Advice for Buying a Restaurant and Selling a Restaurant

Three Tips for Selling a Restaurant - a Restaurant Broker's Guide

Posted by Robin Gagnon on Mar 19, 2018 11:43:35 AM

If you are interested in selling a restaurant, these three tips provide you with a guide for the best results.  These basic concepts can help insure your desired outcome; selling your restaurant for the most money in the shortest period of time. 


Tip #1 – Reveal that Dirty Laundry when Selling a Restaurant

Establishing a relationship of trust with your restaurant broker is a must when you are selling a restaurant. The relationship between you and your restaurant broker should be open and honest with a “no surprise” policy. It is important to make sure your restaurant broker is aware of every negative aspect of your business, so you must pull out all of your dirty laundry and reveal any liability for the sale to be successful.

Although you may feel embarrassed to tell your restaurant broker about a recent liquor license citation, a tax lien in the hundreds of thousand dollars, back rent that is owed to the tune of thousands of dollars, or even a lawsuit that you are facing from an employee, trust us, the restaurant broker has seen it all before. Talk about these issues openly so your restaurant broker can help you resolve the issues and move the deal to the closing table. Remember that the restaurant broker is highly skilled at dealing with these issues and they are equipped to help you through them one by one. It’s only when you attempt to hide issues like that that they become a reason the deal will fail.  Be open, honest and trusting with your broker and he or she should be the same with you. 

Tip #2 – Set Clear Expectations for Communication

Nothing is more disappointing than signing a listing agreement and having communication go silent.  However, remember, that restaurant broker is concentrating on selling your restaurant.  He or she is highly engaged every day with buyers, distributing information, doing calls and sending the would-be purchaser as a secret shopper to visit your business.  If it’s important for you to be looped in on all activity, set these expectations ahead of time.  Ask the restaurant broker what forms of communication they use and establish how you want to receive contact.  Do you want a text each time someone’s “hot” or do you want information weekly whether a buyer is fully engaged or not? 

Ask the restaurant broker to explain their typical style and form of communicating buyer interest to you as the seller.  Some restaurant brokers use high tech systems that automatically notify you by email when there has been an inquiry about your listing. Other restaurant brokers will simply call you when someone responds to the listing. Then there are restaurant brokers who are poor communicators and will never contact you.  By establishing what is important to you, trust is built between you and your restaurant broker.

Tip #3 – Make sure you have a Valid and Enforceable Agreement  

Formalize a listing agreement contract with your restaurant broker. Define exactly what it is that you are selling and which parties are authorized to sign so the deal can move to the closing table. This will help you to avoid any misunderstanding and make the transaction process go a lot smoother.

If there is more than one partner involved with your business, obtain their consent and sign a corporate resolution to sell in advance of the listing agreement. Following this process protects you in the event that one partner is not available or the closing or has a change of heart while everyone else is ready to sell.  Obtain a corporate seal on a document that confirms that all corporate partners have met and agreed to sell the business. Make sure this corporate resolution indicates a vote was taken to sell and designate a partner authorized to sign in the absence of the others. 

Further confirm the validity of your agreement by confirming the legal standing of your corporation.  You can visit the Secretary of State website to check the status of the LLC or corporation on the contract.  Make sure the latest corporate filing has been made.  Confirm your entity is in good standing and has not been administratively dissolved due to non-filing or non-payment.  An entity that is not in good standing cannot be a party to a transaction so this has to be handled before signing a listing agreement or purchase contract.

After following threes three tips for selling your restaurant, follow through on your daily responsibilities.  Run your business at the highest possible level.  Keep it staffed and continue doing the things that deliver a great return for you today. The last thing you want to do is pull back on marketing, staffing or quality while you are on the market.

Then trust the Restaurant Broker to do the job you hired them for.  Wait for the offer to come in and imagine the next step in your life after selling your restaurant. 

Interested in selling your restaurant?  Click this link for a free valuation of your restaurant from We Sell Restaurants. 


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Topics: buying a restaurant, selling a restaurant

Tips for business owners asking the question, “How do I list my restaurant for sale?”

Posted by Robin Gagnon on Mar 8, 2018 3:19:38 PM

Restaurant owners across the country may be wondering whether they should sell or wait to sell their business. The answer depends on whether you have the skill and services of a professional restaurant broker working on your behalf. What does a professional restaurant broker do? He markets and promotes your listing to a database of prospects and seeks new buyers. He makes sure that anyone looking at your restaurant for sale meets the criteria to purchase by having available funds or equity. He ensures that your restaurant for sale name is not disclosed until a confidentiality agreement is in place.

Capture-27.jpgWhile “for sale by owner” is a tactic sometimes used in residential listings, it is not advised for when you are ready to list your restaurant for sale. Before you make the choice to sell single-handedly you should know this is a perilous process. The case for using an experienced restaurant broker couldn’t be clearer and here’s why.

The favorite word in the English language is free and that’s what a seller experiences with the services of a broker. They do the work up front to package and market the restaurant for sale with no pay off until the closing takes place. Very few business models provide full value up front with no investment by the customer. Another reason to use a professional on the job is to make sure you’re getting the most money for your business. The standard method to value your restaurant for sale relies on knowledge and skills to take apart your profit and loss statement and re-state earnings to make sure you are compensated for every dollar of revenue. An expert restaurant broker does this for a living.

Buyers looking for a restaurant for sale have to be bound by confidentiality and the broker ensures this as well as pre-qualifying them to buy. Legal documents are standard parts of their packages that are tried and true to protect sellers from buyers that want to look without buying or out of curiosity. Inexperienced brokers and owners trying to sell on their own are often tempted by those with a good story to provide the address before they are fully qualified. For the experienced broker, “no” is a way of life and that protects your business from countless damage.

Describing a restaurant for sale in glowing terms and at the same time disguising its real name and address is the experienced restaurant broker’s forte. For the inexperienced, it’s a skill that takes time to develop and for the owner trying to get their restaurant for sale sold, it doesn’t make sense to try. The marketing team at restaurant brokerage firms can write headlines to drive responses and phrase the ad to generate leads. They are a whiz at generating activity on restaurant for sale listings. All of this is free of charge to the business owner looking to sell their restaurant for sale.

Unsuspecting sellers often rely on the World Wide Web to post their restaurant for sale. This great resource is often used by brokers but inexperienced owners may have a more difficult time sifting through the inquiries to determine which are “real” versus the work of those who may have less than honest intentions. They may receive multiple inquiries from those who insist they have a buyer or others requesting financial statements. Before they know it they find their restaurant for sale is the victim of financial identity theft. Few sellers realize how dangerous it is to put their financial information in the hands of others who may then borrow against your tax ID number or use a business’s identity to get a loan against future credit card payments.

These are only a few of the reasons that listing your restaurant for sale should always involve the help of an expert restaurant broker. A broker represents your interest and guards your business as if it’s his own until the new owner is in place.

Are you interested in listing your restaurant for sale? The expert restaurant brokers at We Sell Restaurants are ready to get your business sold. Check out our website,, or click the image below to receive a free valuation of your business.New Call-to-action

Topics: buying a restaurant, selling a restaurant

Restaurant Brokers Report on the IFA Meeting & Franchise Opportunity 

Posted by Robin Gagnon on Feb 28, 2018 10:51:44 AM

The existing franchise restaurant for sale market continues to grow as the business model shows strength in unit growth, output and employment. As Restaurant Brokers, we focus on this sector due to the strong buyer interest and turnover in existing franchise restaurants for sale.  

The newest data from IFA (International Franchise Association) Economic Outlook Survey confirms the overall health of the franchise market.  What’s fueling the results?  The overall feedback is that current tax reform and regulatory relief coming out of the White House is driving stronger franchise growth.  That has spiked optimism and confidence among franchise businesses.  IHS Economics prepared the findings and the project many of the franchise sector’s 2018 economic contributions.  They anticipate growth in units and employment, increases to the GDP which include the following:

  • Franchise establishments are expected to grow an additional 1.9 percent in 2018 to 759,000.
  • Franchise employment is projected to grow 3.7 percent, continuing to outpace the rest of the economy.
  • The gross domestic product (GDP) of the franchise sector is forecast to exceed U.S. GPD growth and increase by 6.1 percent to $451 billion. The franchise sector will contribute approximately 3 percent of U.S. GDP in nominal dollars. 
  • Franchise business output is expected to increase by 6.2 percent to $757 billion.
  • Franchise Personal Services experienced strong growth over the past year and is expected to rank first in growth of the number of establishments and in employment in 2018. 

Do these numbers ring true to the restaurant brokers?  You bet!  We just returned from the International Franchise Association convention in Phoenix.  Here are some of the key takeaways from this meeting.

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Don Fox, CEO of Firehouse Subs told an audience at the Leadership Development Conference that, “Growth is not an option.”  We agree.  This sage advice for all unit and franchisor operators lets you know that if a brand ceases to grow, it will soon cease to exist.

From the main stage and in breakout sessions, there was renewed excitement about business conditions.  The relaxation of the regulation feeding from D.C. and the pro-business government, coupled with tax cuts had more than one operator excited about the future.

The relationship between a franchisee and franchisor is a symbiotic one.  Neither can grow without the other and both reflect benefit from working together.  It appears to us that many brands are working to realign themselves with their franchisees to make sure this relationship is protected, especially in the face of some ugly franchise disputes that were made public this year like the one with Subway franchisees.

Lastly, we once again saw brands focusing on the use of technology for not only operations and management, but expanding into other portions of the business to provide a superior customer experience.

As we continue our focus on existing franchise restaurants for sale, we’ll keep you posted on this sector, it’s challenges and the overall opportunity.

To see our existing franchise restaurants for sale, visit the link below. 


Restaurants for Sale

Topics: buying a restaurant, selling a restaurant

Restaurant Broker Steve Weinbaum has sold another franchise for sale. Most recently, Penn Station East Coast Subs in Atlanta, Georgia!

Posted by Robin Gagnon on Feb 22, 2018 4:58:19 PM

Penn Station East Coast Subs was founded nearly 33 years ago in Cincinnati, Ohio, and since it began offering its name as a franchise for sale has expanded to close to 300 locations throughout 15 states in the country. Wondering why “East Coast” is featured in the brand name? In the 80’s when the founder made a trip to Philadelphia Pennsylvania he got his hands on – you guessed it – one of the cities world-famous cheese steaks! It was love at first bite and he took the concept back home to Ohio and began selling his take on the classic out of his own deli. Just as it was in Philadelphia, it was a success in Ohio. So much of a success that he started Penn Station East Coast Subs in 1985.

The Penn Station East Coast subs that was listed by the Restaurant Brokers as a franchise for sale is the sole Atlanta location for the brand. The original owner, Joe Quattro, operated this location for three years before calling upon We Sell Restaurants to list his franchise for sale. Any time we have a franchise

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 for sale it garners the attention from numerous buyers, and this franchise for sale was no exception. Nearly 60 buyers contacted us expressing interest in this franchise for sale!

In the end, Shiraz Surani came out on top and scooped up this franchise for sale in Atlanta. Originally, Surani was interested in a coffee shop or restaurant for sale, but when he saw the numbers this franchise for sale was doing and the location it was in, he knew it was too good of a deal to pass up! Not only was he scoring an open and operating franchise for sale saving him thousands on a build-out, he was also getting everything that comes with purchasing an existing franchise for sale – in this case that was dozens of positive online reviews, an unheard of low royalty percentage, and training from the seller and the corporate office!

If you are in the market to buy a franchise for sale, click the link below to see all the franchise for sale listings that We Sell Restaurants has to offer across the country. Do you currently own a franchise that you are ready to sell? The Restaurant Brokers have you covered! Give us a call today at 404-800-6700 to speak to one of our customer service representatives about what our Restaurant Brokers can do to help you get your franchise for sale sold! Who knows, maybe your franchise for sale will be the next business showing up on our sold list – and we may be writing about you!

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Topics: buying a restaurant, selling a restaurant

Top 10 January 2018 Restaurants for Sale

Posted by Robin Gagnon on Feb 16, 2018 1:54:56 PM

We started out the new year with lots of traffic coming through the We Sell Restaurants website. Wondering what the top listings were in January? Pizza restaurants for sale and restaurant spaces for lease were the most popular - three of the top 10 listings were pizza businesses and another three were lease spaces. Have you had your eye on any of these listings? If so, you're clearly not the only one. Don't miss out - contact the Restaurant Brokers and get those offers in on these great restaurants for sale today! Read on for the 10 most popular restaurants for sale in January 2018.

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The most popular listing in January was this pizza restaurant for sale in a highly desirable Miami-Dade County zip code. The new owner can keep the current concept or bring their own. This business is currently serving pizza along with ice cold beer and wine! This business is surrounded by new condominium developments. Did we mention sales are over $1 million annually?

Everyone knows and loves Little Caesars, and this Little Caesars franchise for sale in Wisconsin got a lot of love in January! Little Caesars is the third-largest pizza chain in the United States, and here is your chance to take over this location and roll in the dough. You can't beat it - this take-out only concept mean no dining room and no delivery! Top line sales of almost $550,000 delivers the current owner almost $90,000!

Restaurant Space for Lease Listings Were Definitely Not the Least of Buyers Concerns

This restaurant space for lease is located in Broward County and it's a proven winner. You can't beat this infrastructure that was recently renovated by the landlord - that's mean more money stays in your wallet because most of the work is done for you! This has been brought to code and it's just waiting for a new owner to bring their own concept - any will work! The landlord of this restaurant space for lease is eager to have a new tenant and is open to any and all

The second most popular restaurant space for lease listing in January is located in Roswell, Georgia. If you're looking for something that already has infrastructure in place, this lease space in booming North Fulton County has it all. This area is highly affluent and doesn't shut down when the sun goes down - nightlife is just as popular as daylight hours. This landlord is motivated to sell and is willing to offer tenant improvement assistance to qualified tenants.

The final most popular restaurant space for lease listing for January is located in Duluth, Georgia. This space features a fantastic build out inside a 2,800 square foot building. Bring your concept to this restaurant space for lease and get ready to accommodate up to 125 guests inside! You won't have to worry about where your business will come from as this is located in a nearly 100,000 shopping center anchored by a Publix. This was a former pizza restaurant, and the landlord will offer money for improvements for the right candidate!

Listings for Less Than $100,000 Were Attention Grabbers

This franchise for sale is in the fast-casual sector in booming Kennesaw, Georgia. This one is fully-equipped and ready to go with an outstanding lease rate! This franchise for sale will qualify for an E2 Visa as well as SBA lending. This business is generating sales of almost $200,000 and is on the market for only $35,000!

This restaurant for sale garnered tons of attention last month, and rightfully so. The popularity was partly the result of the massive nearly $200,000 price reduction, and also because this restaurant for sale also includes a food truck in the sale! Keep the current concept or bring your own, don't worry the full commercial kitchen can support whatever you choose. You will save hundreds and thousands of dollars because the build out is already done for you! Bring your offers, this one is on the market for just $99,999.

Hey Coloradoans! This great little sandwich restaurant for sale located in Littleton includes all of the equipment. This is another one where you can keep the current concept or bring your own! Rent is just $2,375/month. Buy this and you're getting a great turnkey location that has a seasoned staff to make the transfer a breeze!

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Check out the numbers this ice cream shop for sale that specializes in gelato is generating - not surprising considering its location. Sales are over $300,000 and the owner is taking home $117,000! Buy this business and you'll stay busy keeping those Floridians cool in the Sunshine State all year long. The sale includes an ice cream maker and pasteurizer that are the finest you can buy!

Rounding out the January Top 10 is this cafe for sale has excellent books and records and has been open and operating for nearly 14 years. Limited hours and an incredible owner benefit of over $280,000 annually makes this the perfect business for a retiree! This cafe for sale is doing almost $1.4 million!

What are you waiting for? These listings are hot and are garnering lots of attention! Don't delay, bring theRestaurant Brokers your offers today! do you have a restaurant you would like to sell? Give us a call at 404-800-6700 and let's talk about what we can do for you!

Restaurants for Sale

Topics: buying a restaurant, selling a restaurant

Restaurant Broker Dave Duce Sells Neighbor's Kitchen

Posted by Robin Gagnon on Feb 4, 2018 10:01:43 AM

One of the first restaurant for sale transactions closed in the New Year by We Sell Restaurants was in Austin Texas. Neighbor’s Kitchen, a full service iconic store in a gorgeous landmark location is now under new ownership. The buyer, Thomas Dickey is an Austin native excited to acquire this full service iconic store featuring both multiple patios and live music.

The Neighbor’s Kitchen has a huge physical plant, with a series of decks and extensive grounds going down to a river. It is in the lifeblood of an historic town, a fast-growing bedroom community of Austin that is the tenth fastest-growing city in Texas. All of these were reasons for this restaurant buyer to make a decision to buy the restaurant which was on the market and viewed by a number of buyers.

The sellers were a partnership and were ready for a new opportunity. Their highly successful business was operated on an absentee basis and delivering a strong return. The live music scene in Austin Texas is booming and this location brings in local and regional bands to play on two different stages.

The river setting, live music, and good food were all part of the reasons this location offered by Certified Restaurant Broker Dave Duce was a hot listing.  Online reviews for the business number in the hundreds. Their online fans say,

“Great food! Friendly staff! Great atmosphere! Unique and one of a kind place. Love the options for live music and the local and national talent they bring in.”

“Great location and setting. Super friendly staff and delicious food. My second time coming here and my family and friends all love it too.”

“Love it. Love the atmosphere (apparently it's a rather ancient--for the Americas--building, one o

f several moved to this area) and the food doesn't disappoint. I love IPAs and they've got two (though I need to call Bell's about their Two-hearted...I just don't know if that's an IPA...), including Stash, and a handful of other craft and local beers. Plus the usual suspects. Great, friendly staff and nice indoor and outdoor seating options. Over the years I've watched football here and brought the family, met with friends and just hung out solo chatting with strangers. It's good for all of that. :)”

With these types of reviews, it’s no wonder the buyer plans to keep the concept the same. He will be hands on in the business and looks forward to interacting with customers.

For information on selling your restaurant, click the image below.

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Topics: buying a restaurant, selling a restaurant

Business Sales Score Record High in 2017

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

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

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

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

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

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

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

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

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

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Topics: buying a restaurant, selling a restaurant

The Restaurant Brokers Share the 10 Most Popular Restaurants for Sale in 2017

Posted by Robin Gagnon on Jan 22, 2018 6:41:19 PM

Wondering what the most popular restaurants for sale were in 2017 on our powerhouse website? We were too!  That's why we ran a report to find out. The answers might surprise you.


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Of the most popular listings, four of the 10, or forty percent, were franchise restaurants forsale listings while two were restaurant for lease locations.  The remaining most popular restaurants for sale were indepedent oncepts, ranging from money-makers to asset sales. 

Landing at the top of the most popular restaurants for sale based on page views was a package of three Papa John's restaurants for sale in South Carolina.  These stores were only listed for a few short months before gaining hundreds of signed confidentiality agreements and going in to contract.  The three pizza restaurants for sale were grossing over $1 million dollars in sales volume with an absentee owner.  The buyer plans to be full time in managing the locations going forward which are all located in the central Florida market.  What caused this owner to sell his restaurants?  He was an absentee operator and moved into a very successful unrelated business requiring his full time expertise.  The restaurant brokers were excited to see this fast turning multi-unit franchise restaurants for sale listing at the top of the list. 

Who came in second place?  It was a Whopper of a deal!  The second most popular listing in the restaurant brokers inventory for the year was a Burger King restaurant for sale in Cobb County, Georgia.  The traffic was off the charts on views on the We Sell Restaurants website despite being sold in a prior year! That gives you an idea of what people are searching for as they go online looking for the best restaurants for sale in the country. 

Third on the list of most popular restaurants for sale based on page views was a Subway franchise for sale in Palm Beach Gardens Florida.  Part of one of the world's largest franchise groups, this Subway franchise for sale sold in February but still kept pulling traffic to the highest ranking restaurants for sale website for months after that. 

What type of listing gets a lot of views?  One offered by the restaurant brokers with the words, "Lounge & Bar" in the title.  One of the most viewed pages of the year was another sold listing -- a Lounge and Bar in Smyrna Georgia that racked up thousands of views. 

A restaurant space for lease in Fort Lauderdale Florida, also racked up thousands of views for the year 2017.  The former Tedesco Pizzeria, sold by Restaurant Broker Ken Eisenband, was number five on the top ten restaurants for sale this year on our website. 

Another Florida listing, the "Meatball Market" was also front and center of those clicking and viewing the restaurants for sale online.  This pizzeria for sale location was a hit with restaurant buyers since it was both recently remodeled and served up Italian specialities.  The location, in a shopping plaza on a main road with traffic counts of 23,000 vehicles per day and a nearby and very large active adult community were also key factors in the sale.  Strong demographics with more than 110,000 residents with an average household income of $70,000 drove buyers to this restaurant for sale.

Another Georgia listing with thousands of views was The Plant in Atlanta Georgia.  This restaurant for sale, offered by restaurant broker Steve Weinbaum garnered a lot of looks in a short period of time on the market. 

Restaurant Space for Lease is always attractive for buyers and a location in Johns Creek at Abbotts Village was number eight on the list of the most popular restaurants for lease or sale in 2017.  This location drove strong interest and was represented by Cyndi Weinbaum. 

An established food truck for sale in South Florida brings us near the end of the top ten restaurants for sale viewed on our website in 2017.  The event relationships already in place for this Chicken Wing and Burger Truck had a lot of buyers focused on this business opportunity.  No one's pulled the trigger to buy this food truck for sale yet and it's still on the market and gettin lots of traffic each day.

The final entry into the top ten restaurants for sale is a small franchise location in Austin Texas represented by franchise partner and Certified Restaurant Broker Dave Duce.  With well over a thousand views, this proves that things are bigger in Texas! 

For more information on these top listings for 2017 or other restaurants for sale, visit our website online at this link. 

Restaurants for Sale

Topics: buying a restaurant, selling a restaurant

Tips for Buying a Restaurant Franchise for Sale

Posted by Robin Gagnon on Jan 16, 2018 9:33:17 AM

Every would-be restaurant franchisee dreams of owning the next McDonald’s, but the likelihood that that will happen is low. Here are three rules that ensure you get the best deal on a restaurant franchise for sale.

New Call-to-actionWhat are the odds of building a successful restaurant from the ground up and lasting three years? According to a hospitality management professor who studied restaurant failures, it’s less than 40%. A professor at Ohio State University authored a study that found 57% of all newly opened franchises didn’t last beyond the three year mark. That’s only slightly better than independent restaurants that experienced a failure rate of 61%. Does this mean you should avoid buying a franchise for sale altogether? No. A franchise for sale can represent a great value if you know when to buy and how much to pay. That’s what this article will teach you with our three rules for franchise for sale buyers.

The books and records of an established business tell the true picture of its earnings. If you want a restaurant that’s beaten the odds of surviving the three year mark, then you should consider buying a restaurant that’s three years old with repeated years of earnings. If a franchise for sale interests you because of the training or the brand, by all means pursue your dream but do it with our three rules if you want to make money.

The first three years of a franchise for sale often look like this. A new owner learns of a concept and is instantly excited about the potential and ready to build from scratch. This can easily cost the new franchisee $350,000 or more. Eager to experience his own restaurant success, he’s sure he’s on the way to making millions. A simple review of the math, however, shows he’s paying royalty fees of more than 8%, marketing fees of 2%, and rent of 15% all before he buys the food and serves his first chicken wing and beer at an average check price of $8.00. After that first tough year or so he calls a restaurant broker to ask how much he can list the franchise for sale for. He’s not too happy to learn that with a business that is losing money, the most he can expect is about 25% of what he’s invested, or about $125,000. That’s if he has a good concept and a strong site of his franchise for sale.

A smart franchise for sale buyer picks up the pieces of the operation and becomes owner number too. He’s still losing money but he only paid around $100,000, so his cost to acquire is much lower. It’s now year two so his sales are beginning to catch up with his fixed costs. By working hard at the business and operating it himself, he can probably go from losing money to making money. By the way, both owners have paid the franchisor 10% of sales this entire time even while they lost money. Another year into the business, this smart franchise for sale buyer realizes he didn’t get such a great deal after all. He’s in the black but when he adds up the time in the business against his return, he’s making less than the federal minimum wage. He calls to list the franchise for sale. Sales have developed to the point that all fixed costs are covered and he’s in the black. With add backs, he’s earning $35,000 or so a year. Priced at three times earnings, it goes on the market for $115,000 and he nets $99,000.

This is when the franchise for sale buyer hits his stride and gets the deal. The business is now valued on earnings, not hype. The sales cycle has matured and all costs are covered. Franchise for sale buyer number three has a real opportunity in his hands. He owns a good product in the brands. Sales are still growing and its operating in the black. Since he didn’t overpay, the cost of repayment is minimal and the business can easily service the debt. While the first two buyers are telling their friends why they would never buy a franchise for sale, the new owner has never been happier. This business cycle of the restaurant ownership demonstrates why franchise for sale buyers follow our Rules in Buying Franchise Restaurants.

#1 franchise for sale buyers never want to be first or second to own. Number three’s the lucky winner.

#2 Buy a franchise for sale close to the start of year three for the best opportunity. Sales are still trending up and it’s making money. Best of all, there’s still opportunity.

#3 Never, ever pay more than three times earnings no matter how great a pitch you get from the franchise for sale owner. Opportunity is a lottery ticket but none of us like the odds.

Do you dream of owning a franchise for sale? Or perhaps you have a franchise for sale you are ready to list with the restaurant brokers? The restaurant brokers can help you buy or sell a franchise for sale! Click here for a free valuation of your business, or to view franchise for sale listings click the photo above!

Topics: buying a restaurant, selling a restaurant

Numbers Don’t Lie – Now is a great time to Buy or Sell a Restaurant

Posted by Steve Weinbaum on Jan 12, 2018 4:11:10 PM, the Internet's largest business-for-sale marketplace, reported a record number of businesses changing hands in 2017. Looking into specific industries, the restaurant sector experienced major growth in the second quarter. The number of closed restaurant transactions increased 34 percent year-over-year, and the median sale price jumped from $165,000 to $195,000. Improving financials likely contributed to higher sale prices. The median revenue of restaurants nationwide increased 7 percent year-over-year from $504,500 to $540,000, while cash flows increased 2 percent to $100,000.

Great time to buy o rsell.pngDespite higher asking prices, sales are closing at a faster pace. In the second quarter, the median days on market stood at 168, marking a 5.6 percent decline year-over-year from 178 days. Franchises are also increasingly seen as desirable acquisition targets. Established operating franchises for sale comprised 7 percent of active listings and 9 percent of closed deals in the second quarter of 2017. In addition, the median sale price of franchise businesses in the second quarter was $232,500, slightly higher than the median $229,000 for all transactions.

So what do all these numbers and data points mean to you? Whether you currently own an independent or franchised restaurant…or are considering a move into this arena…NOW IS A GREAT TIME! The combination of increasing revenue, increasing cash flow and fewer days on the market all point to a trend that profitable restaurants and franchises are a solid short and long term investment. In the short term a buyer can be confident of sustainable, and likely increasing, revenue and income. In the long term asset values should grow to protect your initial investment.

Buying an existing restaurant, independent or franchised, takes much of the risk and guess work out of the process. With longevity, verifiable financials, and a negotiated lease in place, restaurant buyers/sellers can expect the purchase price to be somewhere between two to three times ODE (Owner Discretionary Earnings). Buying an existing restaurant is safer because you have an existing customer base. By knowing the sales and cash flow, you can determine the cash flow YOU NEED and shop for a restaurant that is currently generating the required earnings. Then you take your experience and motivation to grow it to the next level.

If you currently own a restaurant or are thinking about buying one, The Restaurant Brokers at We Sell Restaurants are here to answer your questions and assist. We are the Nation’s largest Restaurant Brokerage Group and pride ourselves on our level of service and results. All conversations as well as our listing strategies are done to protect the confidentiality of our clients. Please contact us at 1-888-814-8226 or click this link to have a Restaurant valuation performed at no cost or obligation. You may be pleasantly surprised to learn what your restaurant is worth.


Topics: buying a restaurant, selling a restaurant