Owning a restaurant can be a rewarding and fulfilling venture, but it also comes with its challenges. As the late Anthony Bourdain once said, ““If anything is good for pounding humility into you permanently, it’s the restaurant business.”
A restaurant owner that has spent years and invested time, money, and effort into building the restaurant may not have the skills necessary to handle an exit or know how to retire from the restaurant business. That becomes critical as more Americans than ever are retiring as 10,000 Baby Boomers per day turn sixty-five from now until 2030.
Those individuals may own long-standing family businesses or multiple franchises, but in either case, there is point when you consider retirement. For owners ready to cash out and wondering how to retire from owning a restaurant, here are the steps you should undertake for Selling Your Restaurant.
1. Develop a Succession Plan
The first step in how to retire from owning a restaurant is to define a succession plan. If you wish to keep your restaurant in the family, this is crucial. Have you identified potential successors among your family members or key employees? More importantly, have they indicated a similar interest to you? Discuss your intentions openly and consider the capabilities, passion, and commitment to the business of the person carrying on your family business.
Consider a development plan to train and mentor your successor(s) to effectively manage the restaurant's operations, finances, and staff. While it is not always a good idea to sell to an employee, you may want to explore this option if you hope to keep the business among friends or family.
Your succession plan may simply be to sell to the highest offer. Whether you plan to transfer the business to someone you know or sell it to another qualified buyer, the next two steps will still be critical to helping you retire from owning a restaurant.
2. Streamline Operations and Delegate Responsibilities
If you are an owner-operator with an essential role in the business, then preparing for retirement means reducing your involvement in day-to-day operations. Train your management team and empower them to make decisions independently.
Document standard operating procedures, create clear job descriptions, and delegate responsibilities accordingly. Implement efficient systems and technology that streamline processes, such as inventory management, staff scheduling, and customer relationship management. Many of the items in your restaurant may already be streamlined and following effective processes, but it is always a good idea to review these operations and see where there' room for improvement. Some strategies for streamlining operations might include:
- Standardize Recipes and Portion Sizes: Establish standardized recipes for all menu items, including precise ingredient quantities and cooking methods. This ensures consistency in taste and portion sizes, reducing waste and enhancing efficiency during food preparation.
- Implement Inventory Management Systems: Utilize technology solutions or software specifically designed for inventory management. These systems can help monitor stock levels, track ingredient usage, and automate reordering processes. This prevents overstocking, minimizes waste, and ensures that you always have the necessary ingredients on hand.
- Embrace Technology: Adopt restaurant management software that integrates various functions like point-of-sale (POS) systems, reservation systems, and kitchen display systems. This technology can streamline order taking, communication between front-of-house and back-of-house staff, and overall restaurant operations.
- Cross-Train Staff: Train your employees to handle multiple roles within the restaurant. This flexibility allows for smoother operations and reduces the impact of staff shortages or unexpected absences. Cross-training also enables employees to understand different aspects of the business, fostering a more cohesive team.
- Optimize Staff Scheduling: Utilize employee scheduling software that takes into account labor demand based on historical data, reservations, and projected sales. Efficient scheduling ensures adequate staffing during peak periods while avoiding overstaffing during slower times, saving on labor costs.
- Implement Online Ordering and Delivery Systems: In today's digital age, offering online ordering and delivery options can streamline operations and increase revenue. Partner with third-party delivery services or develop your own online ordering platform to expand your customer reach and simplify order management.
- Improve Communication Channels: Establish effective communication channels between front-of-house and back-of-house staff. Utilize technology like messaging apps or kitchen display systems to relay orders accurately and promptly. Clear communication minimizes errors, expedites service, and enhances overall efficiency.
- Evaluate and Adapt: Continuously monitor and evaluate your operations. Seek feedback from staff and customers, and be open to making necessary adjustments. Regularly assess the effectiveness of your streamlined processes and refine them as needed to ensure ongoing efficiency.
Wherever you may struggle to manage, organize, or streamline, consider hiring talent who is strong in areas that you may be weaker in. Many of these strategies look like advice you might have heard when you first bought or started the business. Strong books and optimized operations are key to a restaurant's success at any stage of its life.
These strategies not only prepare the business for your exit, but they can also help reduce costs and bolster your bottom line. This allows you to transition at your own pace out of the business as an enlivened focus on the restaurant operations empowers the business to thrive without your constant presence.
3. Assess the Value of Your Restaurant
Now that you have learned strategies to improve restaurant operations and prepare the business for your exit, it's time to think about what your business is worth. To secure your retirement, it's important to determine the value of your restaurant accurately. On one hand, you don't want to sell yourself short and give your restaurant away for far less than it could be worth. However, you also want to avoid overpricing the business and turning off qualified buyers.
To find the right price tag, engage the services of a professional business broker who specializes in restaurant valuations. They will evaluate the assets and profitability of your business to accurately calculate the value your restaurant. Knowing the market value of your restaurant will assist you in making informed decisions about its future. For instance, you may decide that now is the right time to list and cash out. Alternatively, you may decide to keep the business for another year to improve sales and operations for a higher listing price in the future.
→ Read also How to Sell a Failing Restaurant - 5 Things Every Restaurant Seller Should Know
Planning for your successful retirement is a good idea whether you plan to retire in 10 months or in 10 years. Not only will these steps help create a smoother exit for you, they will also help to improve your restaurant's value on the market today. If you are thinking about retiring from as a restaurant owner, connect with a Certified Restaurant Broker Near You for a free opinion of value of your business. The specialized business brokers at We Sell Restaurants are ready to help you sell your restaurant for the most money in the shortest amount of time.
Download our free Seller Cheat Sheet to help you find a restaurant broker who can help you retire successfully.
Robin Gagnon, Certified Restaurant Broker®, MBA, CBI, CFE, is the co-founder of We Sell Restaurants, a brand that has carved an unparalleled niche in the industry as the nation's leading and only business broker franchise focused on restaurants. Under Robin’s leadership, We Sell Restaurants has grown to 45 states where it dominates the restaurant for sale marketplace, including franchise resales, delivering on the founder’s vision to Sell More Restaurants Than Anyone Else. We Sell Restaurants was named one of the most influential suppliers and vendors in the country by Nation’s Restaurant News and has earned a position on INC 5000’s list of fastest growing privately held companies. Franchisees of We Sell Restaurants surveyed by Franchise Business Review placed it 25th in the nation in franchisee satisfaction.
Robin is the Chair of the Women’s Franchise Committee of IFA and is a member of the IFA Board of Directors. She is also an MBA and Certified Franchise Executive (CFE) and has her CBI (Certified Business Intermediary) designation from the International Business Brokers Association. She co-authored Appetite for Acquisition, a small business book award winner in 2012 and contributes frequently to industry press appearing in Forbes, QSR, Modern Restaurant Management, Franchise Update, and others. Entrepreneur has named her to their list of the “Top Influential Women in Franchising.”