certain that restaurant investors will be lining up to take a look at the opportunities to help you buy a restaurant with this new form of loans.
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Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.
Our last blog posting on buying a restaurant - Atlanta or any major market focused on the questions you should ask yourself before taking the plunge. The last five questions in our ten part survey ask you to consider whether you should move forward on buying a restaurant or save it fo
r another time in your life.
Question 6: I prefer a restaurant that operates during these hours:
- Open any hours
- Open until early Evening (11pm)
- Open Late Night/Early morning hours (2am)
- Open for breakfast and lunch only
This question affects your future lifestyle and time with your family. It's a good one to discuss with other family members before you begin looking at sports bars open until 2am each night.
Question 7: The most desirable alcohol ratio for me is:
- Low to No Alcohol/High Food
- Mid Alcohol/Mid Food
- High Alcohol (bar levels)/Low Food
- No Alcohol
The highest profit margin in a restaurant is made on alcohol sales so the alcohol ratio will drive the net profit on a business up or down depending on how much is served. Local and state restrictions on the type of alcohol licenses generally dictate a ratio. The answer to this question is NO alcohol if you have a felony conviction in your background as you will not qualify for a liquor license in most states.
Question 8: My motivating factor to buy a restaurant is
- Investment/Money making potential
- Restaurant Experienced/now I want my own place
- Seems like a good idea
- I'm not sure
This is a good place to try and take a break and articulate to yourself or another person why you are motivated to buy a restaurant. The answer may determine whether you continue on this quest or decide on another type of business.
Question 9: When it comes to finding a restaurant, these are my criteria from my current home
This question is incredibly important in major metro areas like buying a restaurant in Atlanta. Decide up front how far you will travel or if you will move to acquire the right restaurant. Changing your children's school is a family decision. The right business in the wrong location may not be an option for you.
a) I am willing to travel _________ miles from my current home to my business
b) I am willing to move _________ miles from my current home to my business
Question 10: My financing plan is:
- I will not require financing or capital
- I have loans or investors secured up to __________
- I need the owner to finance ____% or $______ but I can find $__________ to put down
The last question to ask yourself before you go shopping is what you can afford. You wouldn't shop for a house without a pre-approval or a budget and you shouldn't start shopping for a restaurant without the same. Who's paying for the business? Will you need financing? Are you looking for owner financing?
If you seriously consider all ten of the questions covered in this and our last blog posting on questions to ask before buying a restaurant, you will be equipped to meet sellers and brokers with a clear strategy for your own success.
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Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.
Restaurant buyers often begin their search before they qualify what they are looking for. We've developed a ten step questionnaire to help you define what you want and more importantly, what fits your lifestyle before you go on the search for the perfect restaurant. This is vital to the buying process and a step that most buyers overlook.
This article will cover the first five questions and next week's post will cover the balance of our checklist. If you're in the market for an Atlanta restaurant for sale, stop and answer these questions before you do anything else.
Question 1: I am interested in:
a) An operating restaurant – profitable
b) A turnaround situation
c) A closed restaurant
d) Franchise Restaurants
e) New Space
The answer to this question lies with whether you need an immediate income (in which case only the first answer is an option for you) or whether you have the capital (and risk tolerance) to invest and building earnings over time. Consider that it will take between 18-24 months for a GOOD operator to perform a turn around or begin seeing profit from a start up so plan accordingly.
Question 2: I am interested in
a) Restaurant and Real Estate
b) Restaurant Only – with Lease
c) Real Estate Only – I’ll convert
The answer to this question lies within your financial situation. Landlords will require both good credit and a personal guarantee on the lease in most cases. If you plan to lease and don’t have both, you may want to consider something with real estate so you can leverage the purchase of the real property with a lender. If you’re purchasing real estate to convert, it’s going to take a lot of capital
Question 3: I am interested in
- Upscale/Fine Dining Restaurant
- Bar-B-Que Restaurant
- Pizza Restaurant
- Italian Restaurant
- Sports Bar Restaurant
- Asian Restaurant
- Deli/Sandwich Restaurant
- Franchise Restaurant
- Take Out/Delivery Only Restaurant
The answer to this question may lie with your background or experience. You may also have personal values or other criteria which would stop you from looking at certain concepts. Someone whose religious believes preclude alcohol should rule out sports bars.
Question 4: I am interested in
1) Earnings of under $50,000
2) Earnings of between $50,000 and $100,000
3) Earnings above $100,000
The higher the net income of a restaurant (which typically sells for 2- 2.5 times earnings, the higher the purchase price. What you can afford will drive the answer to the following question.
Question 5 I do have or I do not have Restaurant Experience
The answer to the following question is straightforward. It may be very relevant to an owner that may finance a portion of the purchase or landlords and lenders who may turn away candidates without background and experience.
Ask yourself and answer these five questions before you begin to
buy a restaurant. The answers will equip you to meet sellers and brokers with a clear strategy for your own success. Our next blog posting will cover the rest of this list.
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Eric and Robin Gagnon are industry experts and authors of Appetite for Acquisition. Their book, full of advice and tips for Buying a Restaurant is the winner of the 2012 Small Business Book Award. It has been described in the business as "the definitive guide for anyone looking to enter the restaurant industry!" Readers will finish this book knowing how to acquire a restaurant in a way that is less painful, more profitable, and delivers a better return on their investment.