Advice for Buying a Restaurant and Selling a Restaurant

Five Myths Revealed about Leasing a Restaurant

Posted by Robin Gagnon on Jul 26, 2018 12:09:43 PM

Restaurant buyers and sellers have a common goal when transferring a business.  They need consent of a critical third party – the landlord.  Here are five myths, debunked one by one, on the role of a landlord. Understand that the primary impediment to buying or selling a restaurant, is most frequently, the guy getting a rent check each month. 

We Sell Restaurants is busting the myths and telling the cold, hard truth about leasing a restaurant.  Understand this before attempting to transfer or assign a restaurant lease.  

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Myth #1:  Restaurant Lease Transfer is Easy

Assuming that you can call the landlord and tell him about the new tenant and all will be well is a naïve approach.  That lengthy agreement you signed way back when typically puts all the power in the landlord’s hands. This can include the cost to transfer, the time to transfer and obviously, the agreement to transfer or assign the existing lease. 

Want to hear some horror stories on this topic?  Don’t get us started.  We Sell Restaurants and our expert restaurant brokers can attest to dozens of instances where a landlord has sent a deal crashing to the ground.  Quite frequently, buyers and sellers are resorting to getting a strong attorney involved on the lease transfer process.

Myth #2:  The landlord application process or “package” is straightforward and simple when leasing a restaurant.

Landlords want paper and lots of it.  It’s not uncommon to see a request for a personal financial statement, consent to credit check, multiple years of tax returns, a check for the transfer fee, a business plan and much more.

Are they entitled to all that information?  Unfortunately, the answer is yes. They are performing their own financial due diligence.  They can request the experience basis of anyone applying for space in their center. 

One tip to overcome this issue is to provide everything.  Getting their package right the first time will cut down on the games landlords play in approving or failing to approve a new restaurant lease tenant.  Complete the document in it’s entirely.  Submit any required fees in the form of the lease transfer fee.  Submit it both electronically and in paper.  Track the delivery using a paid service with a receipt so you can verity when it was submitted.  The last thing you want to do is fail to get the restaurant lease approved because you didn’t get the paperwork right.

Myth #3:  Assignment of a Restaurant Lease relieves the current tenant of any Obligations on the Personal Guarantee   

Someone buying or selling a restaurant must fully understand their obligations when it comes to the personal guarantee or ongoing financial requirements of the lease.  A personal guarantee is almost always required by a landlord.  Frequently, they will attempt to retain the seller on the guarantee unless you have negotiated up front, the conditions under which you will be removed.  In most cases, absent any form of an agreement previously reached and outlined in the lease, landlords will always keep the old party on the restaurant lease.

Are there ways to minimize the guarantee?  Yes.  You, your attorney, or your restaurant broker can attempt to minimize the amount of the guarantee a seller remains liable for.  They can attempt to cap the guarantee, put a time frame on it or otherwise keep the liability limited to the new buyer. If the new buyer has superior financials to the seller, this is less of a concern as they will always go after the biggest fish first.  If a seller has the greatest assets, it’s best to negotiate this down first

If the landlord refuses to relieve you of the liability, you can circle back to the buyer for what’s commonly termed a ‘wrap-around’ or indemnification.  This legal agreement can allow a seller to pursue a restaurant buyer personally against some form of secured assets if he should default, leaving the landlord to pursue a seller that’s no longer operating in the space.

Myth #4:  Landlords Have a Duty and Financial Incentive to Transfer a Lease

It’s best to know up from this fact about restaurant leases.  Landlords have absolutely zero incentive to cooperate or assist in a transfer.  The money for a landlord is made by leasing a new restaurant space.  In the case of a transfer, he or she, has a tenant in place.  They are paying rent and they have a personal guarantee.  Ergo, there is absolutely no financial incentive to do anything as it relates to an assignment.  For that reason, landlords drag their feet, refuse to move and overall act like the biggest impediment to ta transfer on a restaurant space for sale.

Myth #5:  Landlords execute restaurant lease transfers in a timely manner.   

The last myth to understand is that a landlord does not move quickly.  The landlord cannot, will not, and typically refuses to move on anything other than their own time frame. This is related to the prior myth about financial incentives.  They want their representatives leasing new restaurant space and their legal teams drafting new leases, not dealing with those already in place.  Without a financial incentive to act, they work in their own time.

That leaves countless restaurant buyers and sellers stranded while they wait on this transaction to occur.  What are the pressure points you can bring to bear?  First, leverage your relationship with the local representative if you have a good one.  Secondly, ask a franchise leasing department to intervene on your behalf.  Lastly, go up the chain of command.  As a restaurant broker, I frequently resort to a google search of the VP or Senior VP for the area to escalate a claim to move.  This sometimes works and in some cases, angers the assignment team so much, they will just slow walk it more. 

If you have been patiently waiting and making professional requests for follow up with no response, it may be time to involve an attorney.  Get them to review the lease and ask the landlord why they are failing to meet the lease language that in most cases states, they “may not unreasonably withhold consent.”

That’s it.  Better to be armed and ready with information than taken advantage of by the landlord.  Need help in getting your restaurant lease transferred?  Reach out to the Restaurant Brokers at We Sell Restaurants and we can help.  If you choose to negotiate on your own, you're now in a better position since we just revealed to you the five biggest myths about leasing a restaurant.

 

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Topics: Leasing a Restaurant

Casting Call -- We Sell Restaurants Helping to Find Foodie Families for TV

Posted by Robin Gagnon on Jul 23, 2018 6:34:06 PM

Are you a Foodie Family with some serious chops!  A new TV show is being cast for ABC called Family Food Fight.  They are searching for families of three or more to go head-to-head in high pressure cooking challenges inspired by real home cooking and family food traditions. 

Put those aprons on and tell the kids to get moving!  It's time to apply.  You can compete to be America's #1 Food Family and win $100,000!  Guess what you can do with all that money?  That's right!  Buy a Restaurant! 

The casting director for this project has worked with the We Sell Restaurants team in the past.  His work includes shows like Fox's Hell's Kitchen and Kitchen Nightmares, ABC's, The Taste and Bravo TV's Top Chef.  Is it time your family made it on the screen?  His email to us says, 

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" I'm seeking a variety of "foodie" families to compete on the show. "Foodie" in this sense means many things, but mostly that the families I'm looking for have members who all regularly cook, enjoy to do it, and can all hold their own in the kitchen. Beyond that, we're considering families of all kinds, whether they specialize in a certain style of cuisine (Italian, Moroccan, Southern, Southwestern, etc.) or technique/restrictive diet (BBQ, Vegan, Molecular Gastronomy, etc.)."

What are the requirements?  Here they are.  

  • Families from every culture, creed and background from anywhere nationwide are welcome. .
  • You must be U.S. Citizens with at least 4 family members over the age of 18.
  • You can't be professional cooks or have worked in food preparation in the past seven years. 

The official press release from ABC asks, "Can Your Family Handle the Heat?"  Based on Australia’s hit format and hosted by restaurateur, food maven and New York Times best-selling cookbook author Ayesha Curry, “Family Food Fight” will feature eight families from across the country sharing a common kitchen and a common goal: to claim the title of America’s No. 1 Food Family and take home a $100,000 cash prize. Family teams will pull out their best culinary moves in the kitchen, serving up authentic family dishes and drama. Tapping into each family’s uniquely diverse cultural heritage, along with their countless culinary influences, “Family Food Fight” will take homestyle cooking to a new level as family recipes rich in tradition and shared over generations are put on display.

Want to pop into an open casting call?  The dates and times are below:

OPEN CASTING CALLS:

Los Angeles, California
Sunday, July 29, 2018
12 p.m. – 4 p.m.

Chicago, Illinois
Saturday, August 11, 2018
12 p.m. – 4 p.m.

New York, New York
Saturday, August 18, 2018
12 p.m. – 4 p.m.

Families must fill out the pre-registration paperwork in advance of the open call by visiting familyfoodfightcasting.com. They strongly encourage all family members to attend open call auditions; however, if somebody is unavailable, there is a contingency for that.  Don’t forget to bring your signature dish!

ONLINE SUBMISSIONS:
If you are unable to attend an open call, families can upload a video submission (via the pre-registration form at familyfoodfightcasting.com). Completed applications and video submissions must be received by August 17, 2018, to be considered. If selected, producers will reach out with additional information.

Keep the team at We Sell Restaurants posted if your family makes it to the show.  We'll be pulling for you! 

 

Topics: Buying a Restaurant

Latest Franchise Deals Announced by Industry Press.

Posted by Robin Gagnon on Jul 20, 2018 2:04:25 PM

What are the latest franchise deals we're seeing announced in the restaurant industry?  It looks like everything from legacy brands like Taco Bell expanding with 400 units overseas to newer concepts like Go! Go! Curry who signed their first deal are all hitting the gas on growth in an economy fueled by consumer confidence, small business confidence and the tax cuts. 


We Sell Restaurants tracks growth of new restaurant franchise units from industry press releases and resources like Franchise Times.  If you know of other multi-unit deals in the pipeline, let us know!  Here's where we see new franchise restaurant deals expanding by concept around the country.

Red National Doughnut Day Social Media GraphicPizza remains a favorite and in particular, the create your own segment.  Fast-casual pizza concept My Pie signed a new development agreement to bring the emerging brand into the Alabama market. Rebecca Roland and Richard Meadows will open their first My Pie in Dothan, Alabama later this year. The couple owns and operates five fast-casual restaurants in Alabama, with Roland managing day-to-day operations for each business. Based in Scottsdale, Arizona, My Pie has nine locations open in four states.

John Clancy and his team at Smoothie King Midwest have signed an agreement to develop a stunning 60 locations, starting in Indianapolis and Palm Beach County, Florida. Clancy is a longtime Planet Fitness franchisee with 27 gyms in Ohio and Florida, and he also opened three Smoothie King locations with partner Bob Viani in Connecticut, New York and Florida in the past year under a separate development agreement.

Have you heard of this concept?  Duck Donuts, based in Pennsylvania, is growing in New Jersey.  The brand, which calls itself the fastest growing donut shp in the U.S. is adding stores in Bergen County, New Jersey, one in Hackensack and a second in Paramus area. Duck Donuts has 67 open locations with more than 140 in development. 

Another newcomer on the block Fast-casual concept Go! Go! Curry signed its first franchise development deal with Daxin LLC.   The brand features what it terms, "Japanese comfort food."  The concept features black, thick curry sauce over Koshihikari rice, a premium short grain rice, with very thinly shredded cabbage and Pork Katsu – a crispy, deep fried pork cutlet – all in a stainless plate that is eaten with a fork. Houston, Texas will be home to the first franchise location.  Shishen Li, co-founder and owner of Daxin, plans to open the first store in August. Go! Go! Curry has seven restaurants open in the United States, in New York and Massachusetts.

Two Scooters Coffee drive-thru locations will open in Spencer and Okoboji, Iowa, with the signing of a franchise agreement by Robb Steffes and Joshua Morris. The towns are part of the Okoboji lakes resort region in northern Iowa.

International expansion is on the mind of many brands.  These are deals for big unit counts where a developer is opening an entire overseas market.  Here are the two of the biggest franchise restaurant deals we've seen.

Legacy brand, Taco Bell has signed deals with groups in Brazil and Spain that call for the development of more than 400 total restaurants over the next decade. Sforza Holding Group, a private equity company based in São Paulo, Brazil, is set to open more than 200 Taco Bells in the state by 2027. The new agreement expands Sforza's existing partnership with Taco Bell. Led by founder and CEO Carlos Wizard Martins and his son, Taco Bell Brazil CEO Lincoln Martins, the group began working with Taco Bell International in 2016. In Spain, Casual Brands Group is also expanding upon a current partnership. CBG, led by CEO Ignacio Mora-Figueroa, has been working with the Taco Bell brand since 2008 and owns and operates 40 Taco Bell restaurants throughout Spain. With the new agreement, CBG guarantees that more than 200 restaurants will be built in the country over the next 10 years. 

Church's Chicken is growing it's international brand (Texas Chicken), in the Asia Pacific market.  They have signed an 80-unit deal with PT. Quick Service Restaurant to open and operate restaurants primarily in Indonesia. PT. QSR is the third Texas Chicken franchisee to enter the market, joining PT. Quick Serve Indonesia, which signed a development agreement earlier this year, and P.T. Cipta Selera Murni, which has been in the market since 1985 and has 59 locations. PT. QSR is a subsidiary of Singapore-based Envictus International Holdings Limited, which has a portfolio of restaurants, frozen foods, and sports supplements brands.

That's the latest on franchise restaurant expansion.  We'll continue to track the deals.  Meanwhile, if you're in the market for an existing franchise for sale, check out our listings online at this link. 

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Topics: Buying a Restaurant

Top 10 Restaurants for Sale Earning over $200,000

Posted by Robin Gagnon on Jul 17, 2018 9:33:18 AM

Are you looking to get out of the corporate world or ready to start a new life venture? Do you need high six figure earnings but worried you can't replicate that in a business of your own?  Maybe you want to avoid the risk of starting a business from scratch and need to see verified income.  In that case, check out the top ten restaurants for sale on our site with high earnings and perfect books that are ready to go with lending.  Put just 20% down and leverage your cash while pulling in six figures TIMES TWO to suport your family.  Here are our restaurants for sale around the country that qualify.

Red & Black Just Listed Social Media Graphic (1)How about Colorado?

Colorado is a beautiful state where the scenery and lifestyle could not be better. We have two Restaurants for Sale in that State with Discretionary Earnings of over $200,000. 

Listing # 6121 is an Italian Restaurant with $1.3 million in sales that's kicking out a quarter million-dollars in owner benefit.    You can also be qualified for an SBA loan, with just $140,000 down.  Benefits of this business include: 

  • Located half-way between Colorado’s two largest cities and puts Douglas County in an enviable position to attract business.
  • 2400 square foot facility seats 100 customers comfortably.
  • ALL recipes are authentic dishes from family recipes, passed down through generations.
  • Fully equipped commercial kitchen has it all: pizza oven, large dough mixer, cook line with reach in coolers, grill, oven, salamander, walk in cooler, and much, much more.
  • Owner benefit is at a whopping $270,000!
  • Sale Price is just $650,000!

The current owner-operator runs his business tight and lives and dies by the numbers, resulting in an excellent income. This Italian Restaurant for Sale Today has just recently expanded and sales are up from last year, not even counting the 40 seats just added. Nearby are large anchor stores and four to five hundred parking spaces, a busy intersection with 50,000 cars passing by each day.

A multi-unit opportunity is second on our top 10 lis.

Listing # 5819 is a rare business opportunity for you that allows immediate multi-unit ownership for three National Brand sandwich franchises that are in the Metro Denver area.  Read below for a snip of a 3-store package that can all be yours and give our Restaurant Broker a call today for more details!

  • Close enough together to easily manage while far enough apart to attract different customers!
  • Doing sales of over $2 million each year combined.
  • Good long-term leases in a tight occupancy market, with options to renew.
  • Easy sizes to manage at just 1805 square feet, 1950 square feet, and 1805 square feet.
  • Corporate training will be provided
  • Owner is taking home just over $250,000!
  • Sale Price is just $829,000!

The current proprietor is absent, so there is a strong potential to grow sales with hands-on marketing and ownership. These Restaurants for Sale Today, are a simple concept that don't serve alcohol, do any frying, or require late nights and lots of labor. This is an award winning, top ranked brand that is showing consistent growth and expansion and has a superior support system. However, a buyer must demonstrate strong liquidity and have relevant multi-unit food service experience to qualify for this outstanding opportunity. The franchisor requires the Restaurant Brokers to confirm liquid assets in the amount of $400,000 before any details of this franchise can be released.


Why not Florida?

Have you ever wanted to live in or own a restaurant in sunny Florida? Looking to relocate to warmer weather? If so, read below about our Florida Restaurant for Sale Today.  Listing 6014 is a Broward County Asian Concept.  I tfeatures the following:  

  • Sales in 2016 of more than $ 1.7 Million and newly acquired 4COP liquor license
  • 2,400 square feet with seating for 59 guests indoors plus 1,000 square feet available on the outdoor patio 
  • Fully equipped commercial kitchen: a long hood, wok cookers, six-eye-burners with stoves, char-broilers, fryers, stock pot ranges, ice machines, commercial refrigeration and freezers, and much more.
  • Outdoor patio is on the water and has six large heaters for chilly south Florida evenings.
  • Discretionary earnings of $270,000!

Sales and profits are consistent year in and year out, even with an absentee owner. This is perfect as an investment or for a hands-on operator who can better control costs and drive more sales with an ownership presence. The Las Olas business district is known as the heart and soul of Fort Lauderdale. The district is famous for its sidewalk cafés, boutiques, unique architecture, and swaying palm and olive trees. The Las Olas business district is home to more than 30 restaurants, 75 boutiques, 12 art galleries, historic hotels, and luxury home and yacht rentals. If you are looking for a location with high foot traffic and year-round business, this is the Broward County space for you.


Feeling Peachy for Georgia?

Georgia is bordered by Florida to the South, the Atlantic Ocean and South Carolina to the East, Alabama is to the West, and Tennessee and North Carolina are to the North. Georgia is the largest in land area, of all the states East of the Mississippi River. Why not own a restaurant in Georgia and start earning that profit today! Keep scrolling down for six opportunities that offer six figure earnings.  

#4 – Listing # 6213 is a multi-unit smootie concept.  Be a brand-new owner of 3 smoothie concepts, all located in Georgia.

  • Top line sales of over $1.5 million an ready for lending with just 20% down.
  • Fully equipped: Blenders, ice cream freezers, prep fridges, glass door refrigerators, swing door freezers, and much more.
  • Menu and recipes all transfer in the sale plus full training is provided for 2 weeks.
  • Rents are only $3591.91, $2505.59 and $3316.67 monthly.
  • Royalties of only 6% of sales.and marketing fee is just 3% of sales.
  • Earnings of nearly $225,000!

Buying these franchises for sale like these is an instant path to earnings. Part of a well-known brand has grown to over 800 locations and counting, fueling your purpose across three continents. Simple franchises for sale are turnkey and ready to continue sales of $1,515,489 under your ownership, as employees are willing to remain in place after the sale. 

#5 – Listing # 6184

Don’t miss out on this Marietta Restaurant for Sale Today that serves up savvy cocktails and craft beer, along with delicious dishes using only the freshest of ingredients. Is this sounding like it is up your alley? Let’s dive in to this Restaurant for Sale Today.

  • 2017 annual sales of just under 1 Million, this one qualifies for Bank Lending.
  • 1800 square foot restaurant for sale that seats over 60 guests inside and 28 outside seats on a beautiful patio.
  • Total rent is only $1900 NNN.
  • Menu consists of delicious appetizers, salads, sandwiches, and entrees plus a full bar
  • Owner benefit is at a massive $220,000!

Located in a charming, hip dining and shopping scene of Marietta, Georgia, this successful and long-standing Restaurant for Sale Today is so desirable and well-known that we must keep it confidential and will only reveal to well qualified buyers. Marietta is a terrific place to own a restaurant for sale as the area is densely populated with both businesses and households. The median age is 34 with close to 50% of the population being married families. Perfect for a moderately priced successful business such as this. 

#6 – Listing # 6178

Is a restaurant too much for you to handle? Would you rather be a bar owner, than a restaurateur? If your answer to those questions are “Yes”, check out this Bar for Sale Today!

  • 20% down should qualify for SBA lending as net sales in 2017 exceeded $1.2 Million.
  • 4,000 square feet inside that can accommodate 150 guests and outdoor patio that can seat another 70 customers.
  • Owner benefit is at a massive $220,000!

A bar for sale like this one is a rarity! The current owner spends about 20 hours per week overseeing service and quality, but this business could easily be run by an absentee purchaser, as it is fully staffed with managers in place. As it doesn’t open until 3:00 PM on weekdays and is closed on Sundays, this provides plenty of opportunity for the next owner!  This winning location nearby Kennesaw State is serving the beer ice cold and the simple menu piping hot. Customers rave about the reasonable prices and great food; in addition to, being one of the best places around to go unwind and grab a drink.  Kennesaw State currently ranks 3rd in size of all Georgia universities with over 35,000 students. This profitable bar and grill for sale is a local favorite and benefits from the growing student base. Additionally, the area is seeing double-digit population increases.

#7 – Listing # 6026

Atlanta is a mega market.  Get instant earnings of nearly a quarter million on this bar for sale.  

  • Cranking out nearly $1 million in Sales.  This BAR, yes, BAR will qualify for SBA lending with 25% down.
  • 3600 square feet seats up to 150 people.
  • Perfect books and records!
  • Owner benefit is at a substantial $240,000!

Established since 2013, this one shows no signs of slowing down anytime soon. The current seller is looking to sell for a lifestyle change and if you like sleeping in and having Sundays off then this is the right lifestyle change for you too! The hours of operation are Monday through Saturday from 5pm through 2:30 am and closed every Sunday.

Signature cocktails and rotating draft beers from local Atlanta breweries mixed with their unique bar bites make this this cash cow easy to run!  The location of this bar for sale couldn't get much better, nestled right in Atlanta metro amidst tons of hip eateries and nightlife. Bring your offers!

#8 – Listing # 5699

Read below for information on our Pizza Restaurant that could make you $$, all while enjoying that iconic past-time favorite food. Contact our Restaurant Brokers Today!

  • Voted in Pizza Magazine as one of “America’s Top Pizza Chains”, this store grossed nearly $2.2 million in Sales.
  • Delivery sales equal 35%-40% of Total Sales, with 8-10 drivers delivering in a three-mile radius.
  • 3,820 square feet with seating for 170 guests inside and seating for 55 guests on the patio space.
  • Owner Benefit at a whopping $265,000!

Tourists are known to visit this location to take pictures in front of this legendary restaurant and to enjoy a unique, distinctive slice of pie. A new owner can improve sales with the recent beer and wine license added this year. Does this sound exceptional to you? Let's talk.

#9 – Listing # 5676

What crosses your mind when you hear Bar and Grill? Is it “Mmmm...That sounds good”? If so, we have a Bar and Grill for Sale Today that could be yours! Read about our listing below and if this is something that catches your eye, give our Restaurant Brokers a call today for more information.

  • Annual sales of $2 Million in an 8,500 Square foot space with stunning architecture with amazing views.
  • Inside seating for 230 customers and outside seating for 40 more customers.
  • Owner Benefit is $260,000!

Location is everything and this bar and grill for sale is perfectly situated close to downtown Atlanta, and conveniently located within proximity to the hustle and bustle of the up and coming Atlanta film industry. The atmosphere is comfortable and cozy with stunning views for diners.  


Do you love North Carolina?

North Carolina is the 9th most populous of the U.S, coming in with 10.17 Million people, according to the 2017 census. This is DOUBLE the size of South Carolina. With all these people, who wouldn’t jump at a chance to own a booming Restaurant for Sale Today and put all that cash in their pockets? Read below about our wonderful listing in North Carolina, that can help you grow your bank account, and contact our Restaurant Brokers Today!

#10 – Listing # 5869

Own your own franchise with banker's hours!  That's right!  Open only 7:30 am to 3PM daily Monday through Friday, this is a rare opportunity with earnings on the books of $225,000.

  • Sales of almost $900,000 produce amazing return due to limited labor hours.
  • Lending approved with just 15 – 20% down.
  • Limited hours of just Monday-Friday 7:30am-4pm. – NO Weekends or Evenings!
  • Three weeks of training and support by a Franchise Business Consultant for a full week during the transfer
  • Owner Benefit is a magnificent $225,000!

This restaurant franchise for sale is part of the modern city center that is also home to the Levine Museum of the New South and hands-on science displays at Discovery Place. Uptown is also home to the NASCAR Hall of Fame. 


Wow, there's over $2 million in earnings in this top 10 as every single listing nets to an owner operator more than $200,000.  Better yet, every single listing qualifies with the Restaurant Brokers SBA lending resources with just 15% to 20% down.  Want more details?  Visit our listings online at this link. 

Restaurants for Sale Near Me

Topics: Restaurants for Sale

How to Understand Landlord Math when Leasing a Restaurant

Posted by Robin Gagnon on Jul 10, 2018 9:05:01 AM

Leasing a restaurant? There are some terms, in particular, associated with the calculation of leases that you should be aware of. Here’s are the basics of landlord math so you understand numbers on restaurant spaces for lease.

For starters, landlords price space as a price per square foot on an annual basis. That’s the first and most confusing part of a lease. The price per square foot has to be divided by twelve months to get the amount of the rent payment per month.

Pink Hobbies Facebook Post

Another confusing term is “Base Rent.” What is base rent? It’s the flat amount of rent to be paid every month. In addition to this amount, you will also have to pay, for most spaces, CAM fees, Taxes and Insurance as well.

CAM is an acronym for “Common Area Maintenance.” Common area maintenance refers to expenses for the common good of the shopping center which are distributed among those who benefit on a square footage basis. CAMS can include anything from garbage pickup to landscaping, security and exterior lighting.

It’s very important to understand the amount of CAM charges in the current time period and be aware of their ability to rise over time as they are not fixed amounts like your base rent. It is not uncommon for the monthly rent to increase as much as 30% if you are leasing a restaurant in a high tax area. When taxes to up, your rent goes up. When insurance costs increase, this is passed on to you as a tenant. The landlord can only quote you the current year and this amount, like base rent, is expressed on a cost per square foot.

To add more confusion, the AM fee is calculated on a pro-rata basis or “in proportion” to the square footage. If you are 1200 square feet of a 12,000 square foot shopping center, you are charged 10% of the total CAMS, Taxes and Insurance for the property. You will still be responsible for taxes and insurance on your personal property, your restaurant within the lease space.

Here’s an example of a rent calculation.

  • 1200 square foot restaurant space for lease.
  • Cost: $32.00 per square foot
  • Amount of CAMS, Taxes and Insurance: $7.85 (per square foot)
  • 1200 X 39.85 = $47,820
  • $47,820/12 months = $3985.00 per month

Another lease term you may hear is “Triple Net” which is frequently advertised as an “NNN” lease. In a triple net lease scenario, often associated with a free standing buildings, you will be responsible for all exterior upkeep to the restaurant space for lease. If the driveway needs paving, it’s your responsibility. In addition, you will have to keep insurance in full effect and pay all taxes.

Another important landlord math term to be aware of is TI or Tenant Improvement money. A Tenant Improvement Allowance, commonly referred to as the “TI” allowance, is the amount of money offered by a landlord to the tenant for improvement to the space. The funds are generally offered one of two ways: dollars per square foot of the leased premises or a set dollar amount. These funds are to be used strictly for the improvements to the leased space. They cannot be used for the purchase of equipment or inventory for your restaurant.

Here are of the little known details about TI money you should know. First, the money is not advanced to the restaurant owner. Typically, both the tenant and landlord meet to agree upon the plans or design and then the tenant pays the contractor for the expenses. The landlord later reimburses the tenant based on a full accounting. Sometimes the landlord will add language that if the project is not completed within a certain amount of time than the TI money is not reimbursed. Sometimes he will only repay funds if he chooses the contractor. Make sure you have control over who does the work and what you’re paying.

Secondly, tenant improvement money is expected to supplement the expense for build out. It does not cover the entire cost. The landlord’s contribution is for long term improvements to his property. He wants to see you invest as well and fully expects your contribution to the project at least match his.

This is a word of warning to the would-be tenant. Tenant improvement money, or TI, is not free money. You will be paying this back in the rent amount at some ridiculous rate of interest that’s never clearly calculated for you. It’s all part of the landlord’s top secret formula for arriving at a square footage price.

It may seem like a huge amount of money when a landlord is offering up $20 a square foot for a 2000 square foot space or $40,000 of “free” money. However, a typical build out of a restaurant will be much more than that. Average expenses range from $15,000 for a grease trap (in ground 1500 gallon) to $1000.00 per linear foot for a hood (average 12-14 foot or $12,000 to $15,000). Installation of mechanical, electrical and plumbing can easily run another $40,000 before you build any walls, add flooring, put in a bar or purchase any equipment. That’s why a “second generation” space or even the purchase of an asset sale is often less expensive and less work.

Approach leasing a restaurant the same way you would buying a restaurant. Go in with your eyes wide open, in full possession of as much knowledge as possible and make sure you know the numbers.

Do you have questions about leasing a restaurant or restaurant math? Reach out to We Sell Restaurants for more help and information on this topic.  

Topics: Leasing a Restaurant

How to Buy a Bar [Tips on Evaluating Cash Flow]

Posted by Robin Gagnon on Jul 6, 2018 9:59:25 AM

Buying a Bar does not have to be a risky situation. The team at We Sell Restaurants has these tips for you on confirming earnings.

Does the latest bar for sale listing on your screen seem too good to be true? It may be. Learn from the restaurant brokers the secrets of paying the right price,when you find a Bar for Sale.

First, let's deal with those bars for sale with "Cash" earnings. We are putting to rest the age-old hassle with how to set pricing in this article. The only legitimate way to value a bar for sale, is based on provable earnings.

Blue and Cream Just Sold Social Media Graphic (2)

Valuation Approach

What are Earnings and where are they derived?

  • Earnings are based off a company’s profit and loss statement.
  • Recast earnings include add backs, calculated to remove interest, depreciation, amortization and taxes from the net income number.
  • The result of this approach is the Seller’s Discretionary Earnings, the basis for lending.

Beware! This method does NOT work when the Bar for Sale listing states that they have “Cash Earnings” they will be using in the Valuation.

Why Cash Earnings Won’t Work

  • A listing reflecting cash, is generally, not provable.
  • A seller reflecting "cash earnngs" may be avoiding certain tax requirements like sales tax or income tax.
  • A seller avoiding sales tax or income tax may be paying employees "under the table" which means he is also breaking the law and failing to file appropriate employee tax filings.

Look out for brokers promoting this type of business online. If a listing says, "Cash to be proven by Seller," you can be inheriting a lot of issues.

Some Restaurant Brokers will not advertise or list this inventory, but simply offer them as an Asset Sale because they cannot be verified. An asset sale is an appropriate way to approach a bar for sale opportunity without books and reacords.  An excellent lease in a high value location and a liquor license may be enough to convince you to move forward and pay for assets.  Just don't back yourself into the corrner of paying for earnings that can't be proven.  Also, asset sales will typically not qualify for any type of lending. Only a bar for sale with verified earnings will make the grade for SBA lenders.  

What Issues are Associated with Cash Businesses?

  • Confirmation of Earnings - It's nearly impossible to verify earnings without working in the location for a period of time.  Even if you move forward on the basis that the earnings are real, you will realize additional expenses by converting this to a scenario where appropriate taxes are paid (both income tax and sales tax). This is definitely a buyer beware scenario.
  • Overpayment - The seller is being paid twice, for the same income. They have already received a HUGE benefit since they have avoided all the reasonable and customary taxes; for instance, State Income Tax, Federal Income Tax, etc. Now, they want to sell this bar at a premium.
  • Transparency by the Seller – The seller of this bar for sale has operated on a less than candid basis with the State Alcohol Licensing Authority, the State Sales Tax Board, and the Internal Revenue Service. Do you think they will be forthright with you, when you are trying to buy this Bar for Sale?

What Should You Do?

If you are a Buyer that prefers a less risky approach, than a Bar for Sale with Verifiable Earnings is the answer! The price might not be the “Deal” you were looking for or saw advertised on a listing with “Cash Earnings”, but the motto that “You get what you paid for” holds true in this scenario.

Pricing and Earnings are NOT a game in the Valuation of a Bar for Sale. They are simple math problems and they can have a right and wrong answer!

Robin Gagnon is Vice President and Director of Marketing for We Sell Restaurants and www.wesellrestaurants.com. She holds an MBA in finance and frequently writes on the topics of restaurant sales, restaurant valuation, and financial topics around the buying and selling or restaurants, clubs or bars.  Want to see her latest bar for sale listing with verified earnings?  Click this link for more information. 

 

 

 

 

Topics: Buying a Restaurant

June 2018 top 10 Restaurants for Sale at We Sell Restaurants

Posted by Robin Gagnon on Jul 3, 2018 12:06:51 PM

What happened last month with restaurants for sale and traffic on our website featuring the most restaurant businesses for sale near you?  The traffic continue to trend up, up, up as more buyers started researching their next venture in life.  Our phone calls ranged from those retiring early with too much energy and time on their hands to corporate refugees looking for six figure earnings and an exit from the corporate life. 

The overall theme for this month -- Georgia is booming, multi-units have lots of interest and restaurant space for lease is an opportunity our buyers are loving!  

 

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Open and operating since 2013, this breakfast and lunch, sub and sandwich shop in Florida topped the list with its proven formula. With limited hours, the annualized sales are $200,000, but adding dinner hours  or catering could increase those numbers! This fully equipped has incredibly low rent, and is on a busy street, surrounded by a shopping center including retail businesses, office space, car dealerships. This is a fantastic opportunity and we can certainly see why it's at the top of our list!

 

 

 

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Our second hottest listing for the month was a seven store group in Denver Colorado.  This market has an economy that's raging, a housing market showing no signs of slowing down and buyers ready to go.  They are ready to rake in the dough as the owner of seven franchises for sale of a single brand name in Colorado! These franchises for sale are doing sales of almost $4.5 million annually, which delivers the current owner discretionary earnings of almost $350,000! Seven incredible, built out, fully open and operational restaurants are just waiting for their new owner, and have been very popular! 

 

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A local bar and grill for sale in Georgia checked all the right boxes for our buyers looking for strong earnings and an established location.  This local favorite features a four star reputation, open over eight years, sales exceeding $1.8 million, owner benefit over $140,000, great lease rate and good books and records.  All it needs is a new owner operator which is why it was one of the most popular restaurant for sale listings nationwide. With a university nearby, and population, income, and housing growing, there’s no shortage of patrons, and something for all 200 that can fit to enjoy! With fantastic reviews, and available seller financing, this bar is amazing for an owner who wants to step into a profitable, up and running, business!

 

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Twenty percent of the top ten listings this month were lease spaces.  This one, again in Georgia, features a 1500+ Square Foot second Generation Restaurant for lease with in-ground grease trap and hood system in Roswell.  What is second generation space?  It means this restaurant space for lease was previously operating and open.

The great thing about opportunities like this is the existing infrastructure in place like an in-ground grease trap and hood system! This restaurant space for lease is in a heavily populated area with high traffic counts, and pure potential! Bring your offers.  This one won't last.   

 

 

The top five most popular listings included this Florida store. This recently renovated, fully equipped Peruvian restaurant for sale in Pembroke Pines is a winner! With its sleek, modern style, and well know, homemade sangria, it’s popular, both with guests, and those looking to buy! The near perfect reviews, and fully equipped kitchen mean that this restaurant will be making money from day one, it’s no wonder that this is the second month it’s spent on the We Sell Restaurants Top 10 list!

  

 

Why start with one?  These four proven Franchises for Sale are being sold as a single package in Dallas Texas by We Sell Restaurants and buyers love it! 

Combined sales exceed $2,000,000, delivering more than $220,000 to the owner in discretionary earnings. Eye-catching numbers indeed, but for this opportunity, only those with multi-unit experience will qualify for this opportunity.  Unfortunately, no first timers as these franchises for sale are a valuable commodity and those without experience operating multiple stores will not be approved by the brand. 

  

This fully-equipped restaurant space for lease was one of two on this list last month, and they’re both back this month. Next month, however, this one won’t be here!

Already in contract after just 84 days on the market, the new lessee’s will breathe life into this space with their brand-new concept! Exciting times for their community.  This listing is going, going, gone!  It will lead a possible wave of new concepts, with all the lease spaces gaining popularity on the We Sell Restaurants site.

 

  

 

This adorable Diner for sale in Georgia has been on our Top 10 list for three months in a row, and we can’t figure out why nobody has snatched it up yet! Providing a traditional diner feel, with a southern twist on East-Coast diner food, this diner has proven itself to a cast of regulars, and a number ONE rating for breakfast and brunch restaurants in the city!

A popular diner, both with buyers and with patrons, it’s a perfect opportunity, and is just waiting for a new owner!

  

 

This fantastic bar for sale in metro Atlanta has a great atmosphere, and great sales to reflect that! A very popular bar in person, it has also become a very popular listing here on our site. This bar making it to the top ten list is not surprising to us, as this bar has everything you could be looking for! An unparalleled location, amazing lease terms, TWO separate liquor licenses and, incredibly for a bar, it will qualify for SBA lending!

We don’t expect this bar to be on the market for long, but if we still have it next month, we wouldn’t be surprised if it was on this list again!

   

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This Pizza business for sale in Florida was established by a seller who has an established process of building out restaurants, establishing procedures and menus, opening the business, and then selling. Already selling enough to forecast $360,000 as annualized sales numbers, it’s already doing well.

Only on the market for 20 days, this one is breaking records with views, calls and clicks on our site pushing it onto the Top 10 list. 

With Arcade games and specialty pies, this pizza business is a family friendly fantastic opportunity!

The overall themes for the month include off the chart activity in Georgia and Florida, where buyers are seeking the best opportunities.  There was also strong focus on both lease space and multi-unit restaurant franchises for sale, where buyers can step immediately into a role of strong earnings and multiple locations. 

Still looking for your ideal restaurant for sale?  Check out all our listings online at wesellrestaurants.com. 

Topics: Buying a Restaurant

We Sell Restaurants Weigh in on Recent Franchise Restaurant Sale Announcements.

Posted by Robin Gagnon on Jun 29, 2018 11:07:03 AM

The economy is soaring with small business confidence, lending, unemployment and GDP all hitting top marks.  What does that mean to the franchise restaurant sales industry?  It looks like deals to buy restaurants are hitting record marks.  We Sell Restaurants has scoured announcement across the country to see what’s selling and where.  Here’s what we learned.

One strong trend noted among the announcements is that existing franchisees are expanding.  We Sell Restaurants suspects they are taking advantage of existing operational experience and a very robust lending market to grow additional for units within brands they already own. Examples include:

 Dunkin' Donuts signed a multi-unit store development agreement with existing franchisee Lagunita Franchise Operations.  Over the next several years the franchisee group is planning to open seven new Dunkin' Donuts restaurants throughout Montgomery, Alabama. The first two locations are scheduled to open in 2019, with additional restaurants to follow over the next several years. LFO is led by Damon Dunn; the group has been franchising with Dunkin' since October 2016 and operates seven restaurants in the Mobile, Alabama, and Mississippi Gulf Coast regions. 

Expansion by Team Schostak in Michigan.  The group already owns and operates five Del Taco locations, with a sixth in development.  Mexican continues to be a popular choice as American embrace this food choice and franchise offerings. Franchise Times reports that Mexican chain Del Taco will grow an additional 12 stores across the Detroit, Michigan, area as part of a new franchise agreement with franchisee Team Schostak Family Restaurants.  The company already operates also operates various other casual dining and fast casual brands, including more than 65 Applebee's restaurants across Michigan. 

Cody Trammell and his Southern Fired Hospitality Group are announcing a second location by Cowboy Chicken.  The restaurant in Edmond is set to open in May; Trammell's first Cowboy Chicken unit opened in February 2017 in Oklahoma City's Memorial Square Shopping Center.  He and his business partners plan to open additional Cowboy Chicken restaurants in Oklahoma City, Tulsa demonstrating more growth within brands for new stores.  Founded in Dallas in 1981 and franchising since 2009, Cowboy Chicken has 23 open locations.

Other deals with new franchisees for the past few months included Rise Biscuits Donuts which inked a five-unit franchise deal for the greater Kansas City area. Franchisee Ryan Cook plans to open the new locations over the next five years. Franchise Deals

New York City-based Artichoke Basille's Pizza signed a multi-unit franchise deal to bring its brand to the greater Hartford and New Haven, Connecticut areas. Franchisee Matthew Rusconi is looking to open the first location by year's end and is scouting real estate opportunities in Hartford County, New Haven, Middletown, and Cromwell.

Tropical Smoothie Cafe signed its 100th agreement in Texas, a three-unit franchise deal with new franchisee Shahrukh Noormohammed to open stores in the Houston market.

Mooyah Burgers, Fries & Shakes will expand in Orlando, Florida, and southern Virginia. The company signed a three-unit deal with Bakfield, LLC, a group of three entrepreneurs and friends (Raj Bakshi, Keith Fields, Kevin Hipes) based in Lake Mary, Florida, and a three-unit deal with Keval Shah and Sanjay Patel, community-focused owners of multiple businesses in the area, including a Cold Stone Creamery in Norfolk, Virginia.

Russo's Restaurants signed a development deal with restaurateur Zafar "Jeff" Moosa, who acquired the Russo's Coal-Fired Italian Kitchen location in Richardson, Texas, and will significantly expand Russo's Restaurants' Texas footprint across Dallas, Fort Worth and San Antonio.

NFL stars Vernon Davis and Mohamed Sanu announced a joint partnership to bring more Jamba Juice stores to the Washington, D.C. metro area. Davis, a tight end for the Washington Redskins, and Sanu,one of the Atlanta Falcons' star wide receivers, plan to develop six units. Davis already owns five Jamba Juices in Northern California and is the co-owner of various commercial and residential properties throughout California and Maryland.

Teriyaki Madness inked a deal with the entrepreneurial trio Steve FreedmanMax Freedman and Rene Navas, who purchased 10 shops to build out in Miami, Florida, over the next 10 years.

International growth was also trending in the past sixty days. Dippin' Dots and Doc Popcorn will debut in China as the sister brands plan to open six locations by this fall and a total of 10 by May 2019. The brands' franchising group established a business entity in Asia and signed its first licensing agreement with Shanghai Desire Food Co. LTD.  They are scheduled to open all of the following locations:  Pudong and Yangpu in Shanghai along with the Shanghai South Railway Station and a flagship store planned for the Shanghai Shimao Plaza.

Duck Donuts signed its first international franchise agreement with OBX Alimentos SpA, which is set to open 10 donut shops throughout Chile over the next four years. Marcial Dieguez-Acuna is CEO of OBX Alimentos SpA and a partner in investment firm Inversiones Rio Potomac Ltd. His family has a track record of more than 50 years of successful business ventures in Chile, including bringing American concepts and products to Latin America.

Overall, the market looks great and franchise restaurant sales continue to grow.  For existing franchise for sale opportunities, visit the We Sell Restaurants website online at this link. 

Topics: Buying a Restaurant

We Sell Restaurants Appear on Commercial Real Estate Show

Posted by Robin Gagnon on Jun 25, 2018 9:47:33 AM

Eric and Robin Gagnon, co-founders of We Sell Restaurants, recently appeared on the Commercial  Real Estate Show with Michael Bull.

The conversation ranged from tips for landlords to the biggest disruptors in the industry. What did these experts share with the host?

"Delivery is far and away the largest disruptor to the restaurant industry we have seen in years," says Robin Gagnon of We Sell Restaurants. How is this affecting space needs for restaurant tenants? They are shrinking according to these experts, especially in fast casual, as services like EZ Cater, GrubHub, Uber Eats and more starting to move share out of restaurant seats and into delivery.

Delivery is far and away the biggest disruptor in the restaurant industry.

The duo remarked that some brands are planning for up to 30% of their volume this year to switch into a delivery model. That means they require less front of the house space, reducing occupancy costs. The only problem? Many brands have not yet designed for stores that are shrinking from 3,000 square feet to 2,000 square feet and even if they have, long term leases in place are for oversized units.

That puts pressure on brands to adapt quickly to less space and work creatively with landlords to downsize their existing footprint.

Eric Gagnon told Michael that landlords should no longer seek just the best operators as that's a model from the past. Instead, they should look at those with sales and marketing experience. The restaurant industry is facing tough competitors so good operations is a given. What landlords should focus on is the talent of the potential tenant to sell business and create a buzz about their restaurant outside the four walls.

Tips for landlords from these restaurant brokers included structure of rent in new and creative ways, participating in the business and putting eyes on the business rather than relying on Yelp reviews to know what's going on.

The full show can be heard at this audio link. Tune in to hear Michael Bull with guests Eric and Robin Gagnon. They discuss the current state and future of the restaurant business as well as the impact on the commercial real estate industry including tips for landlords, restauranteurs, lenders and their advisors

America’s Commercial Real Estate Show™ is a weekly video and podcast show about commercial real estate related topics. The show which began airing in 2010 is known for high-quality content delivered in a professional enlightening style. The show provides current, actionable and valuable business intelligence.

Watch videos, listen to podcasts, or read blogs on YouTube, twelve podcast sites including iTunes, and on the show website www.CREshow.com

We Sell Restaurants is a national restaurant brokerage firm specializing in the sale of restaurants nationwide. They work in 45 states and are franchising their brand nationwide. More information about the brand can be found online at wesellrestaurants.com

Topics: Buying a Restaurant

Best Restaurant Social Media Campaign Ever! IHOP goes to IHOB and We Sell Restaurants says...

Posted by Robin Gagnon on Jun 15, 2018 4:33:15 PM

What’s in a name?  For a company like ours, aptly named, “We Sell Restaurants,” we’re pretty confident that a good name is key to not only describing what you’re about but also gaining traction in the market. 

In the news that nearly crashed the internet this week, a familiar brand decided to change their name and their brand focus is one fell swoop.  For the last 60 years, people have known the name IHOP or International House of Pancakes.  On June 4th, they announced that they were “flipping [their] name to IHOb,” much to the consternation of the internet.

In advance of the announcement, jokes abounded about what the b would stand for. IHOP’s own twitter feed drummed up the action with a poll from their followers.  Guesses ranged from butternut squash to barnacles. Many people guessed breakfast, along with other logical choices like bacon and brunch.DfGbx9SVAAA86ag

The social media team at IHOP(B) did an amazing job teasing out the answer.  Their first tweet announced a change was in the work and then primed the social media pump.  From encouraging the speculation on social media, playing coy about guesses, and changing words that start with a p to start with a b, they managed to stage a brilliant online campaign.  They engaged in Twitter exchanges with others (Check out our favorite - the Wendy’s Twitter account) and overall hyped in a way we’ve never seen, as the name change had clearly been in the works for some time.

What did they get for this daring effort?  How about hours of online press, a social media firestorm and more mentions stacked up in a two week period than they probably had in the last year.  It wasn’t just social media getting into the action, traditional media was engaged as well and a quick search of articles finds three pages of online results for articles written in the past 48 hours.  Look at us – we’re writing about them too!  

Some are asking, is it a publicity stunt or is it real?  We don’t know but what we do know is that the tactic got everyone on board from other brands to schools and universities to corporations.  Here’s just a sample of some of the tweets that fueled the storm this week.

Burger King came out on Twitter claiming to be the king of pancakes.  When asked if they’d let IHOP sell burgers on their block, Wendy’s replied “Not really afraid of the burgers from a place that decided pancakes were too hard.”

Whataburger tweeted “as much as we love our pancakes, we’d never change our name to Whatapancake.” Hot Pockets simply tweeted “bot bockets”. Other non-food corporate twitter accounts joined in.  Netflix tweeted “brb, changing my name to Netflib.”

When the dust settles, it will likely be the best social media campaign ever.  Will it sell more pancakes?  The restaurant brokers suspect they will, at least for the foreseeable future. Will they really be IHOB – International House of Burgers?  We don’t see it.  Let’s stay tuned and see what’s in a name for this brand.

Topics: Buying a Restaurant, Selling a Restaurant