Advice for Buying a Restaurant and Selling a Restaurant

Franchise Buyers and Franchise Owners Excited about the Future

Posted by Robin Gagnon on Jun 19, 2017 1:07:54 PM

The International Franchise Association or IFA in conjunction with Morning Consult has released a dynamite new survey about the high level optimism in franchising.  The restaurant brokers have been seeing general research about small business optimism hitting eight year highs, but this is the first survey we’ve seen that focuses on the franchise community.

The survey was conducted online between May 22 – June 5, 2017, among a sample of self-reported franchise owners and potential franchise buyers/investors. Twenty-one percent of their sample was comprised of current franchise owners.  The results are powerful. 

The survey asked how likely prospective buyers are to invest in a business.  Three in 10 (31%) are more likely to buy or invest in a business than six months ago while 4 in 10 (36%) are as likely as before.  Combined, that means 62% of prospective buyers are as likely as or even more likely to buy business than six months ago. Since roughly 30% of all the franchise units are in the restaurant segment, that's good news for those of us selling restaurants today.  Only two in 10 (19%) are less likely.

Ready to buy-1.jpg

Those surveyed believe the economy is improving.  Fully 38% of franchise owners and potential buyers say the economy is improving while half that number (19%) believe it is not. Of the ones that own franchises today, the result is even more bullish.  52% of those who own franchises today, says the economy is improving.  Does that translate into actual spending to buy a restaurant franchise?  The We Sell Restaurants results for the first half of the year say yes.  We are seeing overall improvements in both unit counts and size of restaurants sold.

What about millennials?  The survey found younger franchise owners and potential buyers/investors show high levels of optimism. Almost half (45 percent) of 18-34 year olds report being more optimistic, while only 15 percent of this age cohort is less optimistic.

While they may be ready to buy, they also had a few things on their mind that the government could do to help.  A series of policy questions were posed for feedback.  The data indicates on a policy level that two items are on the minds of franchise owners – taxes and regulation.

Two survey items reinforce the need to a reduction in regulation.  78% said we could improve the economy and the business prospects of the respondent by “Reducing red tape to make it easier to start a business.”  75 percent of franchise owners and potential buyers believe reducing regulations on small businesses would improve the economy.

72 percent believe lowering taxes would improve the economy. 

That’s in line with what the restaurant brokers are hearing from the industry.  Eric Gagnon, President of We Sell Restaurants said, “We are seeing growth in the first half of the year and optimism by buyers, lenders and sellers.  Despite some soft restaurant sales data at the unit level, the fundamentals of owning a business have never been better and our buyer inquiries reflect that, in particular for franchise brands.”

 We Sell Restaurants is a restaurant brokerage franchise and the largest firm specialized in selling restaurants.  All listings can be found online

 New Call-to-action


 

Topics: selling a restaurant

Restaurant Sales Slip Nationally and In Atlanta for Q-1 of 2017

Posted by Robin Gagnon on Jun 8, 2017 9:28:46 AM

First quarter restaurants sales in Atlanta turned in a negative trend of -.7%, only slightly better than the national average for one of the few times that the restaurant brokers can remember in tracking history.  That's the findings from Robert Wagner, CPA and president of NetFinancials who monitors and reports the market's sales with his quarterly report.  .

financial-crisis-544944_1920.jpg

Wagner measured 118 independent Atlanta restaurants and fully 59% reported negative comparable sales trends.  That's before we even get to quarter two of 2017 which we anticipate to hold further bad news for the market.  The closure of I-85 based on the alleged actions of Basil Eleby and two other people -- all believed by investigators to be homeless, when they torched the bridge led to businesses entirely cut off from traffic, large numbers of never before telecommuting professionals and traffic snarls that made getting to and from your home a main priority - not stopping off for food or drink.  The actions brought much of Atlanta to its knees and the impact on restaurant sales in quarter two with the I-85 closure from March 30 to May 12, (most of second quarter), has yet to be calculated. 

While Atlanta licked it wounds with down trending sales January through March of 2017, things were worse on the national level.  TDn2K’s Black Box Intelligence, a restaurant sales and traffic- tracking company, reported national restaurant Q1 2017 revenues declined by 1.6%. This was the fifth consecutive quarter of negative sales results nationally. Restaurant traffic declined 3.6% nationally in Q1. TDn2K has a massive pulse on restaurant sales.  They publish the The Restaurant Industry Snapshot based on weekly sales from over 26,000 restaurant units and 145 brands, representing $66 billion dollars in annual revenue.

What's Impacting Restaurant Sales for first quarter?  There are several schools of thought but here's what these restaurant brokers think.

1) Competition.  The fast casual segment in particular has been ever expanding on at least a three to four year cycle.  Now it's time for some players to shake out and we're seeing that occur across the country at record levels.  It's not a new trend to see concepts grow and contract.  We have seen ebbs and flows for wholescale parts of the industry over time whether it was a specific type of cuisine (pizza comes to mind) or type of service (full service used to be a thing - before the recession of 2008).  Over time, the strongest will emerge, survive and thrive.

2) Shopping Trends.  A report by a national real estate firm indicated that 9000 Mall locations closed in the first quarter of 2017.  That's not a typo ---  that's four digit closures of retail stores, 9,000 of them in three months.  More online shopping means less trips to the mall.  If customers aren't out shopping on Saturdays and Sundays, does that mean they also aren't eating two or three meals out that day?  Is it easier to order up what you want and eat a sandwich at home?  We think so and ultimately this may drive more business back to restaurants as we are also seeing amazing growth among delivery services. 

3)  Easter Shift.  Back in my retail planning days, a shift in Easter seriously moved dollars around for clothing and footware purchases.  2016 numbers for first quarter included Easter as it fell on March 27th last year, a relatively early Easter.  It was a massive shift in 2017 of two weeks, pushed out to April 16.  At the national level, some pickup may show in the second quarter numbers when this shift is realized though Atlanta will be feeling the effects of I-85 so expect no improvement there.  Customer buying habits are consistent and holiday sales affect the numbers, particularly independent concepts like those cited in the report from Wagner on Atlanta sales.  His group includes only independent operators, not franchises.  .

What does the future hold for restaurant sales and what's an operator to do?  It's the same conclusion we always reach.  The restaurant business is a tough master and those within it face challenges each day.  Never stop improving.  You must be laser focused on sales and attuned to the customer's patterns.  While tough, the restaurant business is a robust and amazing part of the nation's economy and Americans love to eat away from home.  The smart operators will figure it out.  This is one quarter, not a lifetime.

 

 

Topics: buying a restaurant, selling a restaurant

Top 10 Restaurant for Sale Listings in May 2017

Posted by Robin Gagnon on Jun 5, 2017 2:25:43 PM

 What happens in May?  It's time to celebrate Memorial Day and kick off the summer!  Most kids are out of school and the line at the local ice cream or yogurt store seems never ending.  It seems like it's also the month for buying restaurants if this top ten report of restaurants for sale by the restaurant brokers is any indication. 

We rank our top ten list of restaurants for sale based on page views, signed confidentiality agreements and calls to our expert restaurant brokers with requests for more information.

Our number one most trafficked listing for the month is a restaurant for Sale in Fort Lauderdale Florida that's priced to move! The great opportunity offered by restaurant broker Ken Eisenband features low rent for a 1700 square foot fully equipped location.
Listing ID:5228 Restaurant Broker Ken Eisenband    
Restaurant for Sale in Ft. Lauderdale Can Convert to Any Concept
Lease: Expires July 31, 2017 with options to be negotiated
Monthly Rent: $2980
Inside Sq. Ft. 1700
Outside Sq. Ft.
Price:$29,000
City:Fort Lauderdale

Ken Eisenband
(561) 350-3365

Are we seeing double? Nope, that really is another South Florida listing under $30,000. This location is decorated nicely and set up for fast-casual service. If you are ready to get into the restaurant location is place is a steal!  Our buyers were looking at both of these and driving up activity. 

Listing ID:5311 Restaurant Broker Ken Eisenband    
Pizzeria for Sale -- Fast Casual Italian Restaurant in Broward County
Lease: Expires January 31, 2018 plus 2 three year options
Monthly Rent: $4612.78
Inside Sq. Ft. 1716
Outside Sq. Ft.
Price:$29,900
City:Tamarac

Ken Eisenband
(561) 350-3365

Sports Bar are always a home run. Add a location in a happening Marietta, Georgia and you have a grand slam! This location was such a big hit that it is already off the market.

Listing ID:5466 Restaurant Broker Dominique Maddox    
Sports Bar for Sale in Marietta. Convert to your own concept!
Lease: Expires 2022
Monthly Rent: $9200
Inside Sq. Ft. 5300
Outside Sq. Ft.
Price:$69,000
City: Marietta

Dominique Maddox
(404) 993-4448

Six Figure Earnings! That is why the buyers are clicking to find out more about the downtown Atlanta location. Add a great new lease term and this Bar for Sale will not last much longer!  Restaurant Broker Steve Weinbaum has all the details and has been fielding the calls on this bar for sale.

Listing ID:4944 Restaurant Broker Steve Weinbaum    
Profitable Bar for Sale Events Venue! Great Location in Downtown Atlanta - SIX FIGURE EARNINGS
Lease: New 5 year lease with 5 year option
Monthly Rent: $$6162
Inside Sq. Ft. 5300
Outside Sq. Ft. several Hundred
Price:$249,000
City:Atlanta

Steve Weinbaum
(770) 714-4552

On the market for less than 30 days and this HOT listing has made the top 10 list of restaurants for sale.   Located in Roswell, Georgia. Pricing is a factor as this one is well below market.  This location has been open and operating and is ready for a new owner!

Listing ID:5486 Restaurant Broker Dominique Maddox    
Restaurant for Sale in Roswell with low rent. Can Convert to Any Concept
Lease: Expires October 31, 2018 + 3 year option
Monthly Rent: $2800
Inside Sq. Ft. 1800
Outside Sq. Ft.
Price:$59,995
City:Roswell

Dominique Maddox
(404) 993-4448

Summer is the season for easy living and it seems kicking back in a bar is on the mind of a lot of our buyers.  Bars for sale drove strong action ont he month including this one in Austin Texas.  This location has more views than days on the market and will fly off the shelf soon.

Listing ID:5496 Restaurant Broker Dave Duce    
Legacy Bar for Sale Available in Austin Texas. Open 33 years!
Lease: Negotiable
Monthly Rent: $4000
Inside Sq. Ft. 1800
Outside Sq. Ft. 300
Price:$198,000
City:Austin

Dave Duce
(512) 773-5272

South Florida is a happening area for this top 10 list. Adding to the list is another sports bar that has done over $2 million dollar in sales for the year.  The Broward County location is driving clicks, views and calls to the Restaurant Brokers for more information.  Opportunities like this don’t come up all the time so buyers are trying to find out more by visitin gour website.

Listing ID:5510 Restaurant Broker Ken Eisenband    
Sports Bar for Sale in Broward County - Sales in Excess of $2 Million
Lease: Expires October 31, 2018 with 3 five year options
Monthly Rent: $20709
Inside Sq. Ft. 5796
Outside Sq. Ft. 800
Price:$350,000
City:Coconut Creek

Ken Eisenband
(561) 350-3365
Austin Texas took up 20% of the slots on the Top 10 this month with Dave Duce posting two new listings that automatically popped up to the top 5% trafficked listings online.  This wine bar for sale offered as an upscale opportunity was creating strong activity and should have a buyer any day now.
Listing ID:5515 Restaurant Broker Dave Duce    
Wine Bar and Restaurant for Sale is Upscale Austin Opportunity!
Lease: expires January 2020
Monthly Rent: $9750
Inside Sq. Ft. 3000
Outside Sq. Ft. 1000
Price:$230,000
City:Austin

Dave Duce
(512) 773-5272
Colorado was not to be left out of the mix.  Restaurant Broker John Kesterson's listing in Parker had buyer clicking and calling as well.  The signed confidentiality agreements on this one tell us it won't be long until an offer is in play.
Listing ID:5318 Restaurant Broker John Kesterson    
Profitable Full Service Restaurant and Bar for Sale in Parker Colorado!
Lease: Year-to-year. New lease to be negotiated.
Monthly Rent: $3600
Inside Sq. Ft. Approx. 3400
Outside Sq. Ft. Approx. 400
Price:$99,500
City:Parker

John Kesterson
(720) 473-3726

With nearly 300 restaurant and bar for sale listings on the market, hitting the top ten means these were truly special!  The activity generated indicates most will be in the hands of a new owner/operator before long.  Want to check out the hundreds of listings online offered by the restaurant brokers? Check them out at this link.

Visit Our Listings Online!

 

Topics: buying a restaurant, selling a restaurant

Are Independents Winning the Restaurant Battle? Restaurant Brokers Offer 5 Ways to Fight Back

Posted by Robin Gagnon on Jun 1, 2017 11:38:01 AM

One of our favorite writers at Nation's Restaurant News, Jonathan Maze has published a thought provoking article on the five reasons he believes independent restaurants are winning.  His position highlights some recent industry research that shows that independent restaurants, not franchises are expected to gain market share in the coming years, and will grow at a higher rate.  What's driving the growth?  How are the David's of the business (independents) beating the Goliath's (franchises and chains)? 

Go High Touch.jpgIn these restaurant broker's opinion, it comes down to a concept made popular in the 1980's from the best-seller, Megatrends.  The author, John Naisbitt, coined the phrase high tech, high touch.  In high tech, the franchises or chains win every time.  They have the social media departments who can tweet up a storm, keep their photos on Instagram and fill the overall social media feeds of the average consumer dozens of times a day.  On the other hand, the independent restaurant has the upper hand on high touch.  They don't fill your social media feed, just your coffee cup, over and over again without being asked.  They also commit to their communities, not as part of a corporate plan but as part of their personal sense of belonging to the area. Is this paying off with consumers? You bet.

Research from Pentallect Inc., foodservice consulting firm, in conjunction with research partner Critical Mix, weighed the factors in the drive toward independents and their data is shown below.   Independent restaurants are shown in blue on the chart against the grey for chains and independents.   When asked to rate the following aspects as excellent or good, independents win on almost every metric including:  Community Oriented, Is Special, Personalized Service, Shares my Value, Food Quality, Good Service, Innovative Menu, Decor/Atmosphere, Consistent Quality, Value for Money, Menu Variety.  The two are tied on delivery.  Where do the chains win?  It's on use of technology, social media use and convenient location.  Wow, no wonder David is stomping Goliath.  They won on 11 out of 15 High Touch attributes, tied on one and were beaten on just three. Franchises/chains won only on High Tech - they get the win for social media, locations and the use of technology.   

 

chart.jpeg

How do franchises and chains counteract this trend?  Franchises, though locally owned and operated, are still perceived by most of America as being owned by large corporations, instead of local owners.  I recall a recent statistic by the International Franchise Association indicating that a large majority of Americans surveyed believe their hometown Subway is in fact a corporate organization rather than a local business owned by their neighbor down the street.  It seems the big chains have built themselves too successfully into a brand instead of a local store.  That brand messaging does not seem to be connected (at the customer level) with attributes seen by locally owned businesses like "community oriented," "is special," and "shares my values."

In Jonathan’s article, he posits five reasons this trend will continue including: 

  • Millennial buying power and their choice for local over chains
  • Pressure on Profits
  • Television shows that highlight the independent restaurant and chef driven concepts.
  • Delivery
  • Social Media.

We agree on most of these points but believe the dial can be shifted with five ideas: 

  1. Franchises need to act local.  The International Franchise Association (IFA) has launched a website with materials to refute the position that franchises are big business. They are making resources available at a new website atourfranchise.org to share the message that these businesses are owned locally. It's unfair to paint the local owner/operator with the same broad brush as a huge corporate store.  Individual units need to take on individuality at the local level to connect with the community.
  2. Franchisors may need to rein in their National Marketing Spend and apply more at the local level. Just as there will always be a big government (collective approach) versus a small government (local approach) battle, it seems the time is here to redirect funds, take pressure off spending and allow local units to make decisions about ad dollars.
  3. Ownership is for Owners. Too many of the franchise resales we broker are based on operators who went into the business thinking that franchising was all they needed to succeed and if they built it, they (customers) will come. Today’s competitive environment is a fight for market share – share of your street, share of your neighborhood, share of the catering pie and share of delivery.  Owners have to get outside their doors to ask for business. 
  4. Ownership isn’t just for Owners.  Everything starts at the top. The restaurant brokers have written on the topic of training for years but it bears repeating.  A fully engaged and well trained team approach means everyone takes an ownership approach.  Sally at the local restaurant doesn't want to disappoint her Sunday school teacher who owns the business so she hits the tables running and serves up great service.  If you buy a franchise, put the name on the door and believe that's enough to engender loyalty and the computer training is all they need to succeed, you're going to be disappointed. Get out of the back room and onto the floor to make sure the community and staff knows you're a local owner and catch your people in the act of doing their job well.  Within the four doors, act like owners and introduce yourself to your customers.
  5. Get them Young.  Jonathan's right that young people like local but before Millennials are Millennial aged, they are school age and that's a place to target.  Local restaurants sponsor the peewee baseball league, contribute to school events and have walls of photos with their local engagement on the wall.  Franchises need to stop seeking out corporate causes and let the owners grab these kids before they age into Millennials that won't darken your door.  Breed familiarity and love of the brand early.

It seems daunting but it can be done. High touch isn’t just for independents.  The human touch can be integrated into any restaurant.  Years ago in our book, Appetite for Acquisition, we wrote about the reason people enter the restaurant industry saying, “From biblical times until today, nothing on earth has connected people to one another like the act of breaking bread. Your restaurant becomes the catalyst for this human contact, and you share in the experience.”  These survey scores show we were right.  Build your restaurant into a local and high touch community gathering point and the sales will follow.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Robin Gagnon is co-founder of We Sell Restaurants and a frequent writer about trends in the industry.  She can be found online at her restaurant for sale website or via LinkedIn

Topics: buying a restaurant, selling a restaurant

Restaurant Sales in College Towns When School is Out - A Report from Raleigh NC

Posted by Katy Sizemore on May 24, 2017 11:58:47 AM

 

For North Carolina, the restaurant industry is a significant force on the economy. The state has 18,169 eating and drinking locations, $18.6 billion projected sales for restaurants in 2017, and 458,400 employed by restaurant jobs equating to 10% of employment in North Carolina. Statistics from the NC Restaurant and Lodging Association.  Today we are looking at summer business in a college town and getting two different viewpoints from local owners.

schools out.jpgTaking a deep dive into one of We Sell Restaurants’ newest franchise locations, the city of oaks and the state’s capital---Raleigh.  Restaurant Broker Katy Sizemore took to the street to ask local owners what happens when the colleges empty out for the summer months.  

Hillsborough Street is an iconic location for Raleigh, North Carolina, and particularly for NC State students. Known for the arts, cultural events, education, recreational facilities, and of course, restaurants. From Mediterranean food to Mexican food, early morning coffee to late night pizza, smoothies to sub sandwiches, this street has it all.

However, what is it that keeps the restaurants on Hillsborough Street thriving? With summer rolling around we wanted to know how the eateries and hot spots stay afloat during the hot months---when the prime audience of these restaurants are off abroad, interning, or home for the summer.  

East Village Grill, a sports bar on the corner of Hillsborough Street and Dixie Trail has become not only a happening spot for students, but a nostalgic dining experience for customers that have been eating there over the past 20 years. After speaking to the staff, we got an insight to what it’s like being a restaurant within walking distance from classrooms, dormitories, apartments, and the DH Hill Library.

East Village Grill staff explains that the restaurant has a drop off in sales for about a week when school lets out for summer. However, the hometown here restaurant and bar is not hurt by the let out for summer.  They go on to explain that Raleigh is not just a college town. The sports bar has plenty of regulars to keep their business going and coming from the neighborhoods surrounding Hillsborough Street. Their business caters to people ages 7-90.

The university hosts tons of summer camps, offsetting the loss of traffic from students. East Village staff also says that plenty of people who are Raleigh natives return home for summer from schools elsewhere and this also adds to their business. Closing the interview, the said that East Village has been here for so long that it has “become kind of a nostalgic place to come here and eat.” He says that people who ate here when they were once students at NC State come back to bring their kids.

There is no doubt that the college students enjoy the food, the fun, the karaoke nights, and the trivia and that NC State students make up a large portion of their business. However, Raleigh locals tend to love East Village just the same-a benefit of owning a restaurant next to a college yet in a town that may not only be considered a “college town.”

For Owner of Global Village Organic Coffee, Greg Ritchey, circumstances seem a bit different. He noted that at the start of summer, the student population in the area drops by 70% and business tends to follow. He discussed that the mass majority of his business does come from the NC State Students. The challenge, said Ritchey, is convincing people that aren’t associated with the university to want to have anything to do with Hillsborough Street. He was happy to say that he is fortunate enough “to have a small core of neighbors who enjoy rubbing elbows with students, faculty, and staff.”

On a positive note and offsetting the fluctuation of student traffic during the summer, some of his part time student workers may leave for the summer to go home or elsewhere. It also balances out for other workers during the summer to be able to go on vacation. All in all, Ritchey loves being an owner of a coffee café on Hillsborough Street. He notes that the environment of Hillsborough Street is a wonderful environment and is fortunate to get business from their international students. He described Global Village Organic Coffee as a good melting pot.

While business may come and go for some, it is a certain that the iconic main drag of the North Carolina State University college campus, in Raleigh Hillsborough Street, brings many people for different reasons.  Being nestled into the college campus, individual neighborhoods of Raleigh residents, and just a jump off the 440 beltline, people make this their destination for food, drinks and fun!

 

 

Topics: buying a restaurant, selling a restaurant

Franchise Restaurants Sales Announced -- Restaurant Brokers Report

Posted by Robin Gagnon on May 22, 2017 11:17:02 AM

What's happening the world of franchise restaurant salesThe media reports pouring in show no signs of interest in franchise restaurants slowing down.  If anything, the restaurant brokers see an uptick in activity.  Here's some of the latest deals we've been tracking in the media.

The Hala Guys are heating up on their Middle Eastern cuisine concept and we see deals happening with increasing frequency for this concept.  Franchise Times reported that AJ Ahmad, who grew up in Abu Dhabi, UAE, has opened the first of 15 Arizona The Hala Guys in Tempe. He plans to add three to four stores in the market.

Mexican cuisine remains on the mind of many in the franchise restaurant marketplace.  We're seeing multiple deals announced including:

  • The 10th El Pollo Loco, owned and operated by franchisees Anil Yadav and Atour Eyvazian  of AA Pollo Inc., has opened in Spring, Texas. The 2,960 square foot restaurant is the second on to open in the market.
  • Del Taco signed a multi-unit franchise development agreement with experienced restaurateur Tom Getz.  He plans is to open the first of seven units in the broader Chattanooga area by 2019.  Locations are planned throughout Hamilton and Bradley counties in Tennessee, as well as expansion into several Georgia counties.
  • Five Tacos 4 Life franchises are opening in the Dallas, Texas, area, the first in the region for the fast-casual taco restaurant company.  The development is being led by the former president of CiCi's and Nothing Bundt Cakes, Craig Moore. 
  • This one's not a franchise restaurant opening but it is noteworthy as Atlanta chef, restaurateur, speaker and cookbook author Kevin Gillespie is opened Communion Cantina, a Mexican-inspired beer garden and eatery behind his popular Revival restaurant in Decatur on Cinco de Mayo.  The new store will serve tacos, West Coast, Mexican, domestic and local beers and margaritas. QSR Softening.jpg

What's going on with Smoothies and Juice Bars?  The restaurant brokers see a lot of activity in these concepts led by some stellar results by Smoothie King who is on fire with the highest number of franchisees ever inked for a single month for March of this year.  Here's everything we read about recently for franchise sales of smoothie and juice concepts.

  • Willie Smith, of EON Brands Inc., a former United States Marine, added a second Juice It Up! to his portfolio. This location is in the city of Temecula in Southern California.
  • Smoothie King is stirring up the market as well as the Smoothies.  In the first quarter of 2017 they opened 28 new stores in 15 states and signed 34 franchise and development agreements for 48 new stores.  Their plan for 2017 is an aggressive one with a goal to open 125 new stores in 2017, 25 percent more than last year.  
  • Not to be outdone, Tropical Smoothie Café is also growing.  Craig and Dianne LeMieux, area developers for the Colorado region, are spearheading Tropical Smoothie Cafe's expansion throughout the Centennial State. Cities targeted will be Colorado Springs, Denver and Centennial. In addition to their development efforts in Colorado, the husband and wife team are also Tropical Smoothie area developers in Michigan and Ohio. They currently have a total of 58 open locations throughout their markets, with an additional 39 cafes in development.
  • It's not just Smoothies showing strong growth.  Dunkin Donuts is also expanding by way of their existing franchisees and new ones. Dunkin' Donuts signed a development agreement with existing franchise group Maruti Donuts, LLC to develop six new units in Evansville, Indiana, including one multi-brand location with Baskin Robbins. The group has more than 20 years of experience as a Dunkin' Donuts and Baskin Robbins franchisee and currently owns 12 multi-brand locations operated collectively with family members.
  • In Louisiana, new franchise group and quick-service veteran SWLA Delights-led by brothers Gul and Vick Awan--signed a four-unit Dunkin' deal (including one multi-brand restaurant with Baskin Robbins) for the Lake Charles area. The brothers have more than 20 years of combined experience operating QSR concepts and gas and convenience store locations throughout Lake Charles and Lafeyette.
  • Dunkin' Donuts has signed multi-unit store development agreements in North Carolina with two franchise groups, including a new franchisee, HARA Foodservice Group, LLC, who will develop four restaurants the Charlotte area, within Hickory, Lenoir, Marion and Morganton.

Burgers continue to grow though we have seen some slow down overall in this category.  Nonetheless, both Smashburger and Bojangles announced recent deals.

  • QSR International, the master franchisee of Smashburger for Central America, the Caribbean, and parts of South America has opened in Panama.  This is the second of five restaurants committed to open in Panama over the next 30 months. This unit is located within the Magic Zone in Albrook Mall in Panama City, one of the largest shopping centers in Central America.  Panama is the third country in the Central American region in which the group has opened Smashburger restaurants. 
  • Bojangles' has signed a multi-unit development to open four new Bojangles' restaurants over the next four years. Potential locations include Chesapeake, Portsmouth and Virginia Beach, Virginia. The agreement is with VABO Inc., an ownership group currently owns and operates several Hwy 55 Burgers, Shakes & Fries in South Carolina and Georgia.  Bojangles’, Inc. also announced a multi-unit development agreement with new franchisee MSR Restaurants, LLC of Mitchellville, Maryland.

It's interesting to see that latest group allowed to own both Bojangles -- fast food featuring burgers and fries along with the Highway 55 concept. 

Other deals the restaurant brokers saw announced this month include:

  • Huey Magoo's Chicken Tenders opened the latest location in Orlando run by franchisees Al Dhanani and Amir Dhanji, who also operate the Oviedo location and the soon to open Gardens on Millenia location.
  • The Greene Turtle welcomes its 47th location with franchisees Pranav Desai, Jiger Patel and Rajan Mahadevia, doing business as The Integritty Group. Their new restaurant is located in North Wales, Pennsylvania. They also plan to open additional locations in Montgomery, Bucks, Lehigh and Northampton Counties.
  • Wetzel's Pretzels has opened its newest location at Indian Wells Tennis Garden, the So Cal legendary tennis complex.
  • HuHot Mongolian Grills, opened its 22nd location April 13 in Lawrence, Kansas.  FRC Group, the largest franchisee of the concept says more openings are scheduled for 2017, including Champaign, Illinois, and Shawnee, Kansas.  Bill Trevvorow, HuHot's newest franchisee and a current Subway multi-unit 'zee, is preparing to open his first HuHot in Lake Delton near the Wisconsin Dells tourism area, and HuHot has six additional openings planned for 2017.
  • Willie Jewell's Old School Bar-B-Q, are opening their third location in Georgia, this time in Marietta. Willie Jewell's also has multi-unit deals signed with Chip and Amanda Evans for locations in Tallahassee, Florida, and with Black Diamond Capital, LLC to develop restaurants in Tampa, Florida. Based in Jacksonville, Willie Jewell's is the fast-casual spinoff of the Bono's Pit Bar-B-Q concept.
  • Georgia-based Amici Italian Café has awarded a 20-unit franchise deal to Stonemont Financial Group, a private investment firm headquartered in Atlanta.  Stonemont will open new Amici restaurants across North and South Carolina with the first location adjacent to the campus of Clemson University.  It will open in the fall of 2017. In addition to the new 20-unit deal with Stonemont, Amici is building a newer location in Madison, Ga., where the restaurant group is headquartered and will open a corporate location in Gainesville. Two other new franchise locations in Macon and Augusta are also in the works.
  • Cauldron Ice Cream is opening in Glendale, California.   Jack Liu is the franchisee opening this location. He has signed a multi-unit deal with the Santa Ana-based ice cream shop company. The first of Liu's locations is expected to open in July.
  • Native Grill & Wings announced its first Massachusetts location opening in Oxford in April as part of a multi-unit agreement.  Franchisee Andy Colby of ANCM Group Inc., has signed for two to three total units in the Boston market, to be developed over the next three years.
  • Primal Kitchen Restaurants will open its first franchise location in May in Granger, Indiana, part of a three-unit deal with franchisees Tom and Tara Olson for the South Bend, Indiana, area. The health-focused, fast-casual concept also has multi-unit deals signed for the Santa Cruz, California, area as well as three units in the Pacific Northwest.

Overall, while the restaurant brokers continue to hear rumbling of softening sales, particularly in the QSR industry and despite a very crowded marketplace, it appears the appetite for new franchise restaurant sales shows no sign of slowing.  Restaurant Brokers Eric and Robin Gagnon say of the trend, "We continue to see Franchise Restaurant Sales Boom despite QSR sales softening.  In our opinion, this is indicative, for new concepts of everyone chasing the "next big thing" while multi-unit owners return to the well on concepts already paying out for them."

Interested in seeing what the restaurant brokers have for sale?  Check out our restaurant for sale listings online. 

New Call-to-action

 

Topics: selling a restaurant

The Restaurant Buyer Meeting - 10 Do's & Don't for Restaurant Sellers

Posted by Robin Gagnon on May 19, 2017 2:27:14 PM

Getting a meeting with the buyer is the first step in selling your restaurant.  Here are ten tips to keep the deal on track once the meeting is set.

When a buyer visits your restaurant as a customer and decides they are interested they will often request a meeting with the seller to see the back of house and the rest of the operation.  That can be a valuable next step as long as you are prepared and adhere to these important “Do’s and Don’ts”.

10 do and dont pix.jpg

Do Schedule the Meeting to Ensure Confidentiality

An experience restaurant broker will always protect your interest by working around your business hours.  That typically means a buyer meeting early in the morning or late at night.  If a buyer cannot be flexible on this point or insists on the seeing the back of house when the store is open, consider whether he or she is a good fit for the business overall.  While you can allow the buyer to view the backend operations posing as an insurance agent or interested franchisee, it’s much easier to simply schedule this during “off” hours.

Don’t Ever Meet Without the Broker

You never want to have a meeting with the buyer without the presence of your restaurant broker.  This is because the restaurant broker can act as your mediator between your wanting to be helpful as possible to the buyer and the buyer wanting to obtain as many tidbits of information as he can.  It is important to remember that not all buyers who inquire about your business will do so with the best intentions in mind.  If they ask your restaurant broker a question and hear an answer that they don’t like chances are they will turn around and approach you with the same question in an effort to get the answer that they are seeking.

Don’t Share Copies of Financial Records

When you meet with the buyer it is okay to review and discuss financial information with a buyer that is pre-qualified however, never share copies of financial records with the buyer.  This information should be channeled through your restaurant broker to protect your best interest.

Don’t Offer a Business Card

Avoid sharing your business card with the buyer because this encourages him to contact you directly. If the buyer requests your business card or tries to approach you with questions, always refer him to your restaurant broker for the information he needs.  Tell your broker that the buyer has attempted to contact you so they can inform the buyer that (in most cases), he is violating the confidentiality agreement.

Remember that your restaurant broker has worked with buyers thousands of times and this may be your first exposure.  You don’t want to lessen the chances of your restaurant to sell by giving the wrong information, too much information or the right information but just too soon in the process.

Do Be Personable and Brief

Try not to offer too much information during your meeting with the buyer.  It is quite normal to be nervous which can cause you to reveal too much information about your business.  You do not want to tell the buyer about situations that could raise issues such as telling him that you were once close to bankruptcy and you pulled out of it and built up the business to what it is today.  Instead keep your answers brief, focused, and personable.

Don’t Be Late

Make sure you are on time for your meeting with the buyer.  If you know your staff leaves at a certain time then schedule your meeting a few minutes or half hour after they leave so you are not held up by concerns or questions from your staff.  Being late to the first meeting with the buyer may get the deal started off on the wrong foot.

Do Say Why You Are Selling

Always make sure you state your reason for selling.  Although you may have shared the financial details, buyers always want to know the reason you are selling.  When you are providing your reasons you should not reveal any personal information that is compelling you to complete a quick sale.  First of all, this is none of the buyer’s business and secondly, it could cause you to lose your leverage with the buyer.  So avoid telling the buyer that one of your business partners has cancer and only has six months to live.

It is okay to provide reasons such as disagreements among partners, retirement, lifestyle change, or taking care of your elderly parents in a distant location.  These are all reasons that are understandable.  Reasons that are not acceptable are age old reasons like you are pursuing other interests which doesn’t make any sense if you’re are currently running a profitable business.  If you are involved with a franchise which isn’t doing well financially, it is okay to reveal this information.  Chances are the buyer will already know by looking at your financial records.

Don’t Give Advice

When it comes to legal advice or liquor license advice, avoid it at all costs and leave it to your broker to provide the legal resources and the contact information for the person handling your liquor license.  While it is okay to tell the buyer the name of the person that handles your liquor license, avoid giving out any advice such as “The liquor license is no problem and here is all you do is….”

Don’t Complain

If you have gotten hosed by your landlord or can't stand your franchise brand any longer, keep it to yourself.  The buyer should be on a journey of discovery and form his own opinions about these and other matters.  You risk raising issues of concern for the buyer that otherwise would not come up. 

Don’t Provide Third Party Information

Avoid giving out your landlord or franchise contact information.  Until your business is under contract the buyer has no legal right to this information.  Furthermore, you do not want the buyer making contact with third parties that you have developed a relationship with.  If the buyer happens to disrupt the relationships and then walk out on the deal you are left to clean up the mess.  Instead send the buyer to your restaurant broker so they can control the third party contact.

A buyer meeting is a logical part of the process for selling your restaurant.  Buyers want to speak directly with the sellers for answers to important questions and to get your point of view.  Make sure you’re familiar with these ten “Do’s & Don’ts” to make sure your deal stays on track and the buyer remains interested.

Are you interested in selling your restaurant?  Contact us for a free valuation.

 New Call-to-action

 

Topics: selling a restaurant

Unicorns and Restaurant Buyers Willing to Overpay – 5 Reasons Both are Rare

Posted by Robin Gagnon on May 9, 2017 3:52:45 PM

A recent discussion with a seller about the amount he wanted for his restaurant led to today’s article.  The seller, a smart multi-unit franchise owner agreed with the pricing of his business based on 2015 performance and the store was listed late in 2016.  When the next year’s financials were provided, this restaurant broker advised him that we were now overpriced.  It was clear that the business would not cash flow for lending at the asking price and was about 25% over the proper value.  This wasn’t a value judgment, it was simply a math problem with a clear answer.    

unicorn final.jpgNow remember, this was not a naïve or uninformed seller.  As a multi-unit owner, he agreed that if he were buying, he would not pay this number.  However, while he knew the business was now overpriced, his plan was to simply stick with his number and wait for a buyer willing to overpay.  

You can guess the next part of the story.  Multiple buyers looked at the listing.  It was a great brand.  It was in a good location.  The only issue is that sales declined between 2015 and 2016 and as a result, earnings declined by approximately 25%.  Each offer came in at the market price recommended by the restaurant broker.  Was I coaching the buyers?  No. 

Then how were these buyers savvy enough to know the business was overpriced?  In the world of buying a restaurant, a lot has changed in the past decade. For sellers seeking a restaurant buyer willing to overpay forthe business, here are five reasons we can assure you those clients are just as rare as unicorns.

The first and most obvious reason that buyers are less than ever before, willing to overpay for a business is their overall sophistication and understanding of valuation. In today’s marketplace, buyers are very savvy about pricing multiples and speak the language of valuation more clearly than ever before.  When we launched We Sell Restaurants and began as restaurant brokers in 2001, it was rare to never (just like those unicorn sightings) that a buyer would have knowledge of the process for valuation and compare deals on a comparable basis.  Today’s buyer is extremely sophisticated and has a lot more access to information that helps in this process.  For that reason, finding a buyer willing to pay more than they should is not a common occurrence.

The second reason that buyers who overpay are just as frequently found as unicorns is related to bank lending.  Unlike a few years ago, bank lending is a near certainty on a restaurant with good books and records.  That means each deal undergoes valuation with the lender and they will come back with the same valuation as the restaurant brokers each and every time. Bankers don’t lend on potential.  They don’t lend on the prior year and they don’t lend on fairy tales (like unicorns).  They lend on actual results.  Businesses that are overpriced won’t make the grade.

What is the third reason that buyers who overpay are as common as unicorns?  Restaurant brokers have significantly upped their game.  The best restaurant brokers in the business have degrees in finance, experience in banking or other strong financial skills.  Unlike a decade ago, simply putting a price on a business and hoping it would sell is long gone.  Smart brokers list properly and that gives buyers the information they need to buy at the right market values.

The fourth reason that buyers who will overpay are as common as unicorns?  Buyers have seen too many listings badly priced on the marketplace and in doing their due diligence, have learned quite a bit about the valuation process.  A restaurant buyer that’s already had something in contract and walked away is an educated buyer.

The last reason for finding buyers willing to pay more than a business is worth is just as common as a unicorn sighting is the Internet.  This giant repository of data at the fingertips of anyone willing to do a simple search will return a number of articles (including ours) on valuation of restaurants for sale.  I have to admit, it will also return plenty of images for “Unicorn Sightings” so buyers should be careful not to believe everything they see online.

If you see a unicorn, grab your smart phone and get a photo!  Meanwhile, if I find a buyer willing to overpay for a restaurant, I plan to move quickly to lock him down as well. 

My seller, by the way, is still waiting on someone to overpay.  I suspect it won’t happen any time soon.

 

Topics: selling a restaurant

Selling Your Restaurant…Beyond the Numbers

Posted by Steve Weinbaum on Apr 27, 2017 10:24:45 AM

The Restaurant Brokers at We Sell Restaurants work with hundreds of restaurant owners every year.  The number one question we are asked is: “What is my business worth?”  This is a math problem and easy enough to solve.  What may be less obvious are the other items included in the transaction. 

Our advice to anyone who is thinking about selling their Franchised or owner-operated restaurant is to make sure all your information is accurate and up-to-date.

We’re not just referring to the obvious…the dreaded Profit and Loss statement.  Restaurants are primarily valued based on the sales and cash flow they generate. The better and more verifiable the numbers…the greater your ability to maximize the value of your restaurant.  That’s only part of the equation however. 

Many owners focus exclusively on financials and fail to make sure they are up to date and accurate when it goes beyond the numbers.  Case in point:  leases and equipment lists.   Sometimes the line between assets – also known as the FF&E or Furniture, Fixtures, and Equipment and leases are blurred, especially if the landlord owns part of the equipment.Twitter Image Template-3.jpg

Here are a few stories from the Restaurant Broker’s files to give you real life examples of what happens once we bring a buyer to the table.  This is AFTER we had a restaurant in contract and past due diligence.

Scenario 1:  Seller Doesn’t Own the Assets

In scenario 1, a restaurant owner listed their business for $59,000.  He was new to the business, had been open less than a year, but was starting to show some decent sales figures and turning a small profit.

An offer of $55,000 was received and agreed to.  The transaction progressed through due diligence and then the lease assignment process began.

The landlord informed the restaurant broker that he owned all the equipment and was letting the current owner use it.  Needless to say the seller should have never included assets he did not own as part of the sale.  The Buyer and Seller had to renegotiate the transaction for half of the originally agreed to price.  The seller only had goodwill to sell.

Scenario 2:  Seller Doesn’t Have a Lease in Place

In scenario 2, a bar owner listed his business for $250,000.  He had a great location at a below-market rent.  The seller had informed the broker and buyer he had five years left on his lease which was correct, according to the lease document. 

The value of the furniture, fixtures and equipment combined with the great location and lease rate generated an offer north of $200,000.  But when the buyer’s restaurant broker started the lease assignment process, he was informed by the landlord that the seller had failed to exercise his option to renew so he was effectively on a month to month lease. 

While the buyer was ready to overpay for assets, the landlord saw the opportunity to jack up the rates and the new rent would be 50% higher than what the buyer was expecting.   What happened???  Needless to say, the deal went south in a hurry.

The take-away here is that when you want to sell your restaurant, get all your ducks in a row.  Not just your P&L, which is still the most important part.   Go through your lease so you know exactly how much time you have left on it and what the assignment criteria is.  Confirm when your option must be exercised if you are anywhere near the end of your initial term.  For most landlords, they require that you give written notice anywhere from 90 to 180 days PRIOR to the end of the first term. If you skip this step, your lease is not assignable and there are no rates for the option years.

Lastly, when you provide an asset list, make sure it is current and accurate.  Don’t list items that are leased (like the dishwasher) or that you don’t own (like the Coke and Tea Machine) or items that are owned the landlord that you did not install.

When you get your restaurant under contract, the rubber meets the road.  The last thing you want as a seller is for the buyer’s offer to be based on inaccurate information.  These details will kill your deal and the opportunity to sell your restaurant.

Do you want a review of your lease or equipment list?  Contact Certified Restaurant Broker Steve Weinbaum for his expert advice on selling a restaurant or check out our restaurant for sale listings online at the link below.

 

Check Available Listings

 

 

Topics: selling a restaurant

Selling a Restaurant? 5 Pieces of Advice to get to “Sold”

Posted by Robin Gagnon on Apr 21, 2017 9:13:11 AM

Selling a restaurant can be easier than you think if you follow these five pieces of advice.   

Establish Trust with Your Restaurant Broker

It is critical when selling a restaurant to establish a relationship of trust between you and your restaurant broker.  The relationship between the Broker and Seller must be one of complete honesty.  We heavily advocate the “No Surprises” policy.  Pull out all the dirty laundry and make sure your broker is aware of every liability.  You may think you’re the only restaurant with a liquor license citation, a tax lien in the hundreds of thousands, a sexual harassment lawsuit by the waitresshandshake-2056023_960_720.jpges or back rent of $35,000 but trust us when we say, the experienced restaurant broker has seen it all before. 

You’ve hired his or her knowledge because they know how to work through the issues, resolve them and keep this deal managed through to the closing table.  The worst mistake you can make as a seller is to hide anything from the broker.  The only thing he can’t deal with is something he’s not aware of.  Remember, no surprises.   

Establish a Communication Strategy

Secondly, make sure you ask the broker how they  communicate with you.  Some brokers have highly standardized systems that enter Buyer notes and automatically send you an email when someone communicates with the broker on your listing.  Our system does that.  Others simply call when there’s significant activity.  Still other brokers aren’t great at communicating the status of the listing at all. If you want ongoing updates and that’s important to you, set the expectation with your broker early.  If you only want to hear from him when he’s got a deal, share that too.  Brokers that specialize in the restaurant business know the hours.  They don’t call anyone at 8am since they know you work late nights.  They also don’t call you between 11:30 and 1:30 if you operate a lunch business.  They never call you at the restaurant since they don’t want to open up a confidentiality issue or if they do, they leave a message using their first name only. Tell your broker what you want to hear and when you want to know.  

Understand the Listing Agreement

The relationship between a seller and his broker is formalized through a listing agreement. This is a contractual obligation.  Make sure there are no misunderstandings about what you are selling and who is authorized to sign so that offers move quickly to the closing table. 

Have all of the partners consent and sign a corporate resolution to sell before signing the listing agreement.  This protects you when offers come in and one partner changes their mind or another is in Brazil for two weeks without email.  Sign and get a corporate seal on a document that says, the corporate officers met and agreed to sell the business by a vote taken this day.  Give one partner the authority to sign on behalf of everyone else.  When the partners are a husband and wife, this step is sometimes unnecessary.  If there are several partners in the business, the broker may require the resolution along with signature on the listing agreement. The broker will have a copy of this form and a copy is included in the appendix.

Check Your Legal Status

Make sure you understand who is selling the business.  The listing agreement must be signed by the legal entity that owns the business assets for sale (and the one on the liquor license).  Therefore, the legal name of the selling business is always used on the contract.  Another step you should take as a seller is to verify the status of your corporation.   Go online at the Secretary of State website for your state and make sure that the officers listed in the state website are correct and that all filings are up to date.  Failing to do this at the onset will cause problems down the road when a contract is written.

Relax and let the Restaurant Broker Work

Once the listing is in place, keep the business in the best possible shape.  Make sure sales stay flat or are increasing (never in decline).  Look at the business with a critical eye and go ahead and call in the cleaners and make minor repairs to freshen up the store.  Most of all, concentrate on what you do best – operating a business and let the restaurant broker focus on bringing a buyer to the table.

Follow these basics on how to sell a restaurant and you’ll go from a restaurant for sale to a restaurant sold without a hitch.

Looking for the restaurants we've sold?  Check out our restaurant seller testimonials from other restaurant sellers at this link.

Topics: selling a restaurant