Advice for Buying a Restaurant and Selling a Restaurant

Franchise Restaurants Sales Announced -- Restaurant Brokers Report

Posted by Robin Gagnon on May 22, 2017 11:17:02 AM

What's happening the world of franchise restaurant salesThe media reports pouring in show no signs of interest in franchise restaurants slowing down.  If anything, the restaurant brokers see an uptick in activity.  Here's some of the latest deals we've been tracking in the media.

The Hala Guys are heating up on their Middle Eastern cuisine concept and we see deals happening with increasing frequency for this concept.  Franchise Times reported that AJ Ahmad, who grew up in Abu Dhabi, UAE, has opened the first of 15 Arizona The Hala Guys in Tempe. He plans to add three to four stores in the market.

Mexican cuisine remains on the mind of many in the franchise restaurant marketplace.  We're seeing multiple deals announced including:

  • The 10th El Pollo Loco, owned and operated by franchisees Anil Yadav and Atour Eyvazian  of AA Pollo Inc., has opened in Spring, Texas. The 2,960 square foot restaurant is the second on to open in the market.
  • Del Taco signed a multi-unit franchise development agreement with experienced restaurateur Tom Getz.  He plans is to open the first of seven units in the broader Chattanooga area by 2019.  Locations are planned throughout Hamilton and Bradley counties in Tennessee, as well as expansion into several Georgia counties.
  • Five Tacos 4 Life franchises are opening in the Dallas, Texas, area, the first in the region for the fast-casual taco restaurant company.  The development is being led by the former president of CiCi's and Nothing Bundt Cakes, Craig Moore. 
  • This one's not a franchise restaurant opening but it is noteworthy as Atlanta chef, restaurateur, speaker and cookbook author Kevin Gillespie is opened Communion Cantina, a Mexican-inspired beer garden and eatery behind his popular Revival restaurant in Decatur on Cinco de Mayo.  The new store will serve tacos, West Coast, Mexican, domestic and local beers and margaritas. QSR Softening.jpg

What's going on with Smoothies and Juice Bars?  The restaurant brokers see a lot of activity in these concepts led by some stellar results by Smoothie King who is on fire with the highest number of franchisees ever inked for a single month for March of this year.  Here's everything we read about recently for franchise sales of smoothie and juice concepts.

  • Willie Smith, of EON Brands Inc., a former United States Marine, added a second Juice It Up! to his portfolio. This location is in the city of Temecula in Southern California.
  • Smoothie King is stirring up the market as well as the Smoothies.  In the first quarter of 2017 they opened 28 new stores in 15 states and signed 34 franchise and development agreements for 48 new stores.  Their plan for 2017 is an aggressive one with a goal to open 125 new stores in 2017, 25 percent more than last year.  
  • Not to be outdone, Tropical Smoothie Café is also growing.  Craig and Dianne LeMieux, area developers for the Colorado region, are spearheading Tropical Smoothie Cafe's expansion throughout the Centennial State. Cities targeted will be Colorado Springs, Denver and Centennial. In addition to their development efforts in Colorado, the husband and wife team are also Tropical Smoothie area developers in Michigan and Ohio. They currently have a total of 58 open locations throughout their markets, with an additional 39 cafes in development.
  • It's not just Smoothies showing strong growth.  Dunkin Donuts is also expanding by way of their existing franchisees and new ones. Dunkin' Donuts signed a development agreement with existing franchise group Maruti Donuts, LLC to develop six new units in Evansville, Indiana, including one multi-brand location with Baskin Robbins. The group has more than 20 years of experience as a Dunkin' Donuts and Baskin Robbins franchisee and currently owns 12 multi-brand locations operated collectively with family members.
  • In Louisiana, new franchise group and quick-service veteran SWLA Delights-led by brothers Gul and Vick Awan--signed a four-unit Dunkin' deal (including one multi-brand restaurant with Baskin Robbins) for the Lake Charles area. The brothers have more than 20 years of combined experience operating QSR concepts and gas and convenience store locations throughout Lake Charles and Lafeyette.
  • Dunkin' Donuts has signed multi-unit store development agreements in North Carolina with two franchise groups, including a new franchisee, HARA Foodservice Group, LLC, who will develop four restaurants the Charlotte area, within Hickory, Lenoir, Marion and Morganton.

Burgers continue to grow though we have seen some slow down overall in this category.  Nonetheless, both Smashburger and Bojangles announced recent deals.

  • QSR International, the master franchisee of Smashburger for Central America, the Caribbean, and parts of South America has opened in Panama.  This is the second of five restaurants committed to open in Panama over the next 30 months. This unit is located within the Magic Zone in Albrook Mall in Panama City, one of the largest shopping centers in Central America.  Panama is the third country in the Central American region in which the group has opened Smashburger restaurants. 
  • Bojangles' has signed a multi-unit development to open four new Bojangles' restaurants over the next four years. Potential locations include Chesapeake, Portsmouth and Virginia Beach, Virginia. The agreement is with VABO Inc., an ownership group currently owns and operates several Hwy 55 Burgers, Shakes & Fries in South Carolina and Georgia.  Bojangles’, Inc. also announced a multi-unit development agreement with new franchisee MSR Restaurants, LLC of Mitchellville, Maryland.

It's interesting to see that latest group allowed to own both Bojangles -- fast food featuring burgers and fries along with the Highway 55 concept. 

Other deals the restaurant brokers saw announced this month include:

  • Huey Magoo's Chicken Tenders opened the latest location in Orlando run by franchisees Al Dhanani and Amir Dhanji, who also operate the Oviedo location and the soon to open Gardens on Millenia location.
  • The Greene Turtle welcomes its 47th location with franchisees Pranav Desai, Jiger Patel and Rajan Mahadevia, doing business as The Integritty Group. Their new restaurant is located in North Wales, Pennsylvania. They also plan to open additional locations in Montgomery, Bucks, Lehigh and Northampton Counties.
  • Wetzel's Pretzels has opened its newest location at Indian Wells Tennis Garden, the So Cal legendary tennis complex.
  • HuHot Mongolian Grills, opened its 22nd location April 13 in Lawrence, Kansas.  FRC Group, the largest franchisee of the concept says more openings are scheduled for 2017, including Champaign, Illinois, and Shawnee, Kansas.  Bill Trevvorow, HuHot's newest franchisee and a current Subway multi-unit 'zee, is preparing to open his first HuHot in Lake Delton near the Wisconsin Dells tourism area, and HuHot has six additional openings planned for 2017.
  • Willie Jewell's Old School Bar-B-Q, are opening their third location in Georgia, this time in Marietta. Willie Jewell's also has multi-unit deals signed with Chip and Amanda Evans for locations in Tallahassee, Florida, and with Black Diamond Capital, LLC to develop restaurants in Tampa, Florida. Based in Jacksonville, Willie Jewell's is the fast-casual spinoff of the Bono's Pit Bar-B-Q concept.
  • Georgia-based Amici Italian Café has awarded a 20-unit franchise deal to Stonemont Financial Group, a private investment firm headquartered in Atlanta.  Stonemont will open new Amici restaurants across North and South Carolina with the first location adjacent to the campus of Clemson University.  It will open in the fall of 2017. In addition to the new 20-unit deal with Stonemont, Amici is building a newer location in Madison, Ga., where the restaurant group is headquartered and will open a corporate location in Gainesville. Two other new franchise locations in Macon and Augusta are also in the works.
  • Cauldron Ice Cream is opening in Glendale, California.   Jack Liu is the franchisee opening this location. He has signed a multi-unit deal with the Santa Ana-based ice cream shop company. The first of Liu's locations is expected to open in July.
  • Native Grill & Wings announced its first Massachusetts location opening in Oxford in April as part of a multi-unit agreement.  Franchisee Andy Colby of ANCM Group Inc., has signed for two to three total units in the Boston market, to be developed over the next three years.
  • Primal Kitchen Restaurants will open its first franchise location in May in Granger, Indiana, part of a three-unit deal with franchisees Tom and Tara Olson for the South Bend, Indiana, area. The health-focused, fast-casual concept also has multi-unit deals signed for the Santa Cruz, California, area as well as three units in the Pacific Northwest.

Overall, while the restaurant brokers continue to hear rumbling of softening sales, particularly in the QSR industry and despite a very crowded marketplace, it appears the appetite for new franchise restaurant sales shows no sign of slowing.  Restaurant Brokers Eric and Robin Gagnon say of the trend, "We continue to see Franchise Restaurant Sales Boom despite QSR sales softening.  In our opinion, this is indicative, for new concepts of everyone chasing the "next big thing" while multi-unit owners return to the well on concepts already paying out for them."

Interested in seeing what the restaurant brokers have for sale?  Check out our restaurant for sale listings online. 

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Topics: selling a restaurant

The Restaurant Buyer Meeting - 10 Do's & Don't for Restaurant Sellers

Posted by Robin Gagnon on May 19, 2017 2:27:14 PM

Getting a meeting with the buyer is the first step in selling your restaurant.  Here are ten tips to keep the deal on track once the meeting is set.

When a buyer visits your restaurant as a customer and decides they are interested they will often request a meeting with the seller to see the back of house and the rest of the operation.  That can be a valuable next step as long as you are prepared and adhere to these important “Do’s and Don’ts”.

10 do and dont pix.jpg

Do Schedule the Meeting to Ensure Confidentiality

An experience restaurant broker will always protect your interest by working around your business hours.  That typically means a buyer meeting early in the morning or late at night.  If a buyer cannot be flexible on this point or insists on the seeing the back of house when the store is open, consider whether he or she is a good fit for the business overall.  While you can allow the buyer to view the backend operations posing as an insurance agent or interested franchisee, it’s much easier to simply schedule this during “off” hours.

Don’t Ever Meet Without the Broker

You never want to have a meeting with the buyer without the presence of your restaurant broker.  This is because the restaurant broker can act as your mediator between your wanting to be helpful as possible to the buyer and the buyer wanting to obtain as many tidbits of information as he can.  It is important to remember that not all buyers who inquire about your business will do so with the best intentions in mind.  If they ask your restaurant broker a question and hear an answer that they don’t like chances are they will turn around and approach you with the same question in an effort to get the answer that they are seeking.

Don’t Share Copies of Financial Records

When you meet with the buyer it is okay to review and discuss financial information with a buyer that is pre-qualified however, never share copies of financial records with the buyer.  This information should be channeled through your restaurant broker to protect your best interest.

Don’t Offer a Business Card

Avoid sharing your business card with the buyer because this encourages him to contact you directly. If the buyer requests your business card or tries to approach you with questions, always refer him to your restaurant broker for the information he needs.  Tell your broker that the buyer has attempted to contact you so they can inform the buyer that (in most cases), he is violating the confidentiality agreement.

Remember that your restaurant broker has worked with buyers thousands of times and this may be your first exposure.  You don’t want to lessen the chances of your restaurant to sell by giving the wrong information, too much information or the right information but just too soon in the process.

Do Be Personable and Brief

Try not to offer too much information during your meeting with the buyer.  It is quite normal to be nervous which can cause you to reveal too much information about your business.  You do not want to tell the buyer about situations that could raise issues such as telling him that you were once close to bankruptcy and you pulled out of it and built up the business to what it is today.  Instead keep your answers brief, focused, and personable.

Don’t Be Late

Make sure you are on time for your meeting with the buyer.  If you know your staff leaves at a certain time then schedule your meeting a few minutes or half hour after they leave so you are not held up by concerns or questions from your staff.  Being late to the first meeting with the buyer may get the deal started off on the wrong foot.

Do Say Why You Are Selling

Always make sure you state your reason for selling.  Although you may have shared the financial details, buyers always want to know the reason you are selling.  When you are providing your reasons you should not reveal any personal information that is compelling you to complete a quick sale.  First of all, this is none of the buyer’s business and secondly, it could cause you to lose your leverage with the buyer.  So avoid telling the buyer that one of your business partners has cancer and only has six months to live.

It is okay to provide reasons such as disagreements among partners, retirement, lifestyle change, or taking care of your elderly parents in a distant location.  These are all reasons that are understandable.  Reasons that are not acceptable are age old reasons like you are pursuing other interests which doesn’t make any sense if you’re are currently running a profitable business.  If you are involved with a franchise which isn’t doing well financially, it is okay to reveal this information.  Chances are the buyer will already know by looking at your financial records.

Don’t Give Advice

When it comes to legal advice or liquor license advice, avoid it at all costs and leave it to your broker to provide the legal resources and the contact information for the person handling your liquor license.  While it is okay to tell the buyer the name of the person that handles your liquor license, avoid giving out any advice such as “The liquor license is no problem and here is all you do is….”

Don’t Complain

If you have gotten hosed by your landlord or can't stand your franchise brand any longer, keep it to yourself.  The buyer should be on a journey of discovery and form his own opinions about these and other matters.  You risk raising issues of concern for the buyer that otherwise would not come up. 

Don’t Provide Third Party Information

Avoid giving out your landlord or franchise contact information.  Until your business is under contract the buyer has no legal right to this information.  Furthermore, you do not want the buyer making contact with third parties that you have developed a relationship with.  If the buyer happens to disrupt the relationships and then walk out on the deal you are left to clean up the mess.  Instead send the buyer to your restaurant broker so they can control the third party contact.

A buyer meeting is a logical part of the process for selling your restaurant.  Buyers want to speak directly with the sellers for answers to important questions and to get your point of view.  Make sure you’re familiar with these ten “Do’s & Don’ts” to make sure your deal stays on track and the buyer remains interested.

Are you interested in selling your restaurant?  Contact us for a free valuation.

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Topics: selling a restaurant

Restaurant Broker Ken Eisenband Recognized as Florida Deal Maker!

Posted by Robin Gagnon on May 15, 2017 8:46:39 AM

We Sell Restaurants Announces that the Business Brokers of Florida has named Ken Eisenband a Million Dollar Club Award Recipient and winner of the Dealmaker Award for the State of Florida.

Ken Eisenband, Franchise Partner for We Sell Restaurants closed enough restaurant sales in 2016 to place him in the Top 5 for completed deals in the entire state of Florida.  His activity is measured against every other broker in the state’s association which has more than 1400 members.  This is the second consecutive year Eisenband has earned this distinction along with being named to the Million Dollar Club.
46576-Ken_Eisenband.jpg

A long time Top Producer, Restaurant Broker Ken Eisenband leads the Fort Lauderdale, Broward County franchise office of We Sell Restaurants.  Ken has been a member of the Business Brokers of Florida (BBF) for two years and has earned the award each year, outperforming many of his peers for this achievement.  BBF or Business Brokers of Florida is a nonprofit association made up of the leading business brokerage companies and agents throughout the state of Florida. It is the largest state business broker association in the country, and the second largest association of business brokers in the world.  

Members of BBF must demonstrate their expertise and ability in business brokerage when applying for membership. Once accepted as a member they must adhere to a strict code of ethics.  The Association has more than 1,400 members, has over 4,000 listings and maintains a database of over 16,000 sold businesses for market data comparisons.  

Robin Gagnon, co-founder of We Sell Restaurants said of the achievement, 'Ken is an amazing Franchise Partner and inspiration to the team. Ken specializes in selling only restaurants while those he competed against for the award sell every type of business.  His commitment to buyers and sellers is unmatched."

BBF Award.jpgAs a franchisee of We Sell Restaurants, Ken underwent extensive training and testing leading to his designation as a Certified Restaurant Broker prior to launching his practice.  He is a licensed real estate broker in the state of Florida and graduated with Honors from The School of Hospitality at Michigan State University in 1983.  He has more than thirty years of experience in the restaurant industry

Ken founded the Ft. Lauderdale office of We Sell Restaurants in 2012.  He is currently working to expand his franchise territory and mentors multiple Restaurant Brokers within his team including:  Robert Morrison, Ken Allain and Everett Rashotsky.  He also serves as a training consultant for the We Sell Restaurants brand and conducts a portion of the training in his market. 

We Sell Restaurants is a franchise business brokerage firm specializing in the restaurant industry. The We Sell Restaurants® brand is known nationwide for professionalism, industry knowledge and unmatched service in the sale of restaurants.  They can be found online at wesellrestaurants.com.

Topics: buying a restaurant

Top 10 Restaurants for Sale in April by the Restaurant Brokers

Posted by Robin Gagnon on May 12, 2017 1:56:45 PM

What’s the pattern of views of restaurants for sale for April 2017?  It was a month of strong activity by buyers showing signs of Spring Fever excited by a new crop of listings.  South Florida topped the chart with activity on multiple listings while the Atlanta and Austin markets were also strong performers for the restaurant brokers this month.

 As always, we weigh the activity on listings based on the phone calls, response to our email blasts, signed confidentiality agreements and connections with our restaurant brokers.

Topping the list of restaurants for sale with the most views is a SUPER priced Italian Restaurant located in Broward County. This location has been hot since hitting the marktet less that 70 days ago. Priced at under $50,000 this listing has attrached the most buyers for the month in the We Sell Restaurants inventory.  

 
Listing ID:5311 Restaurant Broker Ken Eisenband    
Pizzeria for Sale -- Fast Casual Italian Restaurant in Broward County
Lease: Expires January 31, 2018 plus 2 three year options
Monthly Rent: $4612.78
Inside Sq. Ft. 1716
Outside Sq. Ft.
Price:$45,000
City:Tamarac

Ken Eisenband
(561) 350-3365

South Florida stayed in the mix with this Broward County listing attracting buyers.  They also loved this Italian Restaurant for sale that can retain its current look or convert to any concept.  This one made an impact on those looking to make their dreams of restaurant ownership come true. With an incredible monthly rent of less than $3000, this location won't be around much longer

Listing ID:5228 Restaurant Broker Ken Eisenband    
Restaurant for Sale in Ft. Lauderdale Can Convert to Any Concept
Lease: Expires July 31, 2017 with options to be negotiated
Monthly Rent: $2980
Inside Sq. Ft. 1700
Outside Sq. Ft.
Price:$58,000
City:Fort Lauderdale

Ken Eisenband
(561) 350-3365

The top three listings of the month had one thing in common -- Italian was on the mind.  This profitable location in the very desirable Rosewell, Georgia area garnered plenty of looks, calls, signed CA's and views on the Restauant Brokers top rated website.  The $1700 monthly rent is unheard of! No wonder it has already has multiple offers.

Listing ID:5441 Restaurant Broker Steve Weinbaum    
Profitable Italian Bistro and Pizza Business for Sale in Downtown Roswell!
Lease: 5 years
Monthly Rent: $1700 including CAMS
Inside Sq. Ft. 1600
Outside Sq. Ft. n/a
Price:$139,000
City:Roswell

Steve Weinbaum
(770) 714-4552

Austin Texas Restuarant Broker Dave Duce jumped into the top ten list with a unique opportunity in his market.  Buyersare clicking away to find out more. This Bar for Sale in Austin serves beer, wine and small plates.  This one was on the market for only seven days in April before landing in the top 5.  Buyers should prepare for a bidding war on this one!

isting ID:5469 Restaurant Broker Dave Duce    
Bar for Sale in Austin Serving Beer & Wine - Expand to Craft Beer & More
Lease: expires Nov 2020 + 5 yr option
Monthly Rent: $1850
Inside Sq. Ft. 737
Outside Sq. Ft. 60
Price:$99,995
City:Austin

Dave Duce
(512) 773-5272

Restuarant space for lease often creeps into the Top 10 and this Johns Creek, Georgia empty location was no exception.  Those ready to launch from the ground up liked the looks of this opportunity.  The very manageable 1200 square feet allows to keep the rent down monthly but still room for plenty of seats. What are you waiting for?

isting ID:5274 Restaurant Broker Cyndi Weinbaum    
Restaurant Space for Lease in Johns Creek, Georgia - Great Location
Lease: Negotiable
Monthly Rent: $$20.00 PSF + $4.43 CAM
Inside Sq. Ft. 1200 (Adjacent site can be added bringing total to 2400 Square Feet)
Outside Sq. Ft.
Price:$0
City:Johns Creek

Cyndi Weinbaum
 

Space for lease with equipment? Yes! This does not come along every day. This former Pizza place is flipping for a new owner! Sign the lease today and start cooking tomorrow.

Listing ID:5208 Restaurant Broker Ken Eisenband    
Fort Lauderdale Restaurant Space for Lease includes Kitchen Equipment
Lease: Negotiable with Landlord
Monthly Rent: $7393.50
Inside Sq. Ft. 2700
Outside Sq. Ft.
Price:$0
City:Fort Lauderdale

Ken Eisenband
(561) 350-3365

 Two for One!  This sounds like a Happy Hour deal but instead it's a restaurant for sale group also found in Austin Texas.  This features a long term lease and loyal clients.  The two restaurants for sale by Certified Restaurant Broker Dave Duce are turnkey ready for someone looking to start earning a profit.

isting ID:5465 Restaurant Broker Dave Duce    
2 Restaurants for Sale! 6 Figure Earnings - Sandwiches & Catering
Lease: expires March 2022
Monthly Rent: $1326
Inside Sq. Ft. 3200
Outside Sq. Ft. 200
Price:$299,000
City:Austin

Dave Duce
(512) 773-5272

What happens when we list a restaurant for sale with rent at just $1000 per month?  The phones go wild!!!  This crazy low rent in Inman Park is fully equipped and ready for a new concept.  The 1000 square foot space is perfect for a take-out or delivery concept and Restuarant Broker Steve Weinbaum's phone has been blowing up with inquiries.  Are you ready to take this one off the market?

Listing ID:5193 Restaurant Broker Steve Weinbaum    
Inman Park Atlanta Restaurant For Sale - $1000 per Month Rent!
Lease: 3 years with 2+ years remaining
Monthly Rent: $$1000 plus $1400 annual property taxes
Inside Sq. Ft. 1000
Outside Sq. Ft. n/a
Price:$49,990
City:Atlanta

Steve Weinbaum
(770) 714-4552

All in all, another record breaking month of activity for the restaurants fo sale across the country.   The southeast is booming in restaurant sales as evidenced by all this activiy on the restaurant brokers listing.  Want to see these and many other restaurants for sale?  Check out our full list of restaurant for sale listings online at this link. 

 

Topics: buying a restaurant, selling a restaurant

Unicorns and Restaurant Buyers Willing to Overpay – 5 Reasons Both are Rare

Posted by Robin Gagnon on May 9, 2017 3:52:45 PM

A recent discussion with a seller about the amount he wanted for his restaurant led to today’s article.  The seller, a smart multi-unit franchise owner agreed with the pricing of his business based on 2015 performance and the store was listed late in 2016.  When the next year’s financials were provided, this restaurant broker advised him that we were now overpriced.  It was clear that the business would not cash flow for lending at the asking price and was about 25% over the proper value.  This wasn’t a value judgment, it was simply a math problem with a clear answer.    

unicorn final.jpgNow remember, this was not a naïve or uninformed seller.  As a multi-unit owner, he agreed that if he were buying, he would not pay this number.  However, while he knew the business was now overpriced, his plan was to simply stick with his number and wait for a buyer willing to overpay.  

You can guess the next part of the story.  Multiple buyers looked at the listing.  It was a great brand.  It was in a good location.  The only issue is that sales declined between 2015 and 2016 and as a result, earnings declined by approximately 25%.  Each offer came in at the market price recommended by the restaurant broker.  Was I coaching the buyers?  No. 

Then how were these buyers savvy enough to know the business was overpriced?  In the world of buying a restaurant, a lot has changed in the past decade. For sellers seeking a restaurant buyer willing to overpay forthe business, here are five reasons we can assure you those clients are just as rare as unicorns.

The first and most obvious reason that buyers are less than ever before, willing to overpay for a business is their overall sophistication and understanding of valuation. In today’s marketplace, buyers are very savvy about pricing multiples and speak the language of valuation more clearly than ever before.  When we launched We Sell Restaurants and began as restaurant brokers in 2001, it was rare to never (just like those unicorn sightings) that a buyer would have knowledge of the process for valuation and compare deals on a comparable basis.  Today’s buyer is extremely sophisticated and has a lot more access to information that helps in this process.  For that reason, finding a buyer willing to pay more than they should is not a common occurrence.

The second reason that buyers who overpay are just as frequently found as unicorns is related to bank lending.  Unlike a few years ago, bank lending is a near certainty on a restaurant with good books and records.  That means each deal undergoes valuation with the lender and they will come back with the same valuation as the restaurant brokers each and every time. Bankers don’t lend on potential.  They don’t lend on the prior year and they don’t lend on fairy tales (like unicorns).  They lend on actual results.  Businesses that are overpriced won’t make the grade.

What is the third reason that buyers who overpay are as common as unicorns?  Restaurant brokers have significantly upped their game.  The best restaurant brokers in the business have degrees in finance, experience in banking or other strong financial skills.  Unlike a decade ago, simply putting a price on a business and hoping it would sell is long gone.  Smart brokers list properly and that gives buyers the information they need to buy at the right market values.

The fourth reason that buyers who will overpay are as common as unicorns?  Buyers have seen too many listings badly priced on the marketplace and in doing their due diligence, have learned quite a bit about the valuation process.  A restaurant buyer that’s already had something in contract and walked away is an educated buyer.

The last reason for finding buyers willing to pay more than a business is worth is just as common as a unicorn sighting is the Internet.  This giant repository of data at the fingertips of anyone willing to do a simple search will return a number of articles (including ours) on valuation of restaurants for sale.  I have to admit, it will also return plenty of images for “Unicorn Sightings” so buyers should be careful not to believe everything they see online.

If you see a unicorn, grab your smart phone and get a photo!  Meanwhile, if I find a buyer willing to overpay for a restaurant, I plan to move quickly to lock him down as well. 

My seller, by the way, is still waiting on someone to overpay.  I suspect it won’t happen any time soon.

 

Topics: selling a restaurant

Sweet!  Ice Cream & Frozen Yogurt Shops for Sale in Time for Summer

Posted by Robin Gagnon on May 2, 2017 3:13:41 PM

Summer will be heating up the United States before we know it. What better way to keep cool than by visiting one America’s favorite summer treat stores?  Check out these Ice Cream or frozen yogurt stores for sale.  These sweet opportunities are headed into their busy season.  

Before the summer rush comes along, join this $5.7 billion dollar business. Are you a fan of these frozen sweet treats?  Trust the restaurant brokers when we tell you that you’re not alone! Customers surveyed by one popular concept revealed that 45.3% of us eat a cupful of flavor sold at these frozen yogurt franchises for sale at least once a month.  That doesn’t count the ones who love these flavors more frequently.  Do you know that over 40% of those surveyed treat themselves every single week?

Ready to join the biz with one of these ice cream shops for sale?  Why not?  This is a simple operation in a small space that’s super easy to operate.  It’s not too difficult to weight the cup (in the case of self-serve) or scoop it up (for hard ice cream).  In addition, these frozen yogurt shops for sale don't (typically) involve late nights or alcohol so it's a worry free concept if you're new to the business world.

Americans love ice cream.  We are the number two consuming ice cream country in the world, outpaced only by New Zealand.  About 9% of all the milk produced in the United States goes to make Ice Cream.  Want to know more about our addiction to this national treasure before buying one of these frozen yogurt or ice cream franchises for sale?  It takes about 50 licks to finish a single scoop of ice cream and the perfect temperature for scooping ice cream is between 6 and 10 degrees Fahrenheit. That is chilling delicious!

Take a look behind the counter at our inventory of Ice Cream and Frozen Yogurt shops for sale.  These businesses offered by the restaurant brokers currently range from $249,000 on the high to under $40,000 for the least expensive opportunity. 

Most franchise approvals offer quick turnaround and frequent training so you can get going before the temperatures max out.  If you’re in the market for an E2 visa business, one of these ice cream or frozen yogurt shops for sale are perfect!  Easy operation.  Quick approval and eligible for E2 visa candidates.  Why wait for the summer rush, start scooping up these worry free, easy to operate concepts today!


 
 
Listing ID:5257 Restaurant Broker Dominique Maddox    
Frozen Yogurt Business for Sale in Savannah Downtown District
Lease: Expires August 31, 2021
Monthly Rent: $4752
Inside Sq. Ft. 1584
Outside Sq. Ft.
Price:$39,999
City:Savannah

Dominique Maddox
(404) 993-4448

Listing ID:5241 Restaurant Broker Eric Gagnon    
Frozen Yogurt Franchise For Sale in Michigan is a Winner!
Lease: Expires Nov. 2017 with 5 yr option to renew
Monthly Rent: $4304.00
Inside Sq. Ft. 1800
Outside Sq. Ft.
Price:$49,999
City:Rochester Hills

Eric Gagnon
(404) 800-6704

Listing ID:5032 Restaurant Broker Eric Gagnon    
Two Frozen Yogurt Franchises for Sale! Multi-Unit Opportunity
Lease: Expires April 1, 2018 | Expires October 16, 2021 with one 5-year option
Monthly Rent: $8874 | 5619
Inside Sq. Ft. | 1500
Outside Sq. Ft.
Price:$249,000
City:Bossier City | Shreveport

Eric Gagnon
(404) 800-6704

Listing ID:5024 Restaurant Broker Eric Gagnon    
Ice Cream Franchise for Sale in Tennessee
Lease: 3 years w/ one 5 year option
Monthly Rent: $2115
Inside Sq. Ft. 1400
Outside Sq. Ft.
Price:$79,000
City:Lebanon

Eric Gagnon
(404) 800-6704

Listing ID:4991 Restaurant Broker Eric Gagnon    
Franchise Frozen Yogurt Business for Sale - Profitable Store!
Lease: Expires June 30, 2016 with 2 5 year terms
Monthly Rent: $2961
Inside Sq. Ft. 1800
Outside Sq. Ft.
Price:$179,000
City:Joplin

Eric Gagnon
(404) 800-6704

Listing ID:4969 Restaurant Broker Eric Gagnon    
Profitable National Frozen Yogurt Franchise for Sale in Louisiana!
Lease: Expires October 16, 2021 with one 5-year option
Monthly Rent: $5619
Inside Sq. Ft. 1500
Outside Sq. Ft.
Price:$179,000
City:Shreveport

Eric Gagnon
(404) 800-6704

Listing ID:4765 Restaurant Broker Robin Gagnon    
Combo Cinnabon Carvel Ice Cream Franchises for Sale in Illinois
Lease: Expires January 31, 2022
Monthly Rent: $6500
Inside Sq. Ft. 630
Outside Sq. Ft.
Price:$149,000


Robin Gagnon
(404) 800-6701


 

 

Topics: buying a restaurant

Selling Your Restaurant…Beyond the Numbers

Posted by Steve Weinbaum on Apr 27, 2017 10:24:45 AM

The Restaurant Brokers at We Sell Restaurants work with hundreds of restaurant owners every year.  The number one question we are asked is: “What is my business worth?”  This is a math problem and easy enough to solve.  What may be less obvious are the other items included in the transaction. 

Our advice to anyone who is thinking about selling their Franchised or owner-operated restaurant is to make sure all your information is accurate and up-to-date.

We’re not just referring to the obvious…the dreaded Profit and Loss statement.  Restaurants are primarily valued based on the sales and cash flow they generate. The better and more verifiable the numbers…the greater your ability to maximize the value of your restaurant.  That’s only part of the equation however. 

Many owners focus exclusively on financials and fail to make sure they are up to date and accurate when it goes beyond the numbers.  Case in point:  leases and equipment lists.   Sometimes the line between assets – also known as the FF&E or Furniture, Fixtures, and Equipment and leases are blurred, especially if the landlord owns part of the equipment.Twitter Image Template-3.jpg

Here are a few stories from the Restaurant Broker’s files to give you real life examples of what happens once we bring a buyer to the table.  This is AFTER we had a restaurant in contract and past due diligence.

Scenario 1:  Seller Doesn’t Own the Assets

In scenario 1, a restaurant owner listed their business for $59,000.  He was new to the business, had been open less than a year, but was starting to show some decent sales figures and turning a small profit.

An offer of $55,000 was received and agreed to.  The transaction progressed through due diligence and then the lease assignment process began.

The landlord informed the restaurant broker that he owned all the equipment and was letting the current owner use it.  Needless to say the seller should have never included assets he did not own as part of the sale.  The Buyer and Seller had to renegotiate the transaction for half of the originally agreed to price.  The seller only had goodwill to sell.

Scenario 2:  Seller Doesn’t Have a Lease in Place

In scenario 2, a bar owner listed his business for $250,000.  He had a great location at a below-market rent.  The seller had informed the broker and buyer he had five years left on his lease which was correct, according to the lease document. 

The value of the furniture, fixtures and equipment combined with the great location and lease rate generated an offer north of $200,000.  But when the buyer’s restaurant broker started the lease assignment process, he was informed by the landlord that the seller had failed to exercise his option to renew so he was effectively on a month to month lease. 

While the buyer was ready to overpay for assets, the landlord saw the opportunity to jack up the rates and the new rent would be 50% higher than what the buyer was expecting.   What happened???  Needless to say, the deal went south in a hurry.

The take-away here is that when you want to sell your restaurant, get all your ducks in a row.  Not just your P&L, which is still the most important part.   Go through your lease so you know exactly how much time you have left on it and what the assignment criteria is.  Confirm when your option must be exercised if you are anywhere near the end of your initial term.  For most landlords, they require that you give written notice anywhere from 90 to 180 days PRIOR to the end of the first term. If you skip this step, your lease is not assignable and there are no rates for the option years.

Lastly, when you provide an asset list, make sure it is current and accurate.  Don’t list items that are leased (like the dishwasher) or that you don’t own (like the Coke and Tea Machine) or items that are owned the landlord that you did not install.

When you get your restaurant under contract, the rubber meets the road.  The last thing you want as a seller is for the buyer’s offer to be based on inaccurate information.  These details will kill your deal and the opportunity to sell your restaurant.

Do you want a review of your lease or equipment list?  Contact Certified Restaurant Broker Steve Weinbaum for his expert advice on selling a restaurant or check out our restaurant for sale listings online at the link below.

 

Check Available Listings

 

 

Topics: selling a restaurant

A Restaurant Buyer or Seller’s Guide to Valuation by the Restaurant Brokers

Posted by Robin Gagnon on Apr 25, 2017 9:01:33 AM

While everyone has some idea how much they want to pay or price a restaurant for sale, the truth is, selling a restaurant is a math problem with a right and wrong answer

What is the methodology for restaurant valuation?  For lenders and sophisticated restaurant brokers familiar with the process it’s the Income Valuation Method.  This is the most favorable and trusted method used to value restaurants for sale.  In today’s lending environment, this is how we establish value and secure financing on a business.  A restaurant for sale with solid profits that fits the SBA criteria to both satisfy the buyer’s lifestyle needs and satisfy the debt payments with a 25% cushion will qualify for lending.    

 For that reason, the Income Valuation Method provides the most acceptable method of valuation for banks, lenders and individuals in assessing how much to pay for a restaurant.  In a situation where a restaurant buyer is paying cash, this helps to reduce fear of the transaction as the business has a proven track record. 

calculator-988017_960_720.jpgA restaurant for sale with strong books and records, assessed under the Income Valuation Method has the highest number of potential buyers and hence commands the highest possible price.  An expert  restaurant broker can go through the Profit and Loss statement along with tax returns to find the Seller’s Discretionary Earnings (SDE) or owner benefit that is customarily accepted by lenders to value the business.   This includes net income PLUS reasonable and customary add-backs.

Add Backs are the benefits realized by a seller today that go away when he or she leaves the business. For example, owner’s 1099 or W2 earnings are calculated as Add Backs.  Any personal expenses such as a cell phone or auto expense for the benefit of the seller are also “added-back” to the bottom line to calculate the earnings.

What is not allowable for “add-back” purposes are efficiencies a new owner could potentially achieve that the current operator hasn’t.  It should factor in your decision to buy but should not be calculated in the pricing of any    restaurant for sale.  The entire purpose of the add backs is to calculate owner benefit and ultimately pricing of the business.  If you can identify strategies to be more successful in the future than the current owner, that benefit belongs to you as a buyer, not to the seller in the pricing of the business. 

Once the Seller’s Discretionary Earnings is appropriately determined, then it becomes the basis for a “multiple” for pricing    restaurants for sale. Every buyer wants the answer to the question, “What’s the multiple for restaurant pricing?” and the response rarely satisfies anyone.  In general, restaurants for sale can be offered and sold somewhere between 2.5 and 3 times times earnings, with market factors adjusting this up or down.  For purposes of this article, we are limiting our discussion to single restaurant units.  Multi-unit sales (anything above two, especially franchise) changes the multiple significantly and requires a whole different analysis and pricing model.

“How much to pay for a restaurant for sale? ” can be affected by any of the following variables including:  strength of books and records, saturation of concepts in the marketplace, seasonality, location,   comparable Sales Information or “comps,”  franchise or  independent offering, geography and competition. 

Strong restaurant brokers that know the market and should be able to share exactly where a restaurant is priced based on the multiple and why.   Ask some questions of your broker to be certain they fully understand restaurant pricing.  If you’re not satisfied with the response, find an expert restaurant broker to help you buy a restaurant.

Our restaurant for sale listings are all valued using the same methodology and can be found at this link.

Check Available Listings

Topics: buying a restaurant, selling a restaurant

Selling a Restaurant? 5 Pieces of Advice to get to “Sold”

Posted by Robin Gagnon on Apr 21, 2017 9:13:11 AM

Selling a restaurant can be easier than you think if you follow these five pieces of advice.   

Establish Trust with Your Restaurant Broker

It is critical when selling a restaurant to establish a relationship of trust between you and your restaurant broker.  The relationship between the Broker and Seller must be one of complete honesty.  We heavily advocate the “No Surprises” policy.  Pull out all the dirty laundry and make sure your broker is aware of every liability.  You may think you’re the only restaurant with a liquor license citation, a tax lien in the hundreds of thousands, a sexual harassment lawsuit by the waitresshandshake-2056023_960_720.jpges or back rent of $35,000 but trust us when we say, the experienced restaurant broker has seen it all before. 

You’ve hired his or her knowledge because they know how to work through the issues, resolve them and keep this deal managed through to the closing table.  The worst mistake you can make as a seller is to hide anything from the broker.  The only thing he can’t deal with is something he’s not aware of.  Remember, no surprises.   

Establish a Communication Strategy

Secondly, make sure you ask the broker how they  communicate with you.  Some brokers have highly standardized systems that enter Buyer notes and automatically send you an email when someone communicates with the broker on your listing.  Our system does that.  Others simply call when there’s significant activity.  Still other brokers aren’t great at communicating the status of the listing at all. If you want ongoing updates and that’s important to you, set the expectation with your broker early.  If you only want to hear from him when he’s got a deal, share that too.  Brokers that specialize in the restaurant business know the hours.  They don’t call anyone at 8am since they know you work late nights.  They also don’t call you between 11:30 and 1:30 if you operate a lunch business.  They never call you at the restaurant since they don’t want to open up a confidentiality issue or if they do, they leave a message using their first name only. Tell your broker what you want to hear and when you want to know.  

Understand the Listing Agreement

The relationship between a seller and his broker is formalized through a listing agreement. This is a contractual obligation.  Make sure there are no misunderstandings about what you are selling and who is authorized to sign so that offers move quickly to the closing table. 

Have all of the partners consent and sign a corporate resolution to sell before signing the listing agreement.  This protects you when offers come in and one partner changes their mind or another is in Brazil for two weeks without email.  Sign and get a corporate seal on a document that says, the corporate officers met and agreed to sell the business by a vote taken this day.  Give one partner the authority to sign on behalf of everyone else.  When the partners are a husband and wife, this step is sometimes unnecessary.  If there are several partners in the business, the broker may require the resolution along with signature on the listing agreement. The broker will have a copy of this form and a copy is included in the appendix.

Check Your Legal Status

Make sure you understand who is selling the business.  The listing agreement must be signed by the legal entity that owns the business assets for sale (and the one on the liquor license).  Therefore, the legal name of the selling business is always used on the contract.  Another step you should take as a seller is to verify the status of your corporation.   Go online at the Secretary of State website for your state and make sure that the officers listed in the state website are correct and that all filings are up to date.  Failing to do this at the onset will cause problems down the road when a contract is written.

Relax and let the Restaurant Broker Work

Once the listing is in place, keep the business in the best possible shape.  Make sure sales stay flat or are increasing (never in decline).  Look at the business with a critical eye and go ahead and call in the cleaners and make minor repairs to freshen up the store.  Most of all, concentrate on what you do best – operating a business and let the restaurant broker focus on bringing a buyer to the table.

Follow these basics on how to sell a restaurant and you’ll go from a restaurant for sale to a restaurant sold without a hitch.

Looking for the restaurants we've sold?  Check out our restaurant seller testimonials from other restaurant sellers at this link.

Topics: selling a restaurant

Featured Listing -- 8 Franchise Units in a Major Market EBITDA of $434,000

Posted by Robin Gagnon on Apr 17, 2017 3:30:13 PM

This featured listing is an amazing opportunity to anyone looking to expand their portfolio into a multi-unit franchise ownership. This package concentrates all the authority for a national brand into a single operator in a major market.  You get a money driving food truck and eight locations that are pumping out volume between $500,000 to $646,000 at each door.

The opportunity, priced at $1.695,000 is a smart buy.  The volume of these locations is over $4.765 million.  Currently handled with a smart District Manager in place, all the operational controls are already there!  The $434,218 in EBITDA calculations includes the franchise royalties, the district manager and store level management. These types of sales and revenue do not come along every day! Plus there is a right to develop another location adding to that bottom line.

Unmatched opportunity with this fully dressed out Food Truck that is plugged into the entire local scene including all major sporting events (think final 4) and much more. This will not remain in the restaurant brokers’ inventory for long.

These eight locations are quick casual National Sandwich Franchises with limited hours keeping labor cost low. No alcohol or frying of food makes these locations easy to run. The payroll for the District Manager and store leadership is all calculated in the EBITDA on these franchises for sales. This is an award winning, top ranked brand that is showing consistent growth and expansion and has a superior support system.  However, a buyer must demonstrate strong liquidity (7 figures or more) and have relevant multi-unit food service experience to qualify for this outstanding opportunity.

Located in a booming part of the nation that is full of sunshine this area rates among the top 10 best states in job creation. You will have business year around waiting to eat up this delicious concept.  A wealthy and thriving community among all the states gives this southwest destination a bottom ten ranking poverty.

Ready to eat up this rare opportunity. Bring us your net worth of 7 figures and show you previous multi-unit experience. The franchise is ready to make a deal! All stores have long term leases with favorable terms.  This is an award winning, top ranked brand that is showing consistent growth and expansion and has a superior support system

Current ownership team is moving out of the business to pursue other opportunities and is interested in making a deal happen quickly.  Let's talk terms!

This should qualify for SBA lending with no issues and the restaurant brokers will have you in front of our resources for a quick approval.  We must see liquidity of $1,000,000 on this transaction in order to meet the brand requirements.  Send directly to Certified Restaurant Broker Robin Gagnon for a complete package on these franchises for sale.

expansion and has a superior support system.  However, a buyer must demonstrate strong liquidity (7 figures or more) and have relevant multi-unit food service experience to qualify for this outstanding opportunity.

Located in a booming part of the nation that is full of sunshine this area rates among the top 10 best states in job creation. You will have business year around waiting to eat up this delicious concept.  A wealthy and thriving community among all the states gives this southwest destination a bottom ten ranking poverty.

 

 
 
Listing ID:5454 Restaurant Broker Robin Gagnon    
Franchises for Sale - Major Market 8 Units $4.8 MM in Sales
Lease:
Monthly Rent: $
Inside Sq. Ft.
Outside Sq. Ft.
Price:$1,695,000


Robin Gagnon
(404) 800-6701

Topics: buying a restaurant