Advice for Buying a Restaurant and Selling a Restaurant

Robin Gagnon

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Franchise Restaurant Sales and Openings Nationwide

Posted by Robin Gagnon on Sep 21, 2018 2:34:34 PM

New Franchise Restaurants sales and openings are hitting more markets across the U.S.  Announcements for new stores and store openings in August and September range from Chicken Tenders to Chicken Salad Chicks with Curry Up, Breweries and Bars also in the mix.  Here’s what We Sell Restaurants sees nationwide in new franchise restaurant sales either announced or opening nationwide.  

Huey Magoo's Chicken Tenders Announce Expansion To Atlanta

Hailed as the Southeast’s fast-growing, greatest tasting chicken tenders brand, “Huey Magoo’s” is announcing several new stores in the Atlanta area starting next year.  Papa John’s Dean Thompson, Derry Thompson and Alex Larson are joining the Magoo’s team to bring the popular Central Florida based brand to the market with an initial 10 stores and possible additional 36 stores, totaling 46 new Huey Magoo’s franchises coming to the Greater Atlanta area.  The first restaurant is slated to open in April/May 2019, followed by the second store around December 2019.

Also announced recently, The Great Greek Mediterranean Grill is opening on September 21st Located at 11300 Legacy Ave, Palm Beach Gardens, FL 33410 with a Grand Opening Celebration of fresh flavor from salad to souvlaki skewers. 

Chicken Salad Chick is opening its newest franchise restaurant at 5050 Bayou Boulevard, Pensacola, Florida.  The brand serves the nation’s only southern inspired, fast casual chicken salad restaurant concept.  This is the brand’s third location along the Florida Gulf Coast and 17th location in the state. Owned by veteran franchisees Tommy and Stephanie Lauderdale, the new restaurant will include a variety of dining options including a drive-thru, takeout and catering.

The brand also announced the launch of its first restaurant in Oklahoma. Located in the Tulsa area at 1320 East Hillside Drive in Broken Arrow.  The new restaurant will open on September 20th and marks the brand’s 95th restaurant location across 10 states. The Broken Arrow restaurant kicks off a string of new market development for Chicken Salad Chick with restaurants set to debut in Arkansas, Kentucky and Missouri before the end of the year.

 

Curry Up Now Finalizes Multi-Unit Franchise Deal in New JerseyCurry Up Now, the largest and fastest growing Indian fast casual concept in the United States, has finalized a multi-unit franchise deal to bring its innovative, approachable Indian eats to markets throughout the state of New Jersey.

Franchisees Pritesh Benjamin and Tejavsi Patel plan to open Curry Up Now locations in the Central and Northern parts of the state, with sights set on opening their first location in the next six months. The New Jersey outposts will be the first for the brand in the Northeast region and join additional franchised units in development around the country.

The New Jersey locations join over 50 franchised and corporate stores in development, along with multiple market deals in the works in 13 additional states. Curry Up Now currently operates three food trucks and six corporate brick-and-mortar locations across the Bay Area, as well as two Mortar & Pestle cocktail bars in San Jose and San Mateo.

A new emerging brand, Sauce on the Side, opened on August 20th, in Chesterfield, Missouri.  Sauce on the Side first opened in 2012 when business owners Mangialardo, Maciariello, and Porzel collaborated to fulfill a goal – feed the community. 

Last month, Sauce on the Side celebrated the anniversary of six years with three corporate locations but opening the first franchise made it their biggest milestone yet. Robinson and Kaden plan to open four more franchise locations throughout Missouri. 13 more locations are on schedule to open throughout the Midwest in the next few years.

Moving on to alcohol and beer, always a good combination, Old Chicago Pizza & Taproom opened its newest location at 545 Wakarusa Dr., Lawrence, KS 66049 on August 29th. This is the 11th Old Chicago in Kansas, and the 108th location nationwide.

Del Taco Restaurants, the nation’s second leading Mexican quick service restaurant* (MQSR), announced that several established multi-unit franchisees within its system are continuing to grow with the brand in 2018 and beyond, utilizing Del Taco as a growth and diversification vehicle for their company’s portfolios.

Existing Del Taco multi-unit franchisees that have units which have opened, or expect to open in 2018, include Paul Hitzelberger, Mark Miller, Brent Veach, Doug Koch and Mark Schostak, each of whom are growing with the brand in their respective markets across the Pacific Northwest, each of the Four Corners states and Michigan, demonstrating Del Taco’s broad geographic appeal.

Hitzelberger, who is the recipient of the Utah National Restaurant Association’s 2018 Lifetime Achievement Award, opened his 32nd and 33rd locations this year. For diners in Utah, they know heading to a Del Taco means a great experience from a brand that supports the community, with the Hitzelberger team having donated more than $1.1 million to various local organizations since 2008.

Brent Veach, longtime Del Taco franchisee, will be opening two new restaurants by year’s end, one in the Denver area and one in the Phoenix area.

Twin Peaks Makes Highly Anticipated Ohio Debut

Twin Peaks – the ultimate mountain sports lodge – opened the first Ohio location in August at 5060 Monroe St., across the street from Franklin Park Mall.

The 8,000-square-foot space offers full-service dining and regular hours for both lunch and dinner. The new restaurant will also offer unbeatable Happy Hour specials Monday through Thursday, from 3-6 p.m., including great deals on House Brews, wines, cocktails and delicious made-from-scratch shareable appetizers.

Twin Peaks is so much more than the typical sports bar. The lodge welcomes every guest with primetime matchups and barrel-aged whiskey. The entire menu is prepared in-house, to order and in generous portions to satisfy every appetite. The hearty made-from-scratch comfort food pairs perfectly with a frosty draft beer or a classic whiskey cocktail.

Toledo marks the first Twin Peaks in Ohio and the 83rd system-wide

 In Michigan, visitors to “Little Bavaria” can now get their fix of traditional treats on the go as the Bavarian Inn Restaurant introduces its new mobile eatery, the “Cluck Truck,” just in time for the busy tourist season.

The “Cluck Truck” menu features snacks, sandwiches, entrees, and sweets reflecting some of the Bavarian Inn’s customer favorites. The truck launched on August 30th

Cowboy Chicken Opens First Georgia Location in McDonough on Sept. 3 with Chrystal Jakes, Wife of Former NFL Cornerback Van Jakes

 

 

Cowboy Chicken, the Dallas-based rotisserie chain known for its wood-fired chicken and handmade side dishes, opened its first Georgia restaurant in McDonough (90 South Point Blvd.) on Monday, Sept. 3.  Founded in Dallas in 1981, Cowboy Chicken is a fast-casual restaurant chain specializing in real wood-fired rotisserie chicken. The brand has been included in Fast Casual’s Top 100 Movers & Shakers list every year since 2012. In 2017, Cowboy Chicken was named one of the Future 50 Emerging Chains of the Year by Restaurant Business and one of the Top 25 Most Loved Brands by Foodable.   

Garbanzo Mediterranean Fresh – the leading Mediterranean cuisine brand renowned for its wholesome, healthy and simple dishes, top-quality meats and fresh-baked pita – opened in August in the Haupert Union Building on Moravian College’s campus. Garbanzo is headquartered in Colorado with 27 locations nationwide.

Located at 1125 Monocacy St., Bethlehem’s new restaurant marks the first Garbanzo Mediterranean Fresh in the entire state of Pennsylvania and Garbanzo’s fourth university location operated by SODEXO.

While a non-traditional unit, the newest Garbanzo features many elements of the recently refreshed brand trade dress. True to form, the new-look Garbanzo exudes a simple, refined and fresh aesthetic for the brand. The unit features a bakery area where guests will be able to see their pitas being lovingly kneaded, placed in the oven and puffed to perfection right before their eyes. Its welcoming décor and inviting “cocreation” service model will instantly make guests feel comfortable while they discover just how delicious nutritious can be.

Garbanzo is making fresh Mediterranean cuisine a mainstream favorite across the United States. Its authentic, nutrient-rich dishes derived from Old World recipes are served with a new twist, but without compromise. Every order is customized to the guest’s liking, from juicy, high-quality meats and salads made from scratch to gyros, wraps and pita baked from scratch all day.

Dickey’s Barbecue Pit new franchisee Josh Wise plans to open his first Dickey’s location in Newark, Ohio in September. Dickey’s Barbecue Restaurants, Inc., the nation’s largest barbecue chain was founded in 1941 by Travis Dickey. The fast-casual concept has expanded to more than 550 locations in 45 states.

With an extensive background in the restaurant and hospitality industry and a passion for pit-smoked barbecue, Josh knew that Dickey’s Barbecue Pit would be the perfect fit. The new location will have a variety of grand opening promotions in September to complement Dickey’s slow-smoked barbecue.

 The Brass Tap is expanding in the Golden State, signing a five-unit deal in Modesto. With the area’s strong appreciation for great craft beer, the brand is looking forward to introducing its innovative concept to a new group of loyal customers.

Franchisee Rick Sousa, who currently works in business development for Dust Bowl Brewing Company in Modesto, will own and operate the new locations. Sousa has been in the food service and manufacturing industry for his entire career and plans to use his expertise in the field to help his Brass Tap locations thrive.

Building on the momentum of Sousa’s five-store signing in Modesto, The Brass Tap is looking at expansion opportunities in the San Francisco Bay Area, aiming to capitalize on the growing craft beer scene in Northern California.

Outside of California, The Brass Tap continues to grow its presence throughout the country, including in Texas where an existing operator with the brand is preparing to sign for a five-store deal in Dallas.

Squisito Pizza & Pasta Opens in Queenstown, MD with FranchiseeSquuisito Pizza & Pasta also opened for business in the Queenstown Premium Outlets in Queenstown, Maryland as well. This location is the first Squisito owned by franchisee, Martin Hernandez. Hernandez has been working with Squisito for the better part of 2 decades and it was his dream to bring Squisito back to the Eastern shore.

Squisito is a fast-casual Italian concept, with multiple locations across Maryland and Virginia. This restaurant is the 4th Squisito Pizza & Pasta franchised location and is the 11th restaurant for the Monte Restaurant Group which also includes Meatballs, Etc. and Carpaccio Tuscan Kitchen. Squisito Pizza & Pasta will also be opening later this Fall in Oakton, VA with franchisee, Kevin Trump.

 

That is a crazy month or so of openings of franchise restaurants nationwide.  Was your old favorite or new up and coming concept in the mix?  Let us know at We Sell Restaurants so we can track all the franchise restaurants opening nationwide.  

 

Topics: Buying a Restaurant

What are America's Favorite Restaurants and are they for Sale?

Posted by Robin Gagnon on Sep 17, 2018 10:07:18 AM

What are America's favorite restaurants and are any of them for sale?  Here are the answers since the latest list has been compiled according to an annual study by the Harris Poll.  The Harris Poll's EquiTrend study monitors thousands of brands.  In this year's study more than 77,000 United States based consumers participated.  They rated more than 3,000 brands across 300 categories, and 80 brands were named "Brand of the Year." 

Some results are expected and duplicate last year.  Other results are pretty surprising!  If these are America's favorites, is there a chance to get your hands on one of your own?  You bet.  The great news is that We Sell Restaurants has some of these very restaurants for sale in in our inventory.  Here are the results by category along with our thoughts on those taking the top spot, or surprisingly enough, not winning "best of" by this poll.  

For the Mexican category, Taco Bell knocked last year's winner, Moe's from the top spot to regain the position they previously held as the number one Mexican favorite.  Among our restaurants for sale, we do not include a Taco Bell but we have strong interest at We Sell Restaurants for virtually anything in this category ranging from fast casual Mexican like Moe's to full service dining.  Check out this current favorite among our Mexican restaurants for sale. Our restaurants for sale in this category range from franchise opportunities to independents.  

In the mood for the classic American Burger?  Five Guys took the top position in this poll.  From our restaurants for sale inventory, this burger chain opportunity tops the list at our website.  While the burger chains focus on the fast food to fast casual style of service, casual dining is a favorite of many consumers.  In that category, the Hollis Poll surfaced a tie.  The top spot was split between The Cheesecake Factory and Texas Roadhouse. Who doesn't love the opportunity to shuck their own peanuts at Texas Roadhouse?  

When it comes to chicken, the favorite is no surprise.  This chain manages to deliver the top average unit volume nationwide combined with incredible customer service.  Chick-Fil-A took top honors and this is a multi-year achievement for the brand.  If sweet is your passion, Krispy Kreme led the list in the coffee shop category.  This one is actually surprising for those of us selling restaurants for a living.  Because the category is coffee shop, we would have expected to see Starbucks take top honors.  Instead, they were knocked off by those who are serving the doughnuts and coffee hot at their locations.  

In the ice cream category, Ben & Jerry's took top honors.  Their eclectic mix of flavors even at premium price points had them leading the way.  In our restaurants for sale inventory, we feature a great opportunity to acquire a Ben & Jerry's delivering six figure income.  Here's a link to that business opportunity in Florida.

America's favorite pizza chain according to the Harris Poll is Blaze Pizza.  Now this was a surprise as Blaze doesn't have the footprint of many other chains.  Considering that they have only 286 stores nationwide, we are actually pretty shocked by this result.  

 For sandwich shops, there was again, a tie for the top position.  Panera Bread and Subway tied for first place in the sandwich shop category.  We have a number of Subway franchises for sale at this link and sandwich shops lead our inventory in store counts and interest by buyers.  Since these are easily operated, well trained by the brands and for the most part, avoid alcohol, late nights and even frying, they are among our most popular restaurants for sale. 

Did the Harris Poll cover your favorites or leave something out?  Send us your comments on this article. 

For more information on restaurants for sale, visit us online at Wesellrestaurants.com 

Adapted from businessinsider.com 

Topics: Restaurants for Sale

Buying a Restaurant?  You're Not Alone.  Check out the Good Economic News & Sales in August

Posted by Robin Gagnon on Sep 13, 2018 11:24:50 AM

The economic news is good on all fronts for those buying a restaurant.  We Sell Restaurants posted a record month while national restaurant sales hit a three-year high.  If you're in the market for buying a restaurant, it appears that 2018 could be your year as all signs are positive.  Here's what we know so far.

Same-store restaurant sales were up 1.8 percent, making August of 2018 the best month in three years!  That's right.  September of 2015 was the last month with this much positive news.  Hurricane Harvey, which hit the Texas coast in August of last year, greatly impacted sales in the last week of that month, giving restaurants a built-in advantage. That soft comparison resulted in same-store sales growth of 2.9 percent for the last week of August 2018. The sales are reported from TDn2K’s Black Box Intelligence data, based on weekly sales from over 30,000 locations representing more than 170 brands and nearly $70 billion in annual sales.  

The Small Business Optimism Index soared to 108.8 in August, a new record in the survey’s 45-year history, topping the July 1983 high water mark of 108. The record-breaking figure is driven by small business owners executing on the plans they’ve put in place due to dramatic changes in the nation’s economic policy.

The August Small Business survey showed:

  • Job creation plans and unfilled job openings both set new records.
  • The percentage of small business owners saying it is a good time to expand tied the May 2018 all-time high.
  • Inventory investment plans were the strongest since 2005 and capital spending plans the highest since 2007

Pink Simple National Wine Day Social Meida GraphicPeople are working.  The national unemployment rate averaged 3.9 percent over the last four months.  There were 20 states reporting unemployment of 3.6 percent or less in July. This could translate to struggles for some restaurants going forward as they seek to fill opening and face competition for the best workers.

Turnover is Stable to Slightly down. People Report™ tracks staffing levels, demographics, turnover and provides compensation and benefits analysis for the restaurant industry on a monthly, quarterly and annual basis. The latest People Report metrics indicate turnover rates for both managers and hourly employees dropped slightly in July. Since employee retention and guest services are so aligned, this is good news for the industry as well. 

Restaurants are Selling.  In the month of August, We Sell Restaurants posted a sale virtually every other day.  Nearly 60% (57% to be exact) were franchise resales.  This demonstrates that a strong open and operating concept with bottom line earnings is a winning combination for those buying a restaurant.  Of the transactions for the month, many were for locations generating sales of more than a million a month and the lowest sales levels were restaurants selling with volume of just over $200,000.  

Forty percent of the units changing hands with the assistance of We Sell Restaurants were netting six figures or more.  This is a prime opportunity for those transitioning out of corporate America and seeking strong earnings for their families. This is despite the previously cited strong labor market which is also inducing those back into the jobs market at higher wages.

Restaurant Broker Robin Gagnon who was the broker of record for five transactions in the month and Co-Founder of We Sell Restaurants said this of the results, "The economic environment is certainly stimulating the overall market for buying a restaurant.  We predict continued strong sales for the year based on our current pipeline as we are currently working deals that will close in early 2019.  The best listings, especially those with high earnings, are seeing multiple contracts and backup offers."  She went on to say, "Part of the success we are seeing is the strong lending environment.  Our banks and lending contacts see the continued strength of the economy as a mitigating factor to any risk assigned to deals.  They appear to be factoring this into their lending and forward-thinking projections." 

With all this economic good news, is it the right time to be buying a restaurant or selling a restaurant?  For many, while the dollars and sense play a role, decisions are often based on family needs or lifestyle choices.  When the economic trends and the personal desires overlap in an environment that satisfies both needs, it’s a winning strategy.

 

Blog Byline Robin

  

Topics: Buying a Restaurant

The 5 Worst Decisions You Can Make when Selling Your Restaurant

Posted by Robin Gagnon on Sep 10, 2018 12:11:31 PM

Interesting in selling your restaurant?  Here are five the absolute worst decisions you can make to keep the deal from happening, torpedo a would-be transaction and shut buyer’s down cold once they do express interest.  Most people only tell you the sugar-coated version of how to sell a restaurant.  We’re digging into the down and dirty advice from the We Sell Restaurants.  We’ve seen it all, but these five instances are the key reasons a deal gets sidelined and buyers move on.

Ignore the Broker’s Advice for Listing Price

The restaurant broker performing the valuation on your restaurant is relying on comparable sales, multiples based on the market conditions, lending approvals and years of experience to set the selling price.  As the seller, you’re relying on what you “need” or “want” for the business. Buyers are not interested in what you need from the sale or what you want for the business.  They are interested in obtaining a business in line with current market conditions for similar businesses with comparable earnings.

When you tell the restaurant broker that you want a price of $295,000 on a listing valued at $225,000, you are setting up a scenario for disappointment.  Make the decision up front on accepting advice or pay the price in lost months of opportunity and wasted marketing efforts.     

Forget about Operations Once Your Business is ListedThe 5

Taking your eye off the ball is never a good idea, especially when selling a restaurant.  Just because your business is listed with a Restaurant Broker, that doesn’t mean the deal is done.  Typically, you have months of waiting before the closing takes place.  It’s not the time to slack off, in fact, it’s time to up your game.  You will have buyers visiting as secret shoppers and determining if they want to move forward. 

We coach buyers to understand that they are always buying a work in progress and any improvements will lead to a better bottom line for them.  However, if last years’ service record was impeccable and you’re shorting people on night shift to save a few pennies, it will show.  That leads to buyer questions.  Buyer questions lead to negotiated deal terms and ultimately, impact the value of your business.  Decide now that you will keep the operations on track prior to listing your restaurant for sale if you want the best offers.   

Forget About Driving Sales; They Don’t Matter that Much, do They?

Another surefire way to torpedo a sale and keep from selling your restaurant is to start posting negative sales comps.  Positive sales are a requirement, not a suggestion.  Above all, stop the bleeding somehow, if you start heading into negative territory.  Figure out a way, whether through promotions, advertising, delivery, catering or somehow, to get your sales posted in positive territory until the restaurant is sold.

As restaurant brokers, we work with lenders who routinely deny loans because of sales trending or help sellers craft messages about why the trend is dropping. Don’t put yourself in this box unless you’re not that interested in selling your restaurant.

Stop Paying your Taxes

Here’s another bad decision if you want to shut down all the momentum for selling your restaurant.  Begin ignoring the tax man and the payments for payroll or sales tax.  If you think these items are not going to surface before the closing, you are dead wrong.  All attorneys preparing closing documents should be doing a UCC (Uniform Commercial Code) Lien Search.  That search will uncover any unpaid debts and liens.  Since taxing authorities are usually the first to file, these liens will show up. 

Any liens will have to be paid out of the closing or settled in some manner before you can sell your restaurant.  The fact that the liens are there will raise serious doubts in the mind of any buyer.  Can you be trusted if you don’t pay your taxes?  What other bills are out there waiting to surface? These are the doubts raised in a buyer’s mind when taxes aren’t paid.  This tactic is a surefire way to drum up a lot of wasted penalties and interest along with driving away buyers.

Be Less Than Honest, About Anything

There’s really nothing you can tell a restaurant broker that he hasn’t heard before.  What he or she can’t help you with, however, is what they don’t know.  If a pipe breaks and you close the restaurant for two weeks while it’s in contract, that’s a very material matter that should be disclosed.  If your wife caught you with the night waitress in a compromising position, it’s embarrassing and should be no one’s business but if a buyer is likely to hear about it, the broker should know. 

Any situation can be managed if the broker is in the loop.  Making the decision to be less than honest or hide something and it will certainly surface at the worst possible time.  In most cases, it’s another surefire way to keep from selling your restaurant.

There are, unfortunately, many great decisions you can make to help sell your restaurant.  Don’t sabotage the sale of your restaurant and avoid these five decisions for a successful transfer.  Need help selling your restaurant?  Reach out to us at the link below.

 

Topics: Selling a Restaurant

Want to Be Amazing at Leasing a Restaurant?  Here's How.

Posted by Robin Gagnon on Sep 6, 2018 11:30:00 AM

Everyone wants to believe they are the best any anything they try.  When leasing a restaurant, however, the landlord will often have the upper hand.  Here are the tips from We Sell Restaurants so you can be amazing at leasing a restaurant, giving you the best chance at getting the space you want at a price that's right for your concept. 

Begin with the Concept

The landlord's first question when leasing a restaurant to a new candidate is to understand the concept you have in mind. Is it new to the market?  Do you have existing locations?  Is it a fad trending out or trending up?  Do the demographics of his center seem conducive to the style of restaurant?  Will it draw unattractive noise, create parking issues or conflicts with other tenants?  All of these items are on his mind so before you inquire about leasing a restaurant, make sure your ducks are in a row.Here's how to be amazing at leasing a restaurant

It seems simple but too many people looking to lease a restaurant approach the brokers at We Sell Restaurants or landlord without a firm concept in mind.  You must have your menu and your business plan.  You must have a clear idea of how it fits into the center, its demographics and how it will compliment, not complicate the other tenant's lives.  Only with a firm grasp of these principles can you determine the best location for your concept. 

If you don't have all this information in a written format as part of your business plan, you're not going to be amazing at leasing a. restaurant and you're going to get a turndown.  Move from a dream to reality by putting your ideas on paper, together with a menu and pricing.  Easily pull demographic information from online resources like government databases at this link and you'll increase your odds of beating out competitors and leasing a restaurant in the most desirable part of town. 


Set a Budget - Based on your Business Plan

How many seats to you need?  How many times will you turn over the tables in a night generating how much revenue?  Does your idea cry out for patio seating or space for live music to set up?  Starting down the path to leasing a restaurant space means you have to put all the details together. The size, number of seats, times you turn over the seats per night and outdoor seating bring you to an estimate of revenue.  That tells you how much rent you can afford.

Leasing a restaurant space because it's in the "hot" part of town without making sure you can cover occupancy costs is a recipe for disaster. You won't be amazing; you'll be astonished at how quickly you go out of business.  Don’t start shopping and leasing a restaurant space without a full understanding of the revenue and expense line.  If you need help with a business plan, try local resources like SCORE found at this link or a local college or university who may have an entrepreneurship community outreach or business incubator program.  They may just have an MBA program willing to take your plan on as a team project. 


Test your Concept – Consider Doing a Pop-Up

Everyone's excited and ready to go to market but if you want to be amazing in your approach, why not try it on for size first?  Consider doing a pop-up restaurant.  

A pop-up restaurant is an idea that gained steam in the last few years.  Instead of a fixed space, an unused restaurant space may be used by a number of concepts for a short run of their concept.  Invest the time and money in building a following through a pop up concept before you commit to the recurring cost of a monthly lease.  Take that valuable customer input and further develop the menu, build a social media following and then be ready to share that with any potential landlord.  It’s also a great way to build investor support for your new business before leasing a restaurant.


Begin Shopping for Restaurant Lease Space

Once these steps are complete, you're well on your way to being amazing at this process.  You can now begin shopping for a location.  Begin your search for leasing a restaurant on line and on the roads.  Contact restaurant brokers in the market and start looking at options online.  One resource for lease space is loopnet.com.  Check them out but before inquiring, make sure you have someone working on your behalf.  The person posting the ad is usually (though not always), working for the landlord.  Because you have done the work listed above, you now have an understanding of the size, budget and location.  Look at you!  You're already amazing at this and ready to get the best possible location


Don't Forget Second Generation Space

In particular, ask brokers if they have second generation lease restaurant space.  This is a great way to get more for your money.  A second generation space means it was previously rented for restaurant use.  That means the location will have existing infrastructure, typically walk in freezers or refrigeration, hood and grease traps. That’s money you will save over going into a new center that has never been built out for restaurant use.


That's it.  Follow this plan and you're going to land an amazing restaurant for lease space for your new restaurants.  Let us know when you're open for business.  We want to check it out.  For restaurant space for lease listings, click the link below. 

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Topics: Leasing a Restaurant

Franchise Restaurants Grow Again -- from Houston to China

Posted by Robin Gagnon on Aug 30, 2018 11:30:00 AM

Franchise restaurants are growing again and here are the latest deals that We Sell Restaurants has been tracking around the world.  August was a very busy month with multiple opening and announcements of franchise restaurants both overseas and within the U.S.  Many small concepts with under 50 - 100 units seem to be putting up new locations which speaks to the overall health of the industry and interest by customers in new concepts.  Here's what we captured in August announcements for new franchise restaurants with more than a dozen concepts putting deals on the table ranging from single store to master franchise development agreements for multiples.  

Houston’s iconic German eatery, King’s BierHaus has finalized its first deal deal to bring three franchise restaurants to the greater Houston area. King’s BierHaus, cites itself as an award-winning ‘hybrid-casual’ German eatery.  

TKing's Bierhaus Signs First Franchisee to Expand Hybrid-Casual Concept in Greater Houston Areahe first franchised location will open in League City (828 W. FM 646) in October 2018.  A second location is in the process of being secured in Katy. Local franchisee Chung Hui, whose background is in retail development,  is the franchisee of record for this expansion. 

King’s BierHaus is the modern sister concept to the #1 German Restaurant in America, King’s Biergarten, founded by Austrian-born father and son duo Hans and Philipp Sitter in 2011. It began as a car wash serving bratwurst and beer and, over the years, developed into an iconic stop for local Houstonians and tourists alike. 

The bierhaus has developed an innovative ‘hybrid casual’ model for its franchise restaurants, which combines  elements of full-service and fast casual dining.  The brand cites this as a contributing factor to store volume.  King’s Bierhaus’ existing location, which implements the hybrid casual framework, reported a monthly average of $507,102 gross sales in the second half of 2017.

Mexico is on the mind of major franchise restaurants looking to grow and Mexico City is seeing more than one new concept.  Romano’s Macaroni Grill®, has announced the opening of its third location in Mexico City. Opened by Macaroni Grill franchise partner, Grupo Dival, the new franchise restaurants will be in the Tlalpan borough, just ten miles south of Mexico City, with a second location opened by the group within the past six months. International expansion continues to be an important part of the strategic franchise restaurants plan for Macaroni Grill with the recent opening in Mexico City bringing the number of international locations to 18, located in seven countries.

16th Hooters Location in Mexico Opens in Mexico City

Hooters of America recently announced the 11th Hooters location in Mexico City, Mexico.  Led by franchisee Hooters de Mexico, the new 5,3755 square foot venue, is located at Calz. Acoxpa 430 Loc. A-PA-07/08, Col. Vergel del Sur, CP 14340, Tlalpan, in Mexico City,

The new location will feature a centrally located bar, a wide array of cocktails and craft beers, comfortable seating options, and a top-of-the-line AV package perfect for watching all the games. 

Hooters of Paseo Acoxpa boasts 294 seats, over 40 TVs, and a spacious patio, making it easy and comfortable for fans to catch their favorite game.  Hooters continues its acceleration of  franchise restaurants and is actively seeking qualified franchise partners to open new locations in select markets across the U.S. and around the globe. 

Willie Jewell's Old School Bar-B-Q Lexington Grand Opening 8-22-18 Willie Jewell’s Old School Bar-B-Q, the fast-casual spinoff from the 69 year veteran Bono’s Pit Bar-B-Q concept, is expanding in Lexington, SC.  Willie Jewell’s will be opening its newest location on August 22, 2018.  Locally-owned by Willie Jewell’s franchisee, Jeff Katz, the first Lexington location will be 105 Saluda Pointe Court and will be open 7 days a week from 11:00am – 9:00pm with full service Catering opportunities as well. 

This will be the 13th of the franchise restaurants stores for the growing concept, which will now have restaurants in Florida, Georgia, New Hampshire, and South Carolina.  Willie Jewell’s is continuing to expand into new markets through the strength of locally owned and operated Franchises, with 4 more stores currently under construction in Brunswick, GA and the Tampa, FL areas.

 

Chicken Salad Chick to Open Fourth Nashville Location in Spring HillChicken Salad Chick, the nation’s only southern inspired, fast casual chicken salad franchise restaurants chain, announced today it will be expanding in Tennessee with its fourth Nashville location opening in Spring Hill. Located at 4867 Main Street, the company-owned restaurant marks the brand’s 92nd location in the Southeast and will open on Tuesday, August 21st with a ribbon cutting ceremony starting at 9:30a.m.

The Chicken Salad Chick concept, born in Auburn, was established in 2008 in the kitchen of founder, Stacy Brown. When Stacy discovered that the local county health department would not allow her to continue making and selling her delicious recipes out of her home kitchen, she overcame that obstacle by launching her first franchise restaurants with the business expertise of her future husband and fellow founder, Kevin Brown. Together, they opened a small takeout restaurant, which quickly grew; the company now has 92 restaurants across the Southeast.

 

SAJJ Mediterranean Announces Official Grand Opening Celebration for New LocationSAJJ Mediterranean, the popular family of Bay Area-based restaurants and food trucks known for fresh, exotic, and customizable Middle Eastern cuisine, will officially celebrate the Grand Opening of their seventh brick-and-mortar store on Friday, September 7. The newest SAJJ outpost is located at 88 Belden Place/ 485 Pine Street in San Francisco’s business epicenter, the Financial District, and will be celebrating its official Grand Opening by offering up specials and free items to new customers.  It is the second San Francisco location for the brand. 
SAJJ’s newest eatery is located across from the iconic Bank of America building on Belden Place, known among locals for transforming from a small drivable road at night into a pedestrian-only, cafe-lined street during the day, offering al fresco dining experiences in the midst of the bustling FiDi neighborhood. The historic building that houses the new SAJJ shop was built after the Great San Francisco Earthquake of 1906, and still retains its original brick walls and mosaic floor. To preserve the integrity and history of the century-old building, SAJJ has kept much of the space’s original structure and qualities intact.

Tim Horton's plans to open 1,500 franchise restaurants in Asia over the next decade despite facing hefty competition from a slew of companies who have dominated the market as the continent warms to drinking coffee.  The president of Tim Hortons says a plan to conquer a crowded Chinese coffee market hinges on tailoring its menu to local habits and tastes — including offering congee and matcha alongside signature items such as double doubles.

Tims announced an agreement last month with private equity firm Cartesian Capital to bring thousands of franchise restaurants to China, with plans to open the first location in 2019.Tim Hortons has previously announced plans to expand to Spain, Mexico, Great Britain and the Philippines.  Its U.S. expansion, however, appears to be faltering. Last month it closed four locations in Ohio, the latest in a string of closures south of the border in the past several years

TTropical Smoothie Café Opens 700th Locationropical Smoothie Café, has announed the opening of its 700th location in the system, in Hurst, TX at 760 Airport Freeway Suite 100. This major milestone showcases Tropical Smoothie Cafe’s rapid growth since launching in Destin, FL more than 20 years ago and gets the company closer to reaching its goal of opening 120 franchise restaurants in 2018. Tropical Smoothie Café is continuing to fuel development in Dallas/Fort Worth to bring its better-for-you® offerings to more communities throughout the metro area. With nine cafes currently open in Dallas/Fort Worth, these expansion efforts will bring two additional locations to the market by the end of this year.

 

Fork & Salad Announces Its First U.S. Mainland Store in Southern CaliforniaFork & Salad, the Maui-based eatery with a mission to make healthy, farm-to-table cuisine accessible to the masses, plans to open its third corporate location and first U.S. mainland store in Orange, CA. The location, which will introduce the brand to the mainland U.S. and serve as a training store for future franchisee operators, is slated to open before the end of 2018.

Fork & Salad’s new Orange County restaurant will be located in a historically restored building that features original brick construction from 1922 and open wood truss beams. The 1,535 square foot space will have seating for more than 45 guests and be prominently located in the walkable district of Old Towne Orange. Fork & Salad’s menu options include build-your-own and signature salads, produce-forward sandwiches, gluten-free items, kombucha on draft and more, which can be enjoyed in-store or for take-out and pick-up via phone ordering or the Fork & Salad mobile app.

Bennigan's Continues Growth in Small-Town America with New North Dakota RestaurantBennigan’s announces it newest store in Mandan, North Dakota.  The 42-year-old brand is developing in smaller markets as evidenced by this location in a town of only 22,000 people.  

The new restaurant, located at 1506 27th St. NW, will celebrated its grand opening on Monday, Aug. 20. 

Since the end of 2012, the company has opened new franchise restaurants in Clarksburg and Frederick, Md.; Sacramento, Calif.; Melbourne, Fla.; Monahans, Texas; Lexington, Ky.; Veracruz, Mexico; Larnaca, Cyprus; Obarrio, Panama; Doha, Qatar; and Dubai, UAE.

Franchise restaurants are coming soon to Steubenville, Ohio, and Memphis, Tenn.; and internationally in Guatemala, Honduras, El Salvador, Amsterdam and Pakistan, with more than 100 additional locations in development.

Jon Smith Subs, a nationally recognized chain known for delicious hot, grilled subs featuring high-quality marinated sirloin steak and chicken, celebrated a grand opening in Richmond, Virginia on August 20th.  The restaurant, located at 8517 Midlothian Turnpike, Richmond, is 1,600-square-feet and seats 35-40.  Jon Smith Subs has locations in South and Central Florida as well as Ohio, Nevada, Texas, and California—soon in Australia.  

 Jimmy Hula's Continues Florida Expansion with Orlando OpeningOrlando based Jimmy Hula’s Licensing announced the opening of its 15th store in August at 68 East Pine St., Orlando, Florida.  Jimmy Hula’shas units in the Orlando, Tampa-Clearwater-St. Petersburg, Jacksonville and Daytona Beach markets and is looking to franchise expansion throughout the Southeast.

Jimmy Hula’s serves specialty tacos, burgers, sandwiches and bowls in a surf/ beach vibe. It’s fine food at value pricing. That’s why our locals call it Food Nirvana. All stores serve a variety of craft beers and several stores have full service bars.

Jimmy Hula’s has signed area development and master franchise agreements calling for the opening of 60 additional franchise restaurants in Florida and North Carolina.

 
Slim Chickens Gears Up for August Opening in FayettevilleSlim Chickens, a leader in the “better chicken” segment of fast-casual restaurants, will continue expansion of its fresh chicken and unrivaled flavor in its headquarter market of Fayetteville, Arkansas. The corporate-owned restaurant will be located at 1855 MLK Jr. Boulevard opened in August. This is the second corporate store in the market.  

Since the beginning of the Slim Chickens journey in Fayetteville, the brand has celebrated 75 franchise restaurants openings in 14 states, as well as international locations in Kuwait and London. The brand is well on its way to achieving its goal of 600 restaurants by 2025.

Westminster, Colorado Selected as Upcoming Location for The Great Greek Mediterranean Grill Expansion The Great Greek Mediterranean Grill will soon be coming to 14315 Orchard Parkway, Suite 400, Westminster, Colorado. The parent company for The Great Greek– announced that is has finalized its latest agreement with Jack Jones, a local business man and former defense contractor. The rapidly-expanding fast-casual franchise restaurants group already has 15 locations in development across the United States, along with its two original, award-winning locations in the greater Las Vegas metropolitan area.

UFG has been strategically expanding The Great Greek brand nationwide, with a strong focus on established markets that are ripe for a departure from typical fast-food fare and middle-of-the-road flavor. Likewise, they are partnering with experienced business people eager to make a bold entrance into the restaurant market. 

The original Great Greek locations were in Las Vegas, but the concept is now being franchised by The United Franchise Group and is quickly expanding across the U.S. and abroad.

That is a mind-boggling amount of activity for a single month showing tremendous growth in franchise restaurants from small concepts to very large players.  We'll keep you posted on more deals as they hit the market.  Meanwhile, if you're interested in franchise restaurants but want to avoid the risk of a start up, visit us online to see our inventory of existing franchise restaurants for sale?  Check out our listings online at the link below or contact We Sell Restaurants for more information. 

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Topics: Buying a Restaurant

Myths Uncovered About Selling a Restaurant That's Losing Money

Posted by Robin Gagnon on Aug 28, 2018 11:30:00 AM

Selling a restaurant that isn’t making money...is it even possible?  Is certainly is.  Plenty of books written in the marketplace will tell you that if your business isn’t cash flow positive or if the liabilities exceed the assets, then you need to “wait” and improve your business. That’s a myth.  In today’s market, We Sell Restaurants is selling plenty of businesses that are losing money, proving that this thinking is out of date.    

Summer Neon Tropical Music Album Cover

Selling a restaurant without cash flow means selling a business that is losing money for the current operator.  It may need a concept change, a menu adjustment or yes, even a leadership swap, but this location can be a winner for the next person owning the business.  That’s why it’s a myth that no one will want the business if it’s not earning a return today. After all, one’s man’s trash is another man’s treasure. Even if your restaurant is not making money today, it represents an opportunity for someone else tomorrow.

A restaurant that is losing money is referred to as an “Asset Sale.”  It should be marketed differently than a cash flow positive business but it certainly can sell and most importantly, it needs to sell now.  In fact, that’s the most critical aspect when you have a restaurant losing money.  You don’t have time to waste.  If you concept isn’t working, you need to sell before additional months of rent stack up that you can’t pay or new bills are created.  This scenario is called an asset sale and we will help show you how you can sell your restaurant in this scenario by packaging what you do have for sale in a powerful way to attract buyers. 

Here’s the difference between a cash flow positive business earning a return for any buyer and an asset sale.  A restaurant seller is offering one of two things to would-be buyers:

  • If your business is cash flow positive and generates a living for yourself and your family, you’re selling a job.
  • If your restaurant is losing money, needs a concept change or just isn’t generating enough income to provide for someone else, you’re selling used equipment.

It is a myth that buyers only want businesses with cash flow.  Many creative restaurant buyers just want to take over your space and equipment, then re-brand to their own concept as a shortcut to success.  What is not a myth is their need for information.  While you love your restaurant for what you know, a buyer will want your restaurant for what you can prove.  In the case of an asset sale, it is critical to understand what you’re putting on the market when it comes to getting the most money for your business and selling a restaurant in the shortest period of time.   

The process to prepare an asset sale for marketing are the same whether you decide to sell the restaurant on your own or use the services of a restaurant broker.  This article will prepare you to maximize the return, even if you are selling at a loss.  Today’s sophisticated restaurant buyer is demanding.  Prepare up front for their requests and you will see the transaction move to the closing table more quickly.

Any listing for an asset sale should focus on the following:   

Opportunity:  While we cannot put a specific price on opportunity, it can be considered when marketing an asset sale.  Most buyers want to ignore this item as they want black and white numbers.  However, if you have a restaurant location with an under-market lease in an up-trending market, you do have opportunity to factor that into the pricing.  It is a myth that opportunity can never be priced into the equation.

Equipment List:  The single more important item in listing a restaurant for sale losing money is to develop a strong equipment list.  Pull the list together in either electronic or paper format.  For any item valued over $5000, include the serial numbers.  For any major pieces, include the model number. Selling your restaurant with the equipment is a shortcut to success for someone else.  It’s a myth that this is instantly devalued as restaurant equipment has many years of life.

Financial Data:  Even though a buyer is not purchasing established cash flow, count on them requesting financial information.  At a minimum be prepared to provide sales data by month for more than one year.  That gives them insight into the potential in this location even with a change of concept.

Remember, the buyer is asking you to prove the value of the lease or franchise, the transferability of the lease or franchise along business, along with physical assets they are buying along with any liabilities they are incurring. It is a myth when selling a restaurant to believe you won’t have to show all of the following items that should satisfy most requests.

  • Two Years of sales by month
  • Copy of the lease
  • Copy of the franchise agreement (if you are selling a franchise)
  • List of the furniture, fixtures and equipment that transfer in the sale
  • Copies of any ongoing obligations (POS rental agreements, leases for equipment to be assumed)

With these data points, a value can be determined for the business, attracting a buyer.  The key to selling a restaurant as an asset sale is to quickly stop the bleeding, eliminate any ongoing liability for the lease or franchise and get a deal in contract quickly.  It is a myth that there is no value and no opportunity for selling a restaurant if it’s not earning a return today. 

Interesting in selling a restaurant?  Contact us at the link below. 

 

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Topics: Selling a Restaurant

The 5 Things No One Told You to Ask about Selling Your Restaurant

Posted by Robin Gagnon on Aug 21, 2018 12:56:24 PM

Ready to sell your restaurant and looking for the right resource?  There are plenty of people out there selling businesses.  How do you know which one right for selling your restaurant?  Here are questions to use on broker including the 5 things one every told you to ask before.  

If the broker can’t address these to your satisfaction, odds are, he or she is the wrong fit. Starting with the wrong resource adds delays, time and money to the process.  Most sellers want to sell for the most money in the shortest time.  Ask these 5 things and you’ll know who can get the job done. As a seller, you should apply the process of due diligence on your broker long before they ever sell your restaurant.   

Your Guide to Seeds (1)

The simplest most basic question deals with experience.  Ask the broker exactly how many restaurants they have sold.  Seems easy but it constantly surprises me that sellers don’t require this information.  After all, it doesn’t’ matter how many daycare, dry cleaner, liquor store and car wash properties the broker has handled.  You are interested in how many restaurants he or she has sold.  Why?  A specialist has an inventory of buyers already focused on what you’re selling.  Why go fishing in the wrong pond?  Go where the fish are biting and the bait is your business.  That means a broker who sells lots of restaurants has buyers interested in the food service industry.

Figure out how successful they are at selling restaurants.  After all, it doesn’t matter how many restaurants they have listed.  You want to know how successfully they sell. For that, it comes down to one single metric.  Ask the broker for their closing percentage. No one told you before, but this is a statistic that any reputable broker tracks.  It is a clear measure of their success in selling a restaurant. It’s the count of restaurants sold divided by the count of restaurants listed. 

We were shocked to hear at a recent industry function that only one in three businesses listed by one major franchise brand will make it to the closing table.  Why would you list with someone with a batting average this low?  Anyone who wishes to sell your restaurant should be able to tell you, in addition to the days on market, an average time to closing, along with the percentage of transactions that sell. If they can’t, you’re dealing with a rookie.  While that may be okay in baseball and there are certainly stars among the start-ups, it’s a good plan to work with a seasoned professional who closes 80-90 percent of their deals.

No one may tell you to ask this question but it’s critical.  How many other brokers do you cooperate with and what groups do you belong to?  Industry groups often share listings with one broker working the “sell” side and another working the “buy” side.  Your chances of selling dramatically increase when the listing is exposed to more brokers. Remember, you want the greatest exposure.

Selling your restaurant is not a one-man sport.  What’s the team surrounding your broker and what’s his or her policy on co-brokerage? Is he or she is not a member of the professional organizations that share listings and work with buyers and sellers nationwide, you will decrease your potential to sell your restaurant.

it’s good business practice to ask your broker about their level of education, degrees, industry knowledge and any certifications. While it is not required to have advanced education to sell your restaurant, those with strong industry credentials have dedicated time, money and energy to their education. For many, this commitment to education and follow through puts them in the rank of top producers. 

Given a choice between someone with advanced education and someone without, why bet on the uninformed?  For the brokerage industry, a Certified Business Intermediary designation or CBI is the industry gold standard of knowledge and experience that’s been tested.  Less than 500 individuals worldwide hold this designation so a broker that has these credentials is already at the top of their game.

Lastly, ask a broker how they will be investing in your restaurant for sale?  Where will it be marketed?  Will there be upgraded placement?  Who will receive email blasts on the listing and how frequently?   What are your marketing channels for exposing the business to interested parties?  A marketing plan tells you they have a recommendation and road map for attracting buyers.  Without this, they are simply holding the listing until someone comes in the door looking.

There are clear measurements and ways to quantify the quality of a restaurant broker no one bothers to share.  Now you have them.  Take advantage of these questions to score someone who will get you the most money for your restaurant in the shortest time.

 

Blog Byline Robin

Topics: Selling a Restaurant

Restaurant Franchises Growing in Latest Deals Announced

Posted by Robin Gagnon on Aug 17, 2018 9:22:26 AM

Interested in knowing which restaurant franchises are inking new deals and expanding across the country?  We are too!  We Sell Restaurants goes through all the online announcements and press releases to bring you the latest restaurant franchises expanding nationwideWe’re tracking it all from units ranging from one to one hundred.  Here's what we saw in the latest press releases and announcements.  

Despite what we restaurant brokers believe is a tenuous business model, health food concepts continue to expand.  Each month we see new juice concepts and health food concepts adding units.  The newest deal announced is with former NBA player Kris Humphries., He is building six units as the latest multi-unit owner developer for the healthy food franchise, Crisp & Green.  He’s expected to put six restaurants under this brand in the Minnesota Minneapolis Twin Cities market. The first one is already under construction. 

In the totally not healthy food category, the Brass Tap, a craft beer bar franchise, is expanding by five units in California.  The developer is Rick Sousa, a principle of Dust Bowl Brewing Company. He’s a veteran of the industry and plans to open his Modesto store by December of 2019.

Pizza was the single category to post comp store increases last year so it’s not surprising to see restaurant franchises adding units to the mix.  Mountain Mike’s Pizza has inked a deal for more than 40 new units in Southern California.  Between these two deals, Southern California has beer and pizza covered.  A current franchisee, Robby Basati, with five existing stores will be developing 40 new Mountain Mikes Pizza restaurant franchises.Restaurant Franchises Announced

Not to be left out of the mix, Hungry Howie’s another pizza chain, has five new restaurant franchises in development with Deem Investments.  These stores will open in Arkansas.  Hungry Howie’s is currently operating in 22 states nationwide but have been juicing up development nationwide.  They appear to be working hard to expand their footprint.

California has been a tough state to deal with in development of new restaurant franchises, but it looks like that’s beginning to change.  Perhaps the demand for new concepts is now at the tipping point to outweigh the difficulties to develop stores in this market.  Those issues include:  onerous regulations, extreme impact fees and high rents that far outpace the nation. These barriers to entry are not stopping new restaurant franchises from diving in at new levels.  Between the Mountain Mike’s 40 store deal, five for Brass Tacks and the newest from Yang’s Braised Chicken, California development is dominating this list with nearly 50 units on the table.

Many brands develop in the U.S. first for strong proof of concept and then expand internationally.  In an approach that turns this model inside out, Yang’s Braised Chicken has over 6,000 units around the world and is now turning their development to the U.S.  They opened their first unit in this country in 2017 and just announced a multi-unit deal with Xiang Wang for three units in Orange County California. Again, California makes the list!

Also, on the West Coast, Café Yumm announced a three-store deal with franchisee Rebecca Blewett.  The chain, headquartered in Oregon has 20 locations currently.

Turning from the West Coast to the southeast, Louisiana-based The Lost Cajun is heading to the western North Carolina area.  A new deal has been announced to develop six additional restaurants in the traditionally mountainous part of the state over the next four years.  Another veteran operator is launching in that market.  Steve Galloway owns five Dunkin’ Donuts and has been a developer for concepts including:  Taco Bell, KFC, Pizza Hut and Subway.

Overall, we’re seeing trending in sales, leasing and franchise restaurants that agree with the economic trends nationwide.  There is an increased level of risk taking and launch in new concepts. This is fueled by a strong economy, a more business friendly regulator climate and lenders with plenty of money to fund new deals.

Want to see the restaurant franchises in our inventory?  Check out our listings online.

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Blog Byline Robin

Topics: Buying a Restaurant

The 5 Biggest Restaurant Lease Blunders to Avoid

Posted by Robin Gagnon on Aug 13, 2018 6:02:53 PM

Leasing a restaurant?  Here are five clauses you need to include.  Without them, you may see yourself on the hook for much longer than you planned if you ever sell the store.  Trust us.  As restaurant brokers, we have transferred dozens of restaurant leases.  Our best advice to you is to avoid these blunders now so you can transfer the store with no issues later.   

The most common error in negotiating a restaurant lease is the failure to plan for an exit strategy. No one enters business expecting to fail but it can happen.  Partners get sick or walk out of partnerships. Couples divorce, or liquor licenses get pulled.

On the flip side, businesses sell. You get an offer you can’t refuse. The guy developing a new brand in your market wants your location and your location only. Your partner wants out and you want in and the only solution is to sell your restaurant.

There are countless reasons why a business owner will need to get out of the restaurant lease. We recommend you have an exit strategy at the time you negotiate the initial terms.  Generally, this will not be found in the first draft of the landlord’s restaurant lease and you need to fight for these terms.  Avoid these blunders by including clauses that handle the most common transfer terms.  If they aren’t there, you or your restaurant broker need to fight for them.   elly fisher's

Blunder One – Failing to consider the transferability of the restaurant lease

Restaurant lease transfer is the single most contentious issue in the sale of a business and kills more deals than anything else.  Your only power in this negotiation is at the outset of the restaurant lease, not when you’re ready to sell. Make sure the terms of the restaurant lease spell out how it will transfer it to another party.

Blunder Two – Letting the landlord load up experience clauses

You may enter into a restaurant lease with a landlord with lots of experience, but always think in terms of selling the store at a later date. Plenty of successful individuals enter the restaurant industry without experience, but that doesn’t preclude their eventual success. Landlords often will try to sneak language into the restaurant lease that requires five years of restaurant experience, even for franchise operators and it can severely limit the pool of buyers for your business.  Do the reverse and ask for an automatic approval if they are approved as a franchisee.

Blunder Three – Not getting the costs up front

Determine up front what the amount of the transfer charge or assignment fee will be.  Never agree to vague language like “reasonable” attorney fees.  What’s reasonable to you is totally unreasonable to someone else.  Define this term.  Identify the amount you’ll pay in a transfer so you know what it is and insure that it’s minimal ($500 to $1000 is appropriate).  We have seen transfer fees go to exorbitant levels ($10,000) in recent years.

Blunder Four – Leaving a transfer time undefined

Landlords will never move at the speed of business.  Just when you are ready to sell, they are working on other projects and a restaurant lease transfer is their lowest priority.  Try to force a specific time frame into the language, such as “transfer shall occur within thirty days of submission of a formal request.” Landlords are famous for dragging out deals. When you’re negotiating the original restaurant lease, you’re in the driver’s seat. When you want to transfer it later, you’re no longer a priority.

Blunder Five – Failing to protect the confidentiality of your business

Landlords have a lot of information on you including store sales, your earnings and much more.  Never sign a restaurant lease unless the landlord is held to the strictest confidentiality.  He or she often receives the purchase agreement and you don’t want them disclosing what your store eventually sells for.  Make sure landlord should be held to confidentiality on the terms of any future sale of your restaurant. 

That’s it.  Include these terms and avoid five blunders that will cost you time and money when you get ready to transfer your restaurant lease.

Blog Byline Robin

Topics: Leasing a Restaurant