Advice for Buying a Restaurant and Selling a Restaurant

Business Sales Score Record High in 2017

Posted by Robin Gagnon on Jan 26, 2018 9:38:16 AM

BizBuySell has released the latest data on Small Business transactions and the Restaurant Brokers were right when we predicted strong growth last year at this time. Small business confidence, an amazing stock market trajectory and consumer confidence are all combining to create a buying frenzy for small business sales.

What does the national data say?  The largest listing website just released year end data.  The company tracking transaction data provided on a voluntary basis by business brokers says it was a breakout year.  For 2017, BizBuySell reported 9,919 closed transactions compared to 7,842 in 2016, a huge 27 percent year-over-year increase.

How big was that in a historical context?  This rate of transactions was the largest captured since 2013. It wasn’t just the count of businesses and restaurants sold that grew. Asking prices also grew, jumping to an average 11 percent ahead of the prior year at an average of $250,000.  The site also captured increases in revenue of nearly six percent on sold businesses and cash flow growth of almost 7 percent.

Franchise resales, a specialty of the Restaurant Brokers at We Sell Restaurants had a 45 percent growth in 2017 compared to the prior year based on the BizBuySell data.  Franchise resales also demonstrated revenue growth of 22 percent over the prior year and cash flow up by 8 percent. How did that play out in sales prices for franchises for sale like the ones represented by the restaurant brokers?  How about a twenty percent hike in the final sales price or an average of $210,000 in this booming market?   

By sector, restaurants for sale had an amazing showing with 1894 restaurants sold along with 300 bars and another 727 in the "other eating and drinking" category.  That was a total of 2,921 units out of the 9,919 sold or 29 percent of the total sales reported by the industry.  .

In viewing this against the restaurant broker’s numbers, we met or exceeded the same numbers with transactions up over thirty percent for the year.  Selling prices were ahead by 23.5% and the number of days that listings were on the market went down.  Robin Gagnon, co-founder of We Sell Restaurants, predicts that 2018 will outpace these results.  “Last year was a precursor to a banner 2018.  When we predicted record growth last January, the stock market was just beginning to take off, small business confidence, and consumer confidence were improving but not yet stellar and the tax bill looked like a long shot.  For this year, we have unprecedented growth in the market, combined with baby boomers who have been sidelined waiting for a good economy.  Pair that with the impact of money flowing into the economy from the impact of the tax bill and 2018 will be the year for selling your restaurant.”

Eric Gagnon, President of We Sell Restaurants echoes these thoughts but cautions, “Though we anticipate a very strong 2018, that doesn’t mean sellers can hike prices or take their eye off internal sales growth.  The listings moving the fastest, are still though with the best numbers and strongest books and records.”

For a full and confidential valuation of your restaurant for sale, reach out to the restaurant brokers at this link or click the button below.

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Topics: Selling a Restaurant