Key financials of the 1590 restaurants n the BizBuySell report for the year included a median sales price of $180,000 versus a median asking price of $220,000. This means that sellers achieved 88% of their sales price. That is slightly lower than the restaurant brokers at We Sell Restaurants for the time period where selling prices were closer to 90% on average. The median revenue of the restaurants in the BizBuySell report was $500,000 and median cash flow was $92,000. The bars and taverns in the BizBuySell report fared better in terms of median revenue at $534,000.
Bob House, President of BizBuySell.com and BizQuest.com said of the listing pipeline, "Despite the many deals already completed over the past few years, there still appears to be a strong supply of listings, driven by retiring Baby Boomers, and at the same time, qualified buyers with access to capital." Eric Gagnon of We Sell Restaurants agrees saying, "The uptick we have seen in listings can definitely be attributed to baby boomers as well as more churn within the franchise resale market as buyers divest some brands or units in favor of other franchise locations.
Balance of 2016 Remains Good Time To Buy or Sell, Election Among Key Issues To Watch
According to the BizBuySell report, mulitples are holding strong. Restaurant sales reported by BizBuySell showed cash flow multiples on average of 2.01 for Restaurants and 2.12 for Bars and Taverns. They show the average cash flow multiple for all businesses is 2.26, just slightly down from 2.22 in 2015 and they say that "minimal year-over-year variations point to a stable market." For the restaurant brokers we are actually seeing higher multiple particularly for franchise resale transactions. It is customary to see asking pricing at approximately three times seller's discretionary cash flow and the selling price coming in very close to that number.
The BizBuySell report raises the issue of the Presidential election as an item on small business owners' minds and we agree. Despite your party affiliation, the election results may keep some out of the market with fear of the unknown dominating actions.
The BizBuySell report did not comment on is the availability of lending for business sales, perhaps the greatest stimulus to deals. The restaurant brokers are seeing a very strong lending market which is contributing to many more deals being funded and closed on in short periods of time. Robin Gagnon of We Sell Restaurants says, "Getting funding is key to buying a restaurant. Our SBA lenders are strong and we get results within 72 hours of submission and close deals in weeks. That is clearly affecting the pipeline of sales and ready capital is helping many buyers leverage their investment. This is true for both franchise and independent transactions."
Source: bizbuysell.com