Advice for Buying a Restaurant and Selling a Restaurant

We Sell Restaurants Issues Best Restaurants for Sale September 2019

Posted by Robin Gagnon on Oct 4, 2019 9:53:58 AM

What makes a listing hit the "Best Restaurants for Sale" list?  We base our report on signed confidentiality agreements, clicks, views, and calls to our Certified Restaurant Brokers.  With nearly 500 restaurants for sale, that means these are the top 2% of all listings in our database, the most extensive group of restaurants for sale nationwide.  Since our customers are doing the clicking and calling,  they are evaluating the options and pushing them into our best restaurants for sale list as the top ten among all activity.

Here is our latest report covering the month of September 2019.

The number one listing is a hybrid location that offers three business operations in one. This listing combines a restaurant, convenience store and truck stop into one home run location.  The earnings on this unit are an unmatched $735,000 and the price for the location includes the real estate.

Franchise Partner and Certified Restaurant Broker Justin Scotto recently listed this location which was not ever on the market for the full thirty days making its appearance on the list even more remarkable. Since this qualifies for SBA lending with real estate, the purchase price can be amortized over twenty years with just 15% down.  That has our restaurant buyers seriously interested.  

Listing ID:7124 Restaurant Broker Justin Scotto    
Restaurant Convenience store for Sale We Sell Restaurants Restaurant business for Sale plus C-Store and Truck Stop Earns $735,000!
Lease: zero
Monthly Rent: $zero,
Inside Sq. Ft. Business-3500,
Outside Sq. Ft.

Price:$3,750,000

Justin Scotto
(704) 609-4460

There appears to be a trend beginning on this month's report since the second most popular listing was for ten Subway franchises for sale with another very strong earnings level at $240,000 a year.  There are plenty of buyers pushing for strong EBITDA on the books and this store group, churning out nearly a quarter million a year in pure earnings was an instant hit among those buying a restaurant. 

President of We Sell Restaurants and Certified Restaurant Broker, Eric Gagnon is the one fielding the many calls, clicks and confidentiality agreements on this one. 

Listing ID:7059 Restaurant Broker Eric Gagnon    
Subway Franchise for Sale We Sell Restaurants Ten Subway Franchises for Sale - Multi Unit EBITDA of $240,000 a Year
Lease: Varied
Monthly Rent: $27673.95,
Inside Sq. Ft.
Outside Sq. Ft.

Price:$899,000
City:Dallas

Eric Gagnon
(404) 800-6700

We are seeing  a theme come into play as the next on the list of best restaurants for sale is a very strong moneymaker with earnings on the books of $500,000. 

This Naples Florida location offered by Franchise Partner and Certified Restaurant Broker Dave Whitcomb, has been off the charts with activity even though this listing is in contract already and set for closing.  There were multiple offers on this store, driving the actual price much above asking.  

Listing ID:7004 Restaurant Broker Dave Whitcomb    
Naples Restaurant for Sale Grossing $5.2 MM - Owner Income 7 Figures!
Lease: expires June 30, 2021
Monthly Rent: $9941,
Inside Sq. Ft. 3774,
Outside Sq. Ft. seating for 25 on patio deck

Price:$1,000,000
City:Naples

Dave Whitcomb
(239) 300-5041

From high earnings to high potential, the best restaurants for sale can be on either side of the spectrum.  Certified Restaurant Broker Steve Weinbaum was next on the list with a restaurant and bar for sale in Johns Creek that's not returning any profit to the owner and is ready for a new buyer to take over and change the concept. 

The excellent location in a high income area makes this ideal for a pub, sports bar, or full service restaurant of any kind. 

Listing ID:6202 Restaurant Broker Steve Weinbaum    
Restaurant and Bar For Sale in Johns Creek, Keep or Convert
Lease: 2 years remaining on initial term, with three 5 year options
Monthly Rent: $5600,
Inside Sq. Ft. 4069,
Outside Sq. Ft. 500

Price:$125,000
City:Johns Creek

Steve Weinbaum
(770) 714-4552

Franchise Partner and Certified Restaurant Broker Dave Duce in Austin Texas put forth a three store franchise for sale package that pushed into the top two percent of all listings with We Sell Restaurants this month.  This opportunity, priced in the seven-figure range found many interested buyers and kept the phones ringing all month! 

Listing ID:7118 Restaurant Broker Dave Duce    
3 Franchises for Sale - Be a Multi Unit National Brand Owner in Austin
Lease: Expires 2025
Monthly Rent: $6241,5731,7650,
Inside Sq. Ft. 1700,1750,1761,
Outside Sq. Ft. 150

Price:$1,275,000
City:Austin

Dave Duce
(512) 773-5272

Six figure earnings offered on a quick service franchise for sale brought the Colorado office into the mix with a deal offered by Certified Restaurant Broker Chris Gordan.  The location, with a long term lease and option to extend, along with six figure earnings , is priced to move quickly.  That caught the clicks of buyers who wanted to know more! 

Listing ID:6942 Restaurant Broker Chris Gordon    
Quick Service Franchise for Sale in CO - Six Figure Earnings!
Lease: ends 2025 + 5 year option
Monthly Rent: $5200,
Inside Sq. Ft. 1576,
Outside Sq. Ft. 600

Price:$80,000
City:Westminster

Chris Gordon
(303) 594-4247

Certified Restaurant Broker Steve Weinbaum was back in the mix with some of the best restaurants for sale in the month of September.  Like many of the others that attracted a strong buyer count, this was a multi-unit opportunity in Indianapolis Indiana.  Pizza concepts are always strong and this two store group of franchises for sale easily pushed into a top position for inquiring restaurant buyers.

Listing ID:7104 Restaurant Broker Steve Weinbaum    
Profitable 2-Store National Pizza Franchises For Sale - Indianapolis, Indiana
Lease: Differs for each location - contact agent
Monthly Rent: $2400,2600,
Inside Sq. Ft. 1600,1600,
Outside Sq. Ft.

Price:$479,000
City:Indianapolis

Steve Weinbaum
(770) 714-4552

Just sneaking onto the top two percent of all listings, a restaurant space for lease in Decatur Georgia, tipped the scales at position number nine.  The attraction of Decatur and strong landlord brought plenty of interest for this location where we assist in preparing your business plan, menu and financial statement for the landlord. 

Listing ID:7001 Restaurant Broker Robin Gagnon    
Restaurant Space for Lease with Patio for Walkable Decatur Georgia
Lease: TBD
Monthly Rent: $TBD,
Inside Sq. Ft. 3273,
Outside Sq. Ft. 1664

Price:$0
City:Decatur

Robin Gagnon
(404) 800-6700

The last listing to make it to the Best Restaurants for sale based on our cutoff of ten listings was a business ripe for change in Lawrenceville Georgia, part of the Atlanta Metro area.  Certified Restaurant Broker Dominique Maddox is the listing agent and assisted multiple buyers in their inquiries on this store.

Listing ID:6804 Restaurant Broker Dominique Maddox    
Stunning Restaurant for Sale - Keep or Convert to New Concept!
Lease: Expires Feb. 2024 plus 5 year option
Monthly Rent: $3152,
Inside Sq. Ft. 2000,
Outside Sq. Ft.

Price:$59,995
City:Lawrenceville

Dominique Maddox
(404) 993-4448

That's it. You now have the complete list of the Best Restaurants for Sale in the month of October.  Buyers pushed high earning restaurants and multi-unit locations into some of the top positions with offers already in play from some of these. We'll continue to track the response on these best restaurants for sale and publish a new list next month. 

For access to all our listings, visit wesellrestaurants.com at this link for the most restaurants for sale anywhere online. 

 

Topics: Restaurants for Sale

Atlanta Restaurant Sales Are Trending Up - Sales Increased 4.18% over Last Year

Posted by Robin Gagnon on Oct 1, 2019 10:31:59 AM

Restaurant Volume (1)

The latest report from NetFinancials is out and they say that Atlanta restaurant sales volume increased 4.18% this year when measured against the same time frame in 2018. That's a fantastic result that We Sell Restaurants is excited to see.  In addition to overall strong sales, the report shows the results are strong across the board.  The positive sales growth was observed in 73% of the 102 independent Atlanta restaurants that are part of the quarterly survey conducted by the firm.  

They draw their data from 102 non-franchise restaurants in the market.  The total volume covered by this report was $160 million for year to date 2019.  It included Atlanta restaurants in all segments, fast-casual, casual and fine-dining open at least eighteen months.

How does that compare?  

One of the best resources for tracking national restaurant sales data is TDn2K’s Black Box Intelligence.  They reported that year to date sales on the national level are only .5% ahead of last year.  That means Atlanta restaurant sales are far outperforming the national trend by a difference of more than 4 percentage points which indicates the health of the industry in this market. 

The same firm reported that national restaurant traffic counts remain in a decline.  However, as We Sell Restaurants continues to interact with sellers, we see more and more market share shifting to delivery options like UberEats, DoorDash and similar models.  For that reason, store traffic count reductions must be viewed through the lens of a dramatically changing consumer model who is ordering in versus dining in.

The Black Box index is based on weekly sales from more than 170 brands that operate more than 31,000 locations and generate nearly $72 billion in annual sales.

The president of NetFinancials, Lori Johnson, was quoted in the report saying, "The first quarter of 2019 saw a tremendous increase in sales due to the Atlanta Superbowl festivities. The national spotlight was on Atlanta and visitors were given the opportunity to experience the food culture locals love. Not surprisingly Q1 2019 saw an increase in sales at most restaurants surveyed, a startling 78%!

Was all the increase attributed to the first quarter?  No.  The report goes on to state that second quarter sales were up 1.72% versus a national average of plus 1.0 percent. 

There continues to be growth in new restaurant openings in the Atlanta market along with ever increasing transactions for those buying and selling a restaurant from our database.  The economy overall was strong in the market with NetFinancials further reporting job growth among the industry in June.  They cite the addition of 9,000 new hospitality jobs in the market or more than 18% of the jobs added during the month.

The table from the NetFinancials report is shown below.  

10-1

Eric Gagnon, president of We Sell Restaurants said of the latest results, "There is no doubt the entire hospitality industry received a strong boost from the Superbowl.  We are glad to see that the trend for second quarter continues to outpace the national results. Our restaurant buyers and sellers continue to be bullish on results and are finding new opportunities each day."

Our list of Atlanta Restaurants for sale can be found online at this link along with resources for buying and selling a restaurant. 

Topics: Buying a Restaurant

E-2 Investment Visas for Buying a Restaurant - Frequently Asked Questions

Posted by Robin Gagnon on Sep 25, 2019 11:30:00 AM

Have you seen a restaurant for sale with the words "E2 Visa Qualified' and wondered what it means?  We'll take you through the ins and outs and frequently asked questions on investment visas for buying a restaurant or any other business. 

What is an E2 Visa?

This refers to a foreign Investor Visa.  This allows foreigners to live anE-2 _d work in the U.S. if they buy a qualifying U.S. business or create one and are a national of a qualifying treaty country.   With the current immigration  climate, it's a way to gain access to the U.S. as the State Department literally puts those with visas at the front of the line. 

How do I know if the U.S. has a treaty with my client’s country?

Check this link on the State Department website for a list of countries. Some countries such as Canada, Colombia, and Austria issue a five-year Visa.  Others issue them for a shorter period of time.  Countries like Ecuador, Jordan, Ukraine, and Thailand, issue only a 12-month visa however, these are renewable. 

How do I know if the business qualifies for an E-2?

  • The price must be right.  The process requires that you make a "substantial investment"
  • You must have employees. It cannot be a one person business.
  • It must be an active not a passive business investment like real estate. 
  • The funds must be invested from a legal source
  • The funds are invested or will be actively invested shortly
  • The restaurant buyer must be seeking to come to the U.S. to develop their business
  • Ownership must be at least 50%
  • The business can be unprofitable but it must have "potential" to make a profit in future as demonstrated by a business plan.

The Certified Restaurant Brokers at We Sell Restaurants screen the restaurants for sale that qualify for an E2 Visa.  They can help you with the ones that will meet the criteria when buying a restaurant.  One additional caveat, not all franchise brands will allow for visa candidates.  They will require proof of residency prior to buying a restaurant.

How long can you investors stay in the U.S. after buying a restaurant? 

The depends on the country's treaty agreement with the United States.  Typically they are 5-year visas, but when you initially enter the U.S. you get a 2-year status. There is no limit to the amount of extensions, but if a visa expires and you need to travel, you will usually need to renew it six months before the date that it expires.

When do the E-2 investors get social security numbers and driver’s licenses?

Those buying a restaurant with an E2 visa can apply for a social security number after they enter the U.S. Once they get a social security card, they may apply for a driver’s license. Spouse and children can get social security numbers but without a work permit, their cards may say not valid for work.

Why go for an E-2 Visa when buying a restaurant?

  • The ability to travel freely in and out of the U.S.
  • The ability to work legally in the U.S. with the E-2 company only
  • The opportunity to remain in the U.S. for a prolonged basis in E-2 visa status if you qualify
  • Dependents can accompany you while working in U.S. and spouses and children under 21 an apply for a work permit
  • Dependents can attend school in U.S. However, once they are 21, they will need an F-1 visa

    What are the Disadvantages of an E-2 Visa when Buying a Restaurant?
  • Limited to specific treaty countries
  • Must work for E-2 business
  • Approved in two years status increments and some countries have 1 year E-2 treaty visas
  • E-2 beneficiary must always have intent to be in the U.S. temporarily during E stay

Overall, buying a restaurant and acquiring legal residency in the United States through a visa is a great opportunity for those seeking to relocate to our great nation.  If you need more assistance on this topic, contact one of our Certified Restaurant Brokers, or see the listings that qualify when buying a restaurant at this link. 

 

Robin Blog Update

Topics: Buying a Restaurant

3 Main Mistakes in Due Diligence When Buying a Restaurant

Posted by Robin Gagnon on Sep 11, 2019 12:23:46 PM

The most common mistakes we see with those buying a restaurant is failure to understand the due diligence process. Due diligence is undertaken to confirm the items learned during the initial discovery phase of the business.  For those buying a restaurant, the issues fit under three major headings:

Due d
  • Too Soon
  • Too Much
  • Wrong Focus

Let’s look at these one at a time.

Too Soon -

When buying a restaurant, some take the approach that they want to see everything, and they want to see it before any form of an offer is made.  As Restaurant Brokers, we’ll receive a laundry list of items before a deal even goes into contract. Taking this approach, however, can hinder your ability to purchase.  Here’s why.

Sellers are cautious by nature.  They want to avoid revealing too much about their business until the buyer feels more “certain” to them. They trust the broker but aren’t sure, (YET) whether they have faith in the buyer to keep this information confidential.  Even though a confidentiality agreement may be in place, they are thinking of the people who work in the store, their customers and their current livelihood.  All of these are put at risk if someone doesn’t honor the terms of the confidentiality agreement. 

It’s too soon if you start pushing for items like tax returns and 941 filings before a deal is even accepted.   There hasn’t been enough time in the transaction to develop the trust needed between the parties.  It will happen; just not at the outset. 

To avoid the problem of “too soon,” it’s better to go into an agreement to purchase, with a due diligence period and a fully refundable escrow if you are not satisfied.  If the books don’t bear out in the due diligence period, you have the option to terminate or renegotiate the pricing or terms.

Asking for sensitive data like tax returns and 941 filings before a deal is even accepted is often a path to seller resistance, buyer stubbornness and ultimately, failure in buying a restaurant.

 

Too Much

There is a checklist for buying a business floating around on the Internet that is ten pages long and has about 100 items on it.  I know this because I’ve been presented with the exact same checklist dozens of times. 

This list asks for items that have very little to do with buying a restaurant.  I’ve received it on franchise transactions multiple times.  This list asks for terms of the intellectual property owned and all trademarks and patents.  HINT:  The franchise brand owns the intellectual property and the rights to all trademarks and patents.  It also asks for the minutes from every shareholder meeting.  HINT:  The average small business being transferred has one meeting on the books – the one that established the legal entity.  There’s nothing else.  It also asks for contracts with every vendor.  AGAIN – the average main street business doesn’t have vendor contracts.  If they are a franchise, they typically have one, their franchise agreement. 

If I receive this checklist after I’m in contract, it tells me that as a business broker, I need to do a better job to setting expectations and providing good stewardship over the deal.  I need to make sure my buyers seek my guidance about what they should be looking at in buying a restaurant.  If I receive this checklist before a deal is even made, I know I have a buyer who doesn’t really understand what he is buying and probably needs some more education about the industry and small businesses in general. 

If your interpretation of due diligence is to Google - - “Buying a business Due Diligence Checklist” and present your broker with a ten page document that isn’t relevant, it’s TOO MUCH, the second mistake made by most buyers.

 

Wrong Focus

Along with too soon and too much, the third mistake is “wrong focus.” Some of the items cited above are examples of items that are not relevant to the transaction.  Another area where buyers spend too much time and money are in areas they can’t change.  One example is the franchise agreement review.  It is rare to never that a franchisor will change the terms of their franchise agreement.  It simply doesn’t happen.  All 1,000 units operate on a similar plane and they simply will not exempt any one party from certain element. 

When a buyer spends time hiring an attorney to review the franchise agreement, knowing that it cannot be changed, it’s the wrong focus.  The restaurant buyer should be looking at whether a franchise model is the right fit for him or her.  If he wants to change the menu; a franchise is not a good fit.  If he or she wants to reduce the royalties to earn more money, it won’t happen.  Don’t waste precious dollars focusing on the items you cannot change.  Instead, focus on the items in due diligence open to negotiation or change.

These three mistakes in due diligence can cost you the restaurant you want to buy.  Avoid pursuing due diligence too soon.  Be careful of requesting too much and lastly, watch your focus.

Topics: Buying a Restaurant, Restaurants for Sale

Latest Restaurant Franchise Deals and Openings Announced

Posted by Robin Gagnon on Sep 3, 2019 3:34:03 PM

Restaurant Franchises are growing across the nation and the globe.  Some are open, some are signed, and some are target markets!  We've gathered the latest announcements about what's opening and what's in the future based on the latest signed restaurant franchise agreements and deals announced across the industry. 

Chicken, Chicken, Chicken -- It's not just Popeye's that has Chicken on the brain after last week.  There's a lot frying up in the Chicken franchise space. 

The first Zaxby’s in Chantilly, Virginia is coming this month to 43820 Eastgate Shoppes Drive. A fan favorite for chicken fingers, wings and salads, the new fast-casual restaurant is the first location this licensee team will open with plans for an additional five Zaxby’s in the future. Construction on the Chantilly Zaxby’s began in March led by local engineering firm Tri-Tek Engineering.

Franchise openings

The brand is also expanding to Spring Lake, North Carolina in September as well to 130 S. Third St. A. The new fast-casual restaurant is the third location owned and operated by Alan Ward and Fry Guys Management Group 3, LLC. Zaxby’s has 119 restaurants in North Carolina and more than 900 locations across 17 states. Construction on this location began in April.

Slim Chickens, a leader in the “better chicken” segment of fast casual restaurants, will continue expansion of its fresh chicken and unrivaled flavor in Illinois, with its grand reopening in Plainfield on September 5, 2019.  They also inked a six-unit deal with Preferred Development, LLC, with the first location expected to open in Minot, North Dakota. 

Huey Magoo's Chicken Tenders signed a six-unit deal with new franchisee Buck Harris, who will open restaurants in Lowndes, Dougherty, Lee and Taft counties in South Georgia. Harris is a former a Chick-fil-A franchisee and now also owns locations of Chicken Salad Chick.  

That wraps it up for the latest chicken deals.  Meanwhile, pizza is still hot.

Mountain Mike’s Pizza, LLC, a leading California-based family-style pizza chain, known for its legendary crispy, curly pepperonis and Mountain-sized pizzas, is focusing its expansion efforts in northern California’s Humboldt County with a Eureka, California location already in development.

Data uncovered during an in-depth market analysis paired with the brand’s longstanding success throughout northern California makes Humboldt County a natural fit for a concept like Mountain Mike’s, which caters to families, large groups and celebratory occasions. There are currently 211 Mountain Mike’s Pizza locations in operation throughout California, Oregon, Nevada and Utah.

Following a successful restaurant opening in Newington earlier this year, famed New York-style pizza institution, Artichoke Basille’s Pizza, has announced that its second Connecticut restaurant will open in Downtown Hartford this winter. The upcoming outpost will replace the former McKinnon’s Pub at 114 Asylum Street near the XL Center, in the heart of the city and at the epicenter of the revival and renaissance taking place in Hartford.

On the sweet side there’s plenty of new restaurant franchises in the mix as well.  

Doughnuttery, which launched its franchise program in February, signed its first area development deal, a six-unit agreement with Brian Burwell, managing member of Arizona Doughnuttery LLC, for shops in Arizona. A second area development deal, this one for three locations in Virginia, was signed with Doughnuttery of Nova, Inc., led by Leyla Khater, president, and Katherine Ronckovitz, partner. Doughnuttery has four open locations, three in New York City and one in Myrtle Beach, South Carolina.

Baskin-Robbins inked a multi-unit agreement to develop 10 new locations across Upstate New York, including in Syracuse and the Southern Tier, in addition to Wilkes-Barre/Scranton, Pennsylvania. With a portfolio of 40 Dunkin' restaurants and one multi-brand location, the deal was signed with franchisees Manish Patel, Sarika Patel, Krunal Patel and Tarak Patel of Bapa Chambers Rd Ice Cream, LLC.

Fast casual sandwiches, burgers and hot dogs remain in the mix with lots of opening planned coast to coast.   

Burgers, Fries & Shakes, a fast casual, “better burger” chain, is ready to satisfy the taste buds of burger enthusiasts in Orlando. The restaurant franchise is set to have two openings in late 2019 and early 2020 at 8050 International Drive and 3155 South Orange Avenue in Orlando. The Orlando openings mark the second and third MOOYAH Burgers, Fries & Shakes restaurants in the market, joining the existing Oviedo Mall location that opened last fall. The franchise brand is planning to bring an additional six locations to the greater Orlando area, creating a total of more than 200 jobs across the area.

Capriotti's Sandwich Shop inked several multi-unit deals for development in six states. In New York City, husband and wife Ashok and Maleka Isranie signed for three locations; in Phoenix, Arizona, Steve Holdeman of franchisee group Pastrami Boys will open eight units. MAAAFOOD, Inc. and franchisees Daniel Hoffman and Michael Vanderwoude signed a deal for three locations in Hammond, Indiana, while in El Paso, Texas, Tessie Rodriguez plans to open three Capriotti's. Business partners Anthony Reviglio and Ken Cassas signed on for two restaurants in Boise, Idaho, and in Florida, the following franchisees signed for three units each: Todd King (Jacksonville); Mark and Michele Maroulis (Sarasota); Scott Crawford and Stephan Poletta (Tampa).

Crave Hot Dogs and BBQ has an estimated opening date of late October in Houston Texas.  The brand is famous for its delicious Grilled Hot Dogs, brats and sausages along with its amazing BBQ sandwiches. Crave was founded in 2018 by Samantha and Salvatore Rincione. Since then, the company has signed multiple locations in Georgia, Florida, North Carolina, Oklahoma, Texas and more.

Dog Haus, the craft casual concept known for its gourmet hot dogs, sausages, burgers and one-of-a-kind creations, opened its second Chicago location inside Kitchen United’s brand new Eats on Sedgwick, located at 831 N. Sedgwick St,. on Sept. 3.

Across the Globe 

QDOBA Mexican Eats®, a leading Mexican fast-casual chain, today announced its continued expansion across Canada through an agreement with multi-unit operator, Burgess Enterprise. The five-unit deal focuses on locations to be developed in and around Northern Ontario, with the group’s first QDOBA restaurant set to open in Sault Ste. Marie in early 2020.

Popeyes Louisiana Kitchen signed a new agreement to develop and open more than 1,500 Popeyes restaurants in China over the next 10 years. Franchisee group TFI TAB Food Investments, led by CEO Korhan Kurdo lu, already operates Popeyes and Burger King restaurants in Turkey and Burger King in China. The commencement of Popeyes' operations in China is subject to a regulatory filing in China.

That’s the list of the latest restaurant franchise openings.  Keep an eye on the We Sell Restaurants website for franchise restaurant resales or click this link to see our latest franchise for sale listings.

Topics: Selling a Restaurant

Cost Versus Risk - “Pros & Cons” of Buying vs Building a Restaurant

Posted by Steve Weinbaum on Aug 26, 2019 1:51:44 PM

In my line of work, as a Certified Restaurant Broker, I speak to hundreds of folks every week looking to own their own Restaurant, Bar, Café, or Treat Shop.  Many are looking to purchase an established operating and profitable business while others are looking to launch their own. This important decision applies equally to independent restaurants as well as franchises, Fast Casual as well as Full Service…  At the end of the day, I believe strongly that the decision comes down to two key factors; Cost and Risk

 Consider the Cost

Building out a new restaurant from scratch can cost hundreds of thousands of dollars and take many months to complete.  During that time you may be paying rent, likely be paying off a loan, while not realizing any revenue.  Once you open there will be “ramp up” time establishing your business/brand in its new location.  When buying an existing independent or franchised restaurant, your budget and earnings goal dictate the cost.  Established restaurants are valued and sold based on current revenue and Owner Discretionary Earnings (ODE).  Depending on the restaurant’s financials, you may be able to acquire an open and operating restaurant for much less than the cost of building out a new one.  Most Franchise websites will tell you how much is will cost to build a new location from scratch.

Buying a Restaurant Versus Building a Restaurant

Consider the Risk

Building a new independent or franchised restaurant does not guarantee success.  Over 50% of new restaurants close within the 1st 3 years.  The average lease term is 5-10 years as is the loan it took to build that restaurant or franchise.  While there are highly successful restaurants that were established three years ago or less, the odds are against you.  When you buy an existing independent or franchised restaurant, you typically have access to years of financial history.  You can examine key factors such as rent expense, cost of goods, salaries, all as a percent of sales, to determine the profitability of the restaurant.  This is a powerful advantage that puts the new owner in the driver’s seat.

Consider the Reward

For many of us, owning our own business, being our own boss and in control of our financial well-being is an aspiration.  Unfortunately, we don’t always have the stomach or are in the fiscal position to take that leap.  But consider this…the average successful independent restaurant sells for 2-2.5 times verifiable owner earnings.  Franchised restaurants sell at closer to 3 times earnings.  If you need to replace an income of $100,000 per year, which would put you in the to 10% of all US wage earners, you should be able to find an established and profitable independent restaurant for under $250,000 and a Franchised restaurant for under $300,000.  SBA lending is an option so assume you will need approximately 30% of the purchase price for acquisition and initial working capital.  “Do the Math…” for as little as $60,000 you can own a business that provides you with a six figure income!  Sometimes the current owner will even consider Seller Financing.

Consider the “Risk vs Reward

Ultimately, everyone’s individual situation will dictate how they go about making the leap to restaurant owner.  For some, the risk of starting up a new independent or franchised restaurant from scratch is appealing.  For most of us, however, our current financial responsibilities combined with a need for a secure and guaranteed income makes acquiring an existing restaurant a much more viable and palatable option.  We Sell Restaurants is the largest restaurant broker in the country with close to 500 restaurant for sale listings available throughout the United States.  We would be happy to help you find the perfect restaurant to support your lifestyle and financial goals.

steve weinbaum blog footer

 

Topics: Buying a Restaurant

We Sell Restaurants Sells Nona's Sweets of Charlotte, North Carolina

Posted by Robin Gagnon on Aug 23, 2019 4:50:53 PM

We Sell Restaurants closes on another restaurant for sale transaction; the sale of Nona’s Sweets in Charlotte, North Carolina

We Sell Restaurants is pleased to announce the sale of Nona’s Sweets located 1520 Overland Park Lane in Charlotte.  Mikel Leka of Greensboro, North Carolina acquired the company from Dominica and JoAnn Morlando. The transaction was handled by Justin Scotto of We Sell Restaurants.

 Nona’s sweets is a unique family-based concept that was launched by Jo-Ann and her daughter Dominica Morlando. They specialize in delivering an exceptional experience with their “tradition of creating old world taste with new world flair.” The new owner Mikel Leka will take this concept to the next level!

Nona Sweets photo

The seller, Dominic and JoAnn Morlando, said of his experience with Justin Scotto, “Thank you for all you did to make our business sale go smoothly. With the sale of a business, a small family business, there are many dynamics and emotions. You explained to us the steps and phases to sell the business and implemented the tools to see results.”

Justin Scotto is the multi-unit Franchise Partner for the Charlotte, NC Region and surrounding communities. A Certified Restaurant Broker, Justin has been in the restaurant industry for 20 years. Justin is a longtime veteran of the restaurant industry. He started out as a busboy as an early teenager and worked countless restaurant jobs from sports bars to sub shops. In recent years, Justin developed and operated 12 fast casual restaurants with Firehouse Subs from the ground up. In the process of selling his own restaurants, Justin came across the We Sell Restaurant brand. Impressed with their firm, he was ready to join forces with them to help restaurant buyers and sellers alike achieve their goals.

Eric Gagnon, President of We Sell Restaurants, said of the transaction, “Justin Scotto has proven time and again, that he is an unmatched resource in the Charlotte market for those buying or selling a restaurant.”

Other restaurants for sale can be found directly online at wesellrestaurants.com. We Sell Restaurants is the country's leading restaurant brokerage focused on those buying, selling or leasing a restaurant.

We Sell Restaurants is the nation’s largest restaurant brokerage firm, specializing in restaurants for sale, restaurants for lease and franchise restaurant resales.  Found online at wesellrestaurants.com, We Sell Restaurants offers services in 45 states nationwide.

 

Topics: Selling a Restaurant

People Like to buy Restaurants, Not to be sold!

Posted by Scott Ruby on Aug 21, 2019 4:36:47 PM

Certified Restaurant Broker Scott Ruby reports on a recent sales seminar.  His takeaway -- People want to Buy Restaurants but they don't want to be sold.  Here's his report.

Scott Ruby recently attended a Sandler Sales training class that discussed how to be a true and genuine person. It touched on how to avoid being a ‘typical salesperson’ while continuing to grow your business.

The days of a sales professional having all the right words and being a slick car salesman are over.   You need to dress like a restaurant operator, have the same language, and understand the challenges of the business. 

Scott Ruby

The restaurant owner or restaurant buyer of today is looking for a trusted business adviser that they can work with in a comfortable environment. They look for someone they trust with their intimate financial situation.  They want someone who will listen to what they need financially to with the business. 

Good Restaurant Brokers earn the seller or buyer’s trust first.  Failing to do this by requesting financials may cause the buyer to seller to shut down and move to defensive mode. 

Understanding that staffing challenges are affecting all of our clients is an essential in this business.  Most of the We Sell Restaurants sellers are exiting the business because they are tired of struggling to find good team members and can’t afford to pay the “market rate.” 

Seek First to understand

Too Often we show up and start telling what we can do for them. The fact that we focus on Restaurant Sales and are pretty great at what we do is an excellent start.  But what is the pain point that we are trying to solve for them?

  1. Don’t show up and Throw Up!
    This is a common trait for a new salesman. They get nervous and show up and state how great they and the company they work for are, not really focusing on what problem the customer is struggling to solve.   Listen first, then figure out what we can do to solve the problem.
  2. Don’t be afraid to say that we are not a fit for everyone.
    This is the biggest problem with a new salesperson / franchisde. We are not the one size fits all solution!   We can’t help the operator who has 30 days to vacate the property and is losing money.   The best thing we can do is to focus our energy on the opportunities where we can make an impact and generate income in the process!
  3. Stay Behind the Pendulum
    This is the biggest lesson from the class. The best thing we can do as a trusted business advisor is to stay behind the customer.   If they are super excited about an opportunity, we need to keep them grounded.   If they are concerned about a situation, we need to help them investigate, and not be overly excited and positive.  This will drive them away if we are more excited about the opportunity then they are.
  4. Help them buy, but don’t sell!!!
    Our Business Analysis Tool is a best in class report at stating the opportunity as it sits. This does not over promise but clearly states the opportunity and how they can build upon the current sales.
  5. Never Give Something, unless you get something in return!
    Time is limited.  As Restaurant Brokers, spending time with people who have no intention of ever working with us is a waste of resources. We need to be sure and offer free evaluations, travel to the listing, only when we feel that the client is committed to selling, and prescreen them to make sure that we are not just providing a free valuation.  You don’t want to travel halfway across the state, only to confirm that they are priced right if they list it without us!
  6. Customers call us for a reason, as they think we have the solution!
    The information that we have on the market, the price to SDE ratio, is of value to most of our operators. They have been so focused on growing their business, that they have lost track of how to price a restaurant.   Our information is valuable.  We don’t give it away without some commitment of working together.
  7. Be Open, Honest and Up Front!
    Sometimes we are not a great fit.  Be sure to understand how we can provide value. One of my long-lost friends ran a restaurant that he leased from a golf course.  His lease was coming due, and he wanted to know his options.   Since he didn’t own the real estate, his options were fairly limited, either continue to operate the restaurant, or let his lease expire.  Our customer is this situation is the golf course, not the lessor.
  8. Use their data.  People don’t argue if we use their data.
    This was a great lesson as well. If we let the customer provide the area data, or the problems with the restaurant’s numbers, they have a hard time arguing with their own assessment.   If we say that their occupancy numbers are too high, they tend to want to argue with our assessment.   If they come up with the challenges themselves, it is more of a team environment, instead of us stating the problem.
  9. Seek First to understand – ask lots of questions!!
    Why are they selling, what is staffing like, what are they going to do when they sell? We need to do a better job of finding out what is driving them to sell.   Most operators struggle to communicate the real reason they decided to call you today and why they are selling, but I recently asked a pizza franchise what staffing was like, and he showed me a picture of every team member working while on their phones!  He was so done with them looking at their phones instead of actually working that he decided to call and list the restaurant.

Every person knows what is driving them, but it is not always as easy for them to verbalize why.  This is a big piece of the puzzle, and the bigger the problem, the more likely they are to sell at a reasonable price to solve the problem. We need to find the pain point, and then find a way for us to solve it for them!!!

Scott Ruby

 

Topics: Selling a Restaurant

We Sell Restaurants Sells Zaatar of Plantation, Florida

Posted by Robin Gagnon on Aug 16, 2019 9:13:15 AM

We Sell Restaurants closes on another restaurant for sale transaction; the sale of Zaatar in Plantation, Florida

We Sell Restaurants is pleased to announce the sale of Zaatar located at 1893 N Pine Island Road in Plantation Florida.  Wissam Farhat of Dearborn Heights acquired the company from Darin Richards. The transaction was handled by We Sell Restaurants Franchise Partner, Ken Eisenband.  Ken is the multi-unit owner of both Broward and Palm Beach counties Florida. 

It was a great experience, professional, honest, dependable and reliablesZaatar serves nothing less than authentic Mediterranean cuisine. This restaurant specializes in providing expletory Lebanese dishes. The most popular dish is called the Shawarma platter which combines a massive amount of meat with flavors leading to an insanely delicious fresh salad.

The seller, Darin Richards, said of his experience with Ken Eisenband, “It was a great experience, professional, honest, dependable and reliable. If I have another restaurant to sell it will definitely be Ken’s (listing).”

Eric Gagnon, President of We Sell Restaurants, said of the transaction, “Throughout the years Ken has topped the charts with restaurant brokerage. Every day Ken is improving in sales techniques and competitive skills that create the best experience for buying or selling a restaurant in South Florida.”

Ken Eisenband leads two offices for We Sell Restaurants in the southern part of the Sunshine state with distinction and directs a team of Restaurant Brokers as a multi-unit owner. He is a member of the Business Brokers of Florida Association where for multiple years, he received the prestigious Dealmaker Award.  That designates him one of the top five transaction agents in the state of Florida.  He has also prepared training and spoken before the group at large as an expert in selling restaurants. 

Other restaurant for sale in Ken’s market and nationwide can be found directly online at wesellrestaurants.com. We Sell Restaurants is the nation’s leading restaurant brokerage focused on those buying, selling or leasing a restaurant.

We Sell Restaurants is the nation’s largest restaurant brokerage firm, specializing in restaurants for sale, restaurants for lease and franchise restaurant resales.  Found online at wesellrestaurants.com, We Sell Restaurants offers services in 45 states nationwide.

Topics: Selling a Restaurant

Why Restaurant Buyers Don’t Pay for “Potential”

Posted by Robin Gagnon on Aug 12, 2019 10:36:34 AM

It seems every day in selling restaurants, an owner describes the “potential” the business has for more volume or more profit.

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For those selling a restaurant, this potential or opportunity for the future is seen as a reason that a buyer should invest and rightly so, as the future prospects makes the listing more attractive to buyers.  It can also encourage a restaurant buyer to identify this as a better long-term opportunity.

When it comes to pricing the business for sale, however, Restaurant Brokers must price according to common lending practices and standard valuation methods.  That means that “Blue Sky” or potential for the future is not something buyers are willing to pay for and lending can be provided for.  A buyer will only pay for the past performance and a bank will only lend on past results.

Here’s why buyers will not pay for the “potential” in your business.

Lending is trickier.  Most lenders avoid any open and operating businesses built on a pro forma. This is the Latin words for “to form.”   It is standard practice to develop a pro forma in a startup situation where there are no existing metrics to rely upon for sales and earnings.  The commonly accepted definition of a pro forma is, “assumed or forecasted information presented in advance of the actual or formal.  The objective of a pro forma business plan is to give a fair idea of the revenue, expenses and earnings in anticipation of the actual occurrence

If a business is not open, it’s easy to formulate underlying data points and put them into a business plan to forecast the pro forma earnings.  The only problem with this method is that pro forma financial statements estimate how the actual statements will look if the underlying assumptions hold true.

For open and operating businesses, the underlying assumptions have already been put to the test.  Now we have actual statements and actual performance.  The underlying assumptions may be revealed as flawed or inaccurate.  If a restaurant owner built a pro forma based on sales of $6000 per week and the actual performance is only $4500 in sales per week, that fact is now known and therefore, must materially adjust the pro forma. 

The second reason that “potential” cannot be factored into the selling price of a restaurant is that all the risk, effort and financial commitment to meet the business potential belongs to the buyer, not the seller.

In our earlier example, there is “potential” is to increase the number of customers each day and improve the volume to the original forecasted point.  That, however, may require any of the following conditions be met:

  • Investment in Advertisement
  • Investment in Marketing 
  • Change of Concept
  • Improvement in Service
  • Change in the ingress/egress to the business
  • New Residential or Commercial Development 
  • Improved Signage
  • And the list continues

For an open and operating business, that means the buyer must invest some level of energy, effort and/or financial resources to improve the current performance of the business.  That investment and effort is on the part of the buyer, not the seller.  Therefore, the “up-side” or “potential” is still unknown, can’t be quantified and thus, can’t be sold on the front end of the listing.

The next time you consider selling your restaurant and offer up “potential” as a reason to buy, just remember, it cannot factor into the listing price. It is a definite selling point and makes a business more attractive but is not part of the valuation model.

Topics: Selling a Restaurant