Advice for Buying a Restaurant and Selling a Restaurant

Tips on Buying a Bar for Sale – Evaluating Cash Flow

Posted by Robin Gagnon on Dec 8, 2017 9:32:46 AM

When the deal seems too good to be true, it probably is. A Restaurant Broker shares the secrets of paying the right price for earnings when you find a bar for sale.

An age-old struggle with how to set pricing on a “cash” business like a bar for sale is put to rest in this article. Expert restaurant brokers know that the only real way to value a bar for sale opportunity is based on earnings. Earnings are based on a profit and loss statement on the business and additions to earnings known as add backs to calculate Seller’s Discretionary Earnings. This method, known as the Income Valuation Approach doesn’t work when bar for sale listings states they have “cash earnings” they want to use in the valuation.Tips on buying a Bar for Sale.png

Cash earnings are generally not provable. They results when the seller avoids certain tax requirements and doesn’t report all of his sales and thus, his earnings. Some restaurant brokers promote these listings online and say things like “cash to be proven by seller.” Other restaurant brokers don’t take these listings or simply offer them as assets since they can’t be verified. Cash earnings are not the same as items “added back” to earnings to arrive at the owner benefit on a bar for sale. Anything that is customarily added back can be substantiated with documents during a period of review on the books and records. Here are some of the issues presented by “cash” businesses.

The first is valuation. A bar for sale advertised with earnings of $100,000 offers no way for a restaurant buyer to confirm that number. Since pricing is based on earnings, the restaurant broker that takes this number at face value will be overpricing the business. The only way the value would be correct is if the earnings were authenticated and the buyer kept the business the same when he took over the bar for sale. The other problem with the valuation is that seller is being asked to be paid twice for the same income. He’s already received a huge benefit since he’s avoided all the reasonable and customary taxes (state income tax, federal income tax and more). Now he wants to sell this bar at a premium.

Some buyers are willing to take the risk and decide they will just run on the up and up once they take over the bar for sale. There’s a problem with this approach. If you convert the cash earnings onto the books, you’re looking at an immediate hit to the earnings. The federal, state, and sales tax implications alone could drive the operation into a negative earning situation.

The larger problem for most however is one of transparency by the seller of the bar for sale. He has operated on a less than candid basis with his franchise (if he has one), the State Alcohol licensing authority, the state sales tax board and the Internal Revenue Service. It’s a bit of stretch to now believe he or she will be forthright with you at the point you are buying this bar. Outside of coming into the business as an employee or minority partner for a series of months, it’s impossible to establish the “real” earnings.

If you are a buyer that prefers a less risk adverse approach, than a bar for sale in with verifiable earnings is the answer. The pricing may not seem as good a “deal” as something advertised at a good price with “cash” earnings but the old adage that you get what you pay for holds true in this scenario. Pricing and earnings are not a game in the valuation of a restaurant or bar for sale. They are a simple math problem and they do have a right and wrong answer – whether you are buying a franchise restaurant or buying a bar or club.

Robin Gagnon is Co-Founder of 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 surround the buying and selling or restaurants, clubs or bars.

Topics: buying a restaurant

Tips on Leasing a Restaurant – What Landlords Expect from a Tenant

Posted by Robin Gagnon on Nov 27, 2017 10:00:00 AM

You can get respect from the landlord when leasing a restaurant as long as you take the time to assemble a package with the help of an expert restaurant broker.

Leasing a restaurant can be a daunting task for the inexperienced restaurant owner. Here’s everything you need to know to present your offer in a way to get serious consideration from landlords who see multiple submissions for the best space. Start and end your negotiations with the landlord on the best foot by treating this as a serious business deal.

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Lending covenants or other restrictions on landlords often dictate the mandatory materials he needs to consider any new tenant leasing a restaurant space. This can be for a new lease or even the transfer of an existing one. By understanding the requirements early in the game and presenting a well organized and complete package, your application moves to the top of the list, important in the current competitive market for leasing a restaurant. Once the landlord has a package, he will meet with the proposed tenant but generally not before he has a package. Why? The landlord wants to understand who he or she is dealing with and their credit quality before they meet with a would-be tenant and enter into negotiations.

How can using a qualified restaurant broker assist you in leasing a restaurant? There are multiple ways. First, the best spaces move quickly and restaurant brokers with established relationships with landlords often get the first look at spaces that will be available. Secondly, using a restaurant broker that has established a rapport with the landlord increases your chance of success when leasing a restaurant. Since the landlord isn’t meeting directly with you as the tenant, he’s relying on the expertise of the restaurant broker to communicate information about your concept and you personally. That’s important when the developer is weighing multiple offers or considering tenants that do not have as strong a credit position. Leasing a restaurant for locations in demand are typically managed by firms who are very experienced in conducting background reviews and credit quality reviews on would-be tenants. Lastly, a qualified restaurant broker is going to prepare your package for the landlord and help you put forth as the best candidate.

You can indicate a lack of sophistication or inexperience on the part of your broker if your package is incomplete or missing elements. For big landlords, this can be a deal breaker when there are competing packages though less established or single unit operators are more forgiving. Anyone leasing a restaurant should get a full list of requirements from the broker.

Be prepared to produce any or all of the following items. The most important item is your financial statement. This should be accurate and dated within the last 30 days. Landlords will want credit checks so be prepared to give them approval to pull your credit. Often they will want two years of federal income tax returns. Most of this is a required need to have; not a nice to have. The landlord is looking for three things: cash on hand to operate, assets sufficient to secure the lease and history of paying bills on time. In addition, they want to understand how you will operate in their restaurant for lease so provide a copy of your menu and outline of your business.

The actual discussions on lease terms begin after the full package is submitted. If you have a powerful package and strong financial results you’ll have more negotiating room in leasing a restaurant and the terms. If there are lots of people vying for the same space and your restaurant brokers submits the best package on your behalf, you’ll win out. Weak credit or insufficient cash positions can be overcome in multiple ways. A strong restaurant broker can offer you suggestions to overcome or secure the landlord’s risk on these elements.

Want more information on leasing a restaurant? Download our free Guide to Leasing a Restaurant available at this link.

 

Topics: buying a restaurant

Skip Cooking This Thanksgiving - The Restaurant Brokers Share Restaurant Chains Open for the Holiday!

Posted by Robin Gagnon on Nov 22, 2017 10:00:00 AM

Our friends at Restaurant News did it again!  Here's the list of the restaurant chains open for Thanksgiving this year.  Making a home-cooked meal for Thanksgiving is how some families spend the day but a surprising number of people prefer to skip the preparation, cleanup, and house full of relatives.  Instead, they opt for a chef who works their magic and a server team to handle the legwork!  An added benefit to dining out, you can avoid all those pesky leftovers and seconds that are bound to sabotage your diet plans when a restaurants whisks in a meal and then clears it away in the same sitting. 

The Restaurant Brokers have been on both sides of the fence.  We've been the recipients of a fabulous home cooked meal, we've been the ones cooking the turkey and we've dine out.  What's the best experience?  It depends on your own unique situation.  More and more families are gathering together but opting for dining out.  We can't blame those who want to leave the cooking to specialists.  Especially not after reviewing this list of fantastic chain restaurants who are staying open to make your Thanksgiving meal an unforgettable one!

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According the research performed by the National Restaurant Association, this year nine percent of American’s will be eating their Thanksgiving dinner at a dining establishment instead of in the comfort of their own or someone else’s home. That’s a three percent increase from 2011.

If you’re one of the millions of American’s who are eating their Thanksgiving dinner out this year, check out the following list of chains who are staying open to roast your bird, bake your ham, and plate up your mashed potatoes and gravy so that you can be thankful you don’t have to lift a finger – except to pick up your fork and knife!.

Applebee’s – Not all Applebee’s restaurants will be open for Thanksgiving, but there will be many in select markets that are. Those that are staying open for the holiday will serve turkey, green beans, and mashed potatoes with gravy. Call your local Applebee’s to find out if they will be participating!

Boston Market – For $12.99 a person you can enjoy turkey breast or half of a chicken along with two side dishes, a roll and a slice of pie! For $34.99 enjoy the same items for three people!

Country Buffet – Country Buffet is where you go to get a meal just like what grandma made, and Thanksgiving dinner is no exception. From 11am-6pm guests can dine on numerous meats from the carving station, potatoes, juicy corn, and a selection of Thanksgiving pies.

Cracker Barrel Old Country Store – head to Cracker Barrel for a turkey dinner complete with a small portion of sugar-cured ham, delicious sweet potato casserole, your choice of a side and beverage for just $12.99 per adult and $7.99 per child.

Denny’s – Head into your favorite Denny’s for carved turkey breast, stuffing and even cranberry sauce.

Houlihan’sWhat an interesting concept this bar and restaurant chain has come up with this year – ‘Drinksgiving!’ After you finish meal with the family, head over to Houlihan’s and indulge in $2 beers, $3 wines, and $5 pitchers of Long Islands!

McCormick & Schmick’s Seafood & Steaks – For an upscale dining experience this Thanksgiving, head to McCormick & Schmick’s Seafood & Steaks for turkey dinner including butternut squash soup, cornbread stuffing, and apple squash casserole. This chain will also be featuring its regular menu all day long for anyone not wishing to have the traditional Thanksgiving turkey!

Romano’s Macaroni Grill – For $24.99 per person you can indulge in a three-course dinner including roast turkey, mashed potatoes, carrots with bacon, apple sausage stuffing and pumpkin pie.

Ruth’s Chris Steak House– Another upscale dining option for Thanksgiving is the famous Ruth’s Chris Steak House. The price is a bit steep, but it is well worth it! For $39.95 per adult and $12.95 per child, guests will enjoy gumbo or a house salad as a starter, and tender turkey with house-made gravy, stuffing, and more!

Ryan’s – If you’re looking for good old fashioned pecan pie this Thanksgiving, you’ll want to get to Ryan’s. Sure, you can get the traditional turkey dinner, but you can also get friend chicken, steak, shrimp, and meatloaf! Southern-inspired side dishes include collard greens, green beans and corn.

Shari’s – Head on into Shari’s for turkey or ham dinner for just $14.99. If you’d rather have something from the daily menu, all entrees are $5 off from 10:00PM Thanksgiving night until 10:00am Black Friday! Shari’s has 94 locations in the United States. For dessert, Shari’s is serving up its award-winning pumpkin pie!

Sizzler’s – From 11am through 10pm on Thanksgiving, guests will be treated to stuffed roasted turkey, potatoes, cranberry sauce and pumpkin pie. The price will vary at each location, so call ahead to the Sizzler’s closest to you for pricing and reservations!

The Dixie Cafe – Head on over to the Dixie Café for a traditional turkey for just $10.99 per person from 11am-5pm.

Waffle House – While they don’t have a special Thanksgiving menu, they will be open serving all of their signature items to the masses!

With all of these delicious options to choose from, we wouldn’t be surprised if some of us have a home-cooked meal for lunch, and head out for a second serving for dinner! Wherever you choose to dine this Thanksgiving, We Sell Restaurants wishes you a happy and healthy holiday with your friends and family. Enjoy!

Topics: buying a restaurant, restaurant brokers

Restaurants for Sale and Their Valuation are Simple Math Problems – Do you have the Right Answers?

Posted by Robin Gagnon on Nov 20, 2017 9:39:41 AM

Researching restaurants for sale can be a challenge. Understanding that this is a math problem with a right and wrong answer can help. If your broker can’t answer these questions about how much to pay when analyzing restaurants for sale, find another one.

There are three methods of establishing valuation of restaurants for sale used in the industry. An expert restaurant broker should be familiar with all three though the Income Valuation Method is the most favorable and trusted method used in the industry.

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In today’s robust environment for SBA lending, the Income Valuation Method is the one used to secure financing on a business. If a restaurant has solid profits and a two to three year history, it’s easily financeable in most circumstances, with 25% to 30% down. This is the most acceptable method of valuation for banks, lenders and individuals in assessing how much to pay for a restaurant. In a situation where a restaurant buyer is paying cash, this helps to reduce fear of the transaction as the business has a proven track record.

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

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

Once the Seller’s Discretionary Earnings is appropriately determined, then it becomes the basis for a “multiple” for appropriately pricing restaurants for sale. Every buyer wants the answer to the question, “What’s the multiple for restaurant pricing?” and the response rarely satisfies anyone. In general, restaurants for sale can be offered and sold somewhere between two and a half and three times earnings. Franchise restaurants trend at the higher end of the multiple, at nearly three times earning for lending at most times. Exceptions come into play when the business has down trending sales year over year. For purposes of this article, we are limiting our discussion to single restaurant units. Multi-unit restaurants for sale, (anything above three, especially franchise) changes the multiple significantly and requires a whole different analysis and pricing model.

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

Strong restaurant brokers that know the market and should be able to share exactly where a restaurant is priced based on the multiple and why. Ask some questions of your broker to be certain they fully understand restaurant pricing. If you’re not satisfied with the response, contact a Certified Restaurant Broker who has passed testing and has experience in pricing to assist you in buying a restaurant.

Topics: buying a restaurant

Buying an Existing Franchise Restaurant Versus Building It

Posted by Robin Gagnon on Nov 17, 2017 9:02:04 AM

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Topics: buying a restaurant

Restaurant Brokers Weigh in on Nation's Restaurant News Hot Concept Picks

Posted by Robin Gagnon on Sep 29, 2017 1:48:13 PM

Are they Hot or are they a flash in the pan?  That's a question the Restaurant Brokers ask each year when Nation's Restaurant News looks at the "up-and-coming restaurants" to pick their five "Hot Concepts" award winners.  According to the magazine, these five brands are "resounding with consumers and have strong growth potential." 

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Do the restaurant brokers agree?  Well, we have to say this year's field is a far cry from the everyday sandwich shop.  It ranges from a "hippie-chic" chain featuring healthy food to a gastropub concept.  Here are their Hot Concepts. What do you think?

Flower Child is first on the list.  This brand has grown to seven units in three years by combining a focus on healthy food with decor that feels like you're back in the 70's and headed to Woodstock. This is not some small hippie chick's brand however as powerhouse Fox Restaurant Concepts kicked this one off in 2014. That's not the only large player attached to chain.  In November, The Cheesecake Factory Inc. made a minority equity investment in Flower Child and North Italia, another Fox Restaurant Concepts brand.  The chain has three stores in Arizona, two in California, one in Dallas and one in Austin (with a second store in the works).  What is the restaurant broker take?  We are seeing this "healthy fare" space fill up quickly with players.  We anticipate some fall out in the next 24 months as Americans say they want to eat healthy a lot more than they actually do. 

Another concept noted as "Hot" is a fast-casual Korean concept called Bibibop Asian Grill. The idea is cashing in on the popularity of bowls — and Korean food, one of the hottest Asian cuisines currently.  The name comes from the Korean dish bibimbap, a Korean dish of rice served in a bowl, topped with vegetables and often an egg and meat.  The chain has more than 20 units and has expanded to Washington, D.C., Los Angeles, Chicago and Dayton, Ohio.  The restaurant brokers opinion on this one is "Thumbs Up!"  There's a void in market for fast casual Korean while most other Asian concepts are well represented.  This has some space to grow. 

Topics: buying a restaurant

Restaurant Brokers Weigh in on Top 40 Restaurant Franchises based on Satisfaction with Brand

Posted by Robin Gagnon on Sep 21, 2017 12:18:22 PM

Chain Restaurants just published a recent survey of more than 4,300 franchisess across 100 brands.  Theiy were searching for franchisee satisfaction.  Then they ranked the best and published their Top 40 Restaurant Franchises list. 

What do the restaurant brokers think?  Well , I for one, would have appreciated a ranking from first to last rather than just an alphabetized list.  I would also like more clarity on what the survey asked.  The article cites part of the reason for landing on the top 40 list was the ability of these brands to deliver an, "intense focus on company culture."Is culture enough however?  For these restaurant brokers, looking at a list of concepts ranging from emerging brand Dicks Wings & Grill with only 23 units to Zaxby's with 946 units is a very wide range.  Is the culture great because the brand is so small that there's immense individualized attention? Conversely, is the culture great because a large brand has the money and payroll to keep a team in place to make everyone "feel good" even if they are not making money. 

 

What about the store development costs and return on investment?  This list showns startup investment costs for these restaurant franchises ranging from a low of $45,000 for Happy and Healthy Concepts to a whoppping $3 million for Buffalo Wings & Rings,  Both are "Happy franchisees" and I want to know more about the difference between what makes each investor and franchisee of these brands make the list. 

What do you think?  The survey respondents totaled more than 4,300 franchisees from almost 100 foodservice brands.  Franchise Business review analyzed 18 months of data before naming their Top 40 Food and Beverage Franchises for franchisee satisfaction.  

Looking at this data another way, if "almost 100" foodservice brands were included and the ultimate list was 40 brands, was this a self-serving survey since the brand had almost a 50% chance of landing in the top?  Without ranking, we don't know if one of the restaurant franchieses listed below was number 40 out of 100 which is not that super great. On the other hand, they did throw in everything from soup to nuts (or Zoup! to Biggby Coffee) so that's a positive.  

The list is below and it was published in an article by Chain Restaurants written by Peggy Carouthers.  Let the restaurant brokers know what you think about the list. 

These are the year's Top 40 franchisees in alphabetical order:

    Bahama Buck's
  • Startup Investment: $223,346 – $720,825
  • Cash Requirement: $90,000
  • Total Units: 89
    Biggby Coffee
  • Startup Investment: $220,000
  • Cash Requirement: $70,000
  • Total Units: 254
    Billy Sims Barbecue
  • Startup Investment: $169,000 – $433,000
  • Cash Requirement: $60,000
  • Total Units: 59
    Buffalo Wings & Rings
  • Startup Investment: $1,224,000 – $3,085,000
  • Cash Requirement: $300,000
  • Total Units: 57
    Captain D's
  • Startup Investment: $771,000 – $1,003,000
  • Cash Requirement: $350,000
  • Total Units: 522
    Checkers & Rally's
  • Startup Investment: $96,414 – $1,501,265
  • Cash Requirement: $250,000
  • Total Units: 855
    Dick's Wings & Grill
  • Startup Investment: $237,500 – $772,500
  • Cash Requirement: $100,000
  • Total Units: 23
    Donatos Pizza
  • Startup Investment: $449,000 – $667,000
  • Cash Requirement: $449,000 – $667,000
  • Total Units: 152
    East Coast Wings & Grill
  • Startup Investment: $658,875 – $1,133,502
  • Cash Requirement: $250,000
  • Total Units: 35
    Fazoli's Restaurants
  • Startup Investment: $883,000 – $1,399,000
  • Cash Requirement: $250,000
  • Total Units: 334
    Fuzzy's Taco Shop
  • Startup Investment: $335,000 – $1,035,000
  • Cash Requirement: $250,000
  • Total Units: 112
    Golden Corral Buffet & Grill
  • Startup Investment: $2,120,644 – $6,170,713
  • Cash Requirement: $500,000
  • Total Units: 482
    Ground Round Grill & Bar
  • Startup Investment: $450,000 – $2,200,000
  • Cash Requirement: $350,000
  • Total Units: 27
    Happy & Healthy Products, Inc.
  • Startup Investment: $45,000 – $90,000
  • Cash Requirement: $45,000 – $90,000
  • Total Units: 65
    Hungry Howie's Pizza
  • Startup Investment: $251,375 – $495,850
  • Cash Requirement: $100,000
  • Total Units: 548
    Hwy 55 Burgers Shakes & Fries
  • Startup Investment: $191,255 – $385,155
  • Cash Requirement: $125,000
  • Total Units: 137
    Jamba Juice
  • Startup Investment: $201,000 – $619,300
  • Cash Requirement: $350,000
  • Total Units: 953
    Jason’s Deli
  • Startup Investment: $905,891
  • Cash Requirement: $905,891
  • Total Units: 261
    Kona Ice
  • Startup Investment: $120,225 – $143,025
  • Cash Requirement: $20,000
  • Total Units: 941
    LaRosa’s Pizzeria
  • Startup Investment: $800,000 – $1,000,000
  • Cash Requirement: $500,000
  • Total Units: 66
    Lenny’s Sub Shop
  • Startup Investment: $188,216 – $396,146
  • Cash Requirement: $75,000
  • Total Units: 96
    Marco’s Pizza
  • Startup Investment: $221,592 – $546,592
  • Cash Requirement: $221,592 – $546,592
  • Total Units: 682
    Mooyah Burgers & Fries
  • Startup Investment: $412,750 – $620,000
  • Cash Requirement: $250,000
  • Total Units: 98
    Nothing Bundt Cakes
  • Startup Investment: $392,875 – $545,475
  • Cash Requirement: $150,000
  • Total Units: 168
    Penn Station
  • Startup Investment: $293,102 – $593,027
  • Cash Requirement: $300,000
  • Total Units: 310
    Pizza Factory
  • Startup Investment: $156,000 – $643,500
  • Cash Requirement: $90,000
  • Total Units: 109
    Planet Sub
  • Startup Investment: $182,500 – $402,000
  • Cash Requirement: $100,000
  • Total Units: 58
    Scooter’s Coffee
  • Startup Investment: $334,000 – $514,000
  • Cash Requirement: $100,000
  • Total Units: 167
    Smoothie King
  • Startup Investment: $225,650 – $426,185
  • Cash Requirement: $100,000
  • Total Units: 907
    The Häagen-Dazs Company
  • Startup Investment: $154,158 – $542,408
  • Cash Requirement: $154,158 – $542,408
  • Total Units: 206
    The Honeybaked Ham Co. and Cafe
  • Startup Investment: $299,200 – $468,200
  • Cash Requirement: $100,000
  • Total Units: 405
    The Wendy’s Company
  • Startup Investment: $300,000 – $3,000,000
  • Cash Requirement: $2,000,000
  • Total Units: 6,564
    Toppers Pizza
  • Startup Investment: $291,666 – $527,152
  • Cash Requirement: $150,000
  • Total Units: 99
    Tropical Smoothie Cafe
  • Startup Investment: $198,050 – $478,550
  • Cash Requirement: $125,000
  • Total Units: 541
    Uno Chicago Grill
  • Startup Investment: $736,000 – $1,850,500
  • Cash Requirement: $750,000
  • Total Units: 196
    Wings Etc.
  • Startup Investment: $300,000 – $780,000
  • Cash Requirement: $300,000 – $780,000
  • Total Units: 40
    Wingstop
  • Startup Investment: $346,775 – $733,249
  • Required net worth $1,200,000; $600,000 liquid
  • Total Units: 1,056—21 are corporate-owned stores, and the rest are franchise
    Zaxby’s
  • Startup Investment: $352,000 – $664,300
  • Cash Requirement: $300,000
  • Total Units: 946
    Zoup!
  • Startup Investment: $321,400 – $609,400
  • Cash Requirement: $321,400 – $609,400
  • Total Units: 87

To see our restaurant franchises for sale, check out the link in this paragraph or the graphic below. 

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Topics: buying a restaurant

Restaurant Brokers Report on Latest Franchise Deals Announced

Posted by Robin Gagnon on Sep 13, 2017 10:41:57 AM

The Restaurant Brokers love to announce the new franchise restaurant deals in the pipeline.  The counts continue to grow with established and new concepts on the horizon demonstrating strong unit count increases in both openings and future deals.  Here's an overview of new deals announced recently.  

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It looks like Tom+Chee has a new competitor with Meltshop which is expanding in both the U.S. and abroad.  Their recent press release says they are seeking seeking experienced entrepreneurs to help the brand grow to 100 locations over the next five years across the U.S. and internationally. Melt Shop recently expanded into the Middle East and will open seven locations in the region, with four opening in Kuwait by March 2018. Melt Shop’s focus is simple: melted sandwiches made with high-quality ingredients. Its bread is freshly-baked daily and its high-quality cheese is sourced from meticulously selected dairies. But Melt Shop does more than create melted sandwich masterpieces — it creates a culinary experience unmatched in the fast-casual space. 

Pie Five Pizza Co , the fast-casual restaurant known for its customizable pizzas prepared and ready to enjoy in five minutes – will soon be expanding its piece of the pie beyond the USA.  They are reporting a new master development partnership with Ali Shahid Butt and his partners at AR Pizza, LLC, Pie Five will open its first international location in Pakistan in 2018, with up to 40 more locations over the next seven years. AR Pizza also owns 47 Popeye’s Chicken locations and eight Arby’s restaurants. The group is developing Pie Five locations on the East Coast of the United States as well.

A brand in the "better breakfast segment," Famous Toastery has opened six stores, with another eight expected to open their doors before 2017 comes to a close. The restaurant brokers have seen growth in this segment for some time but we suspect the field is getting crowded.  Breakfast is a high profit meal and we're seeing too many brands jumping in while established fast food chains all add the meal to the mix.  Expect to see some fall out in the future.  For now, Famous Toastery has also signed on to open five more corporately owned locations as the breakfast and brunch segments of the restaurant industry continue to grow. This year, Famous Toastery has officially crossed the 20-unit mark, and is on pace to meet its goal of signing 15 deals for a total of 75 restaurants.

Fast Casual concepts show no signs of slowing down and here are just a few examples the restaurant brokers have seen announced very recently.

Chicken Salad Chick, the nation’s only southern inspired fast casual chicken salad restaurant concept, announced today it will be expanding in North Carolina with its first location in Concord. The new restaurant will open on Tuesday, September 12 and is located at 8915 Christenbury Parkway, Suite 40. This location is owned and operated by franchisee team Mike Hernandez and Don Carson of Cardez Hospitality Group, and marks the fifth Chicken Salad Chick restaurant in North Carolina.

Zoup!, which labels itself as the nation’s leading fast-casual fresh soup concept, is preparing to open its doors in Washington, Pa., on Thursday, Sept. 14, at 181 Old Mill Blvd. in the Old Mill Shopping Center.  Washington’s first Zoup! also marks the 10th in Pennsylvania.  As an established brand throughout the United States and Canada – with more than 100 restaurants in 20 states/provinces – Zoup! is targeting Pennsylvania as part of an overall expansion strategy.

Other concepts showing growth include Buono, a 19-store chain founded by Buonavolanto patriarch Joe Buonavolanto, Sr..  The chain announced a partnership to serve Chicago’s original Italian beef and other classics during Chicago Bears games at Soldier Field.  As part of a three-year agreement with the Bears organization, Buona is the exclusive purveyor of Italian Beef, Italian Sausage, Beef & Sausage “Combos” and Meatball sandwiches during all of the Bears regular season games at Soldier Field. 

The restaurant brokers are also seeing growth from large franchise chains.  Dunkin Donuts for example, is not slowing down.  They have signed another multi-store development agreement for seven stores in Raleigh/Durham North Carolina with Coastal Franchising Inc. The company, led by CEO George Ross, Coastal Franchising already has 39 locations throughout the Carolinas, including four Dunkin' Donuts restaurants and one Dunkin' Donuts and Baskin Robbins combo unit.

Dunkin also signed with two franchisee groups in Georgia for a total of six locations. Franchisees Nishith and Navnit Patel and their QSR Group LLC will open five restaurants in the Macon area, including two multi-brand units. And in the Buckhead area of Atlanta, franchisee Smita Patel of Guzaratii LLC will have one unit in a gas station/convenience store.

Additional multi-unit deals announced include Chuch's Chicken.  Their franchisee, Volunteer Chicken LLC opened its first Church's Chicken location last month in Smyrna, Tennessee, as part of a 10-unit development deal to expand the concept in the middle Tennessee region. Larry Lavigne, president of Volunteer Chicken, has more than 25 years of restaurant industry experience, and is also a franchisee of Jet's Pizza and Tropical Smoothie Café.

Overall, strong unit count increases and reinvestment by existing franchisees into growth signal a continuing strong market.  The restaurant brokers expect this trend to continue. 

 

Topics: buying a restaurant

Buying a Restaurant Business?  Take Advantage of Delivery to Boost Sales

Posted by Robin Gagnon on Sep 8, 2017 9:02:03 AM

Are you buying a restaurant business and looking for ways to improve the business?  Here's a simple way to drive sales.  Start with delivery.  A recent survey from Morgan Stanley has some eye-popping statistics on the delivery portion of business and the opportunity it presents for operators.  The restaurant brokers have been hearing this from multiple clients looking for a way to shore up sales in a soft market and it looks like it’s just getting started.

According to this recent study from Morgan Stanley, delivery will account for more than 40% of total restaurant sales by 2020.  That's an increase of seven times over current levels.  It's an incredible opportunity for growth of the current volume in a store.  That's why anyone buying a restaurant business must focus on this aspect of their operation.

Delivery to drive sales.jpg

What are they ordering?  The survey found that demand for delivery is surging most for coffee and burgers.  That's very non-traditional.  It's also good news if you're buying a restaurant business and thought no one would be in the market for Pho takeout or hot dogs.  In this case, it seems nothing is off limits when someone wants to grab an APP and dial up an order. The Morgan Stanley survey indicates that traditional leaders in delivery aren’t suffering either.  Pizza chains, the most traditional of all delivery models seem immune from any other competition. 

Is this a new customer or someone you’re diverting from seats in the business?  The Morgan Stanley survey found that around 43% of delivery patrons were opting to order in place of going to a business.  That’s up from 38% in 2016. At the same time, National Restaurant Association numbers show us that a family’s share of their food dollar spent outside the house continues to grow.  From these two data points, the restaurant brokers could infer that isn’t replacing the customer in your store and could in fact, be a new one.

How do you take advantage of the opportunity if you’re buying a restaurant business?  First, evaluate what form of delivery (if any) they have.  Most businesses (outside of pizza) don’t have a delivery person on staff any longer because of the costs associated with insurance.  Thankfully, using a third party eliminates that risk.

Secondly, forecast your anticipated sales.  We have restaurant operators telling us they are picking up a net (not gross sales) of $1000 a week with the delivery services and that's out of the gate.  That's an additional $52,000 in sales by doing nothing other than installing an app and fulfilling orders!  It's found money.

Third, investigate the services. The beast among these is Uber Eats but the choices aren't an either/or scenario.  You can have accounts with UberEats, GrubHub, Doordash, and Zifty simultaneously.  If they each contribute an extra $500 per week, the opportunity is unmatched and should definitely be considered if you're buying a restaurant business and looking for ways to increase sales. By the way, if you’re buying a restaurant business and an account with one of these vendors is already set up, here’s a quick tip.  Transfer that account rather than setting up a new one.  That shortens the time frame for you to get going and there’s no interruption in service to customers already using the App to order from your business.

What about costs?  The delivery services do take a chunk of change from the transaction.  However, if that customer is ordering from home, increasing your market share, and not costing you a seat in the dining room, you have to run the math to see if this is 'found' money or a “found” customer.  After all, this is a way to get your brand in front of customers that otherwise wouldn't come in the door.  According to the Morgan Stanley survey, almost half the respondent base (45%) had ordered delivery in the prior six months, and 85% had visited restaurants.  But the key to this is whether they have visited your business.  Seeing something interesting on a menu and ordering it to the front door might be a way to expose your brand to new customers who will then book a table for 4 on a Friday night or call in a catering order for the office. 

When you are buying a restaurant business, the first goal is to retain the existing business but a focus on growing sales may definitely have a delivery component.  Let us know what you chose and how it worked out for you in our comments section.

In the market for buying a restaurant business?  Check out our listings online at this link.

 

 

Topics: buying a restaurant

Top 10 Restaurants for Sale in August 2017 by the Restaurant Brokers

Posted by Robin Gagnon on Sep 5, 2017 6:28:43 PM

 

It is always fun to figure out which restaurants for sale are the most interesting to our buyers!  August was a banner month with tons of clicks, calls and downloads on the most trafficked restaurant for sale website online.   Restaurant Broker Cyndi Weinbaum led the list with her Decatur listing priced to move at under $50,000.  This winning location is right sized for someone entering the industry and has a fixed cost we can all love with rent at just $1540 per month. This restaurant for sale is jumping off the site and will land in someone's hands soon.  

Listing ID:5640 Restaurant Broker Cyndi Weinbaum    
Restaurant for Sale in Decatur, GA - Metro Atlanta
Lease: 2 1/2 with 5 year Option
Monthly Rent: $1540
Inside Sq. Ft. 1500
Outside Sq. Ft.
Price:$48,000
City:Decatur

Cyndi Weinbaum
(770) 851-5194
The Colorado market is smokin' hot with restaurant for sale listings moving quickly.  Chris Gordon, one of the team's newest Certified Restaurant Brokers listed an adorable coffee shop for sale that made it into the number two most active spot on our top ten list. This won't last long with a common theme in play for reasonable rent, especially for the Colorado marketplace.
Listing ID:5668 Restaurant Broker Chris Gordon    
Turnkey Coffee Shop For Sale in Arapahoe County, Colorado
Lease: 5 yr
Monthly Rent: $2610
Inside Sq. Ft. 1400
Outside Sq. Ft.
Price:$99,000


Chris Gordon
(303) 594-4247
The third most active restuarant for sale listing this month was offered in Austin Texas, one of the fastest moving markets for our restaurant for sale listing.  A manageable size, at just $1100 square feet in a location described as "killer" by this restaurant broker and you have a winning scenario in hand.  
Listing ID:5648 Restaurant Broker Dave Duce    
Restaurant for Sale in Killer Location SW Austin, TX - Fantastic Rent!
Lease: Expires December 31, 2017 + 2 two-year options
Monthly Rent: $1851
Inside Sq. Ft. 1100
Outside Sq. Ft.
Price:$48,000
City: Austin

Dave Duce
(512) 773-5272
The number four slot on our hit parade for the month was in sunny Pompano Beach Florida which is bracing for Hurricane Irma as we write these words.   This restaurant space for lease is a winner at just under 200 square feet.  The landlord is looking for a new restaurant tenant so take a deal to Restaurant Broker Ken Eisenband today. 
Listing ID:5649 Restaurant Broker Ken Eisenband    
Restaurant Space for Lease in Broward County
Lease: Negotiable with Landlord
Monthly Rent: $4240
Inside Sq. Ft. 1950
Outside Sq. Ft.
Price:$69,000
City:Pompano Beach

Ken Eisenband
(561) 350-3365
 Austin made it back into the list with a second slot in the top five restaurants for sale. This gourmet Sandwich franchise for sale at under $50,000 made a lot of noise on the top 10 list with buyers checking it out.  This daytime only opportunity is ideal for someone seeking limited hours.
Listing ID:4935 Restaurant Broker Dave Duce    
Gourmet Sandwich Franchise for Sale in Thriving Downtown Austin Texas!
Lease: Expires March 31, 2018 + 5 yr option
Monthly Rent: $2000
Inside Sq. Ft. 1583
Outside Sq. Ft.
Price:$45,000
City:Austin

Dave Duce
(512) 773-5272
 Austin continues to get some of the hottest activity on the Top Ten report.  A historic location that has been beautifully renovated converted some of the highest buyer counts to electronically acknowledge confidentiality on the listing and learn more.
Listing ID:5270 Restaurant Broker Dave Duce    
Restaurant for Sale - Historic and Beautiful Renovated Location Near Austin
Lease: 5 years
Monthly Rent: $5500
Inside Sq. Ft. 6000
Outside Sq. Ft.
Price:$125,000


Dave Duce
(512) 773-5272
Colorado has one of the busiest real estate markets around and our Restaurant Brokers are fielding plenty of calls and inquiries as well.  Restaurant Broker Bob Steinberger offered a tremendous deal in Greenwood Village that got the phone ringing and the website clicking.
Listing ID:5616 Restaurant Broker Bob Steinberger    
Profitable Office Building Cafe for Sale in Denver, Colorado DTC Area!!
Lease: TBN
Monthly Rent: $0
Inside Sq. Ft. Aprox 1000
Outside Sq. Ft. Aprox 2000
Price:$15,000
City:Greenwood Village

Bob Steinberger
(303) 901-4938
 Austin made it back onto the top 10 list yet again with a Mexican Restaurant offered by Austin Franchise Partner Dave Duce.  The 2000 square foot location brought a look of looks to the table and will see a buyer before long.
Listing ID:5647 Restaurant Broker Dave Duce    
Mexican Restaurant For Sale In Austin, Texas
Lease: Expires 2020
Monthly Rent: $8000
Inside Sq. Ft. 2000
Outside Sq. Ft. 120
Price:$450,000
City:Austin

Dave Duce
(512) 773-5272
Georgia restaurants for sale always lead the list of favorites offered by the Restaurant Brokers and this Italian gem earning over $200,000 on the books was no exeption.  Great books and unmatched earnings had restaurant buyers burning up the website with clicks and confidentiality agreements. 
Listing ID:5655 Restaurant Broker Steve Weinbaum    
Italian and Pizza Restaurant for Sale Earns $200,000 for Owner
Lease: 2 years remaining + 5 Year Option to renew
Monthly Rent: $4700
Inside Sq. Ft. 3300
Outside Sq. Ft. 140
Price:$369,000
City:Duluth

Steve Weinbaum
(770) 714-4552
 A Gastro Pub location in Miami garnered a lot of looks.  This standout location has sex appeal and a top spot in one of Florida's most exciting cities.
Listing ID:5547 Restaurant Broker Everett Rashotsky    
Gastro Pub for Sale In Miami Dade - Rare Chance for Outstanding Location
Lease:
Monthly Rent: $6800
Inside Sq. Ft. 1694
Outside Sq. Ft. 400
Price:$149,999
City:Miami

Everett Rashotsky
(786) 302-8125

The top ten restaurants for sale this month featured listings across the United States with Austin Texas showing strong results.  For more information on these or any other restaurants for sale, call our office at 1-888-814-8226 and speak to a restaurant broker today.

 

Topics: buying a restaurant