Robin Gagnon
Introduction: First Impressions Are Financial
When it comes to selling your restaurant, the first thing buyers notice isn’t the food, the social media, the décor, or even the location. It’s your numbers.
Your financial records are the foundation of any restaurant sale, and in many cases, they are the sole deciding factor in whether a buyer moves forward—or walks away. Well-prepared, credible, and transparent numbers establish trust. Properly presented, they make your business look like a smart investment rather than a risky gamble.
At We Sell Restaurants, we’ve seen time and again that a restaurant listing backed by clean, organized financials attracts more qualified buyers, speeds up due diligence, and increases the likelihood of securing financing. In other words, strong financials attract and most importantly, retain more restaurant buyers getting them to the closing table.
This guide walks you through exactly what buyers want to see, the documents you need to provide to your Certified Restaurant Broker, and the costly mistakes you should avoid. Whether you’re months away from listing or ready to sell now, this is your roadmap to financial readiness.
What Restaurant Buyers Are Really Looking For
Buyers are not just purchasing a restaurant—they’re purchasing future earnings potential based on the past performance fo the restaurant. That means your financials need to do more than show revenue; they need to tell a story that buyers can believe.
Here’s what every serious restaurant buyer will want to see.
- Proof of Profitability
Revenue is meaningless without profit. Buyers want to see that after paying for food, labor, rent, and other expenses, the restaurant is still producing strong earnings.
- Consistent Performance or Positive Trends
Ideally, your numbers should show stability or steady growth over time. Even if your sales have dipped in the past, we can still define that story for the buyer if you can provide context. Especially if you can show a rebound trend or a clear path to recovery they can continue.
- Transparency with Supporting Documentation
Any claim you make in your P&L must be supported by verifiable documents—POS reports, tax returns, bank statements. Buyers (and their lenders) will dig deep.
- Bankable Records
Many buyers rely on SBA or traditional financing. Lenders want to see accurate, consistent financials that meet underwriting standards. A “bankable” restaurant is one where the earnings of the business support both the buyer’s lifestyle and meet the debt service requirements of the loan with a 25% cushion. It is possible to overcome this with a mixture of seller financing and bank lending or bringing cash from other sources. Your expert Certified Restaurant Broker can work with you and the lender on creating deal structures.
Restaurant Brokers Need Details to Prepare the Package
Selling a restaurant without the right documentation is like trying to serve a meal in your restaurant without ingredients—you simply can’t do it. Before your business even hits the market, your Restaurant Broker will be working with you to assemble a complete, organized financial package if the business is .
Your must-have documents include:
- Most Current Year of Profit & Loss Statements (if taxes are unfiled)
Prepared by your accountant or generated from accounting software. They should be detailed and consistent year-to-year.
- Two Years of Business Tax Returns
These are critical for verification. Lenders and buyers will match them against your P&Ls.
- Current Year-to-Date P&L Buyers want to see how the restaurant is performing right now—not just last year.
- Lease
- Equipment List
For due diligence, you can also expect a request for:
- Sales Tax Filings, POS Reports, and Bank Statements
These confirm that your reported revenue matches what’s actually flowing into the business.
- Supplemental Data
Payroll reports, maintenance records and other items help paint the full operational picture.
Pro tip: Your Restaurant Broker should provide a secure cloud folder or confidential file-sharing platform for this information. He or she will also confirm that the buyer has signed a Non-Disclosure Agreement (NDA) and deposited escrow on the deal before seeing many of these materials. This protects your sensitive business data while still allowing buyers to review it thoroughly.
Restaurants Sell for Seller’s Discretionary Earnings or SDE
When it comes to valuing a restaurant, one term reigns supreme: Seller’s Discretionary Earnings (SDE).
SDE is the total financial benefit a single full-time owner-operator can expect to receive from the business. It’s calculated by taking your net profit and adding back certain owner-related expenses.
The formula looks like this:
SDE = Net Profit + Owner’s Salary + Add-Backs
This metric gives buyers—and lenders—a clear picture of the income potential if they take over day-to-day operations. It’s a common language in business sales, especially in the restaurant industry.
The catch? Any add-backs must be accurate, well-documented, and easy to understand. Without that, your SDE will be undervalued, and your asking price may seem inflated. Your restaurant broker will walk through these add-backs to substantiate them.
Section 4: Add-Backs That Build Buyer Confidence
Add-backs can make or break your SDE calculation. Done right, they show buyers the true earning power of your restaurant. Done poorly, they raise red flags.
Legitimate add-back examples include:
- Owner’s Salary and Perks – If you draw a salary from the business, it’s added back since a buyer could replace you with themselves.
- Family Payroll – Wages paid to family members who won’t be part of the new ownership as long as they did not have a role in the store.
- Personal Vehicle or Phone Expenses – If the business pays for your car or cell phone but the buyer won’t need to, that’s an add-back.
- One-Time Expenses – Large, non-recurring costs like legal fees, major equipment repairs, or one-off marketing campaigns.
Best practices for presenting add-backs:
- Keep it Verifiable – Every add-back should have documentation to support it.
- Label Clearly – Don’t make a buyer guess. Spell out each add-back in a dedicated schedule.
- Explain Once – A written Add-Back Schedule should accompany your financials so buyers see exactly how your SDE was calculated.
Presentation Matters—Restaurant Brokers Make It Buyer-Friendly
The way your financials are presented can be as important as the numbers themselves. Disorganized, incomplete, or confusing records frustrate buyers and slow down the process.
Steps to make your financials ready for the Restaurant Broker’s Review:
- Clean Them Up – Have your accountant review and reconcile your books before you go to market.
- Make Your CPA Available – If there are questions that only the accountant can answer, schedule a call or provide permission for a one-on-one discussion.
- Provide Context for Anomalies – If sales dipped during a renovation or spiked after adding a patio, note it. Transparency builds trust.
- Avoid Spreadsheet Overload – While detailed records are important, buyers appreciate summaries that help them quickly grasp the business performance.
When a buyer sees organized, professional financial records, it signals that the business is well-managed, making them more confident in moving forward.
Mistakes That Derail Restaurant Sales
Even profitable restaurants can lose buyers over financial issues. Avoid these common deal-killers:
- Inconsistent Income Reporting – For example, reporting only partial credit card receipts and leaving cash sales undocumented.
- Excessive Personal Expenses Without Documentation – If you run non-business costs through the restaurant but can’t prove them, buyers may doubt your numbers.
- P&Ls That Don’t Match Tax Returns – Discrepancies raise immediate red flags for buyers and lenders.
- Unsubstantiated Cash Sales – If it’s not on the books, buyers (and the IRS) can’t count it.
- Outdated Financials – Listing a restaurant with last year’s numbers makes it hard for buyers to assess current performance.
The bottom line: Every number you present will be verified during due diligence. If something doesn’t match up, the deal slows—or falls apart entirely.
Get Expert Eyes on Your Books Before You List
The smartest move you can make before selling your restaurant is getting a professional review of your financials.
A Certified Restaurant Broker at We Sell Restaurants can:
- Accurately calculate your SDE and help you justify your asking price
- Spot potential red flags before buyers do
- Organize your financial package so it’s clear, credible, and lender-ready
- Guide in presenting add-backs and assemble supplemental documentation to maximize buyer confidence
Selling a restaurant is a complex transaction, but it becomes much smoother when your financial records are airtight. With the right preparation and expert guidance, you can turn your numbers into your strongest selling point—and get buyers to say yes faster.
FAQs – Selling a Restaurant: Financial Records Buyers Want
- Do I need three years of financial records to sell my restaurant?
Three years is ideal, but you can still sell with fewer if your business is newer. Buyers and lenders prefer three full years to evaluate performance trends. A Certified Restaurant Broker can help present shorter histories effectively.
- What is Seller’s Discretionary Earnings (SDE)?
SDE is the total financial benefit a full-time owner can expect, calculated as net profit plus the owner’s salary and documented add-backs. It’s the most common way to value restaurants.
- Will buyers verify my numbers?
Yes. Buyers and lenders will cross-check P&Ls against tax returns, bank statements, and POS reports. Any discrepancies can slow or stop a deal.
- Can personal expenses run through the business be added back?
Yes, if they are legitimate and fully documented. Without proof, buyers may exclude them from earnings calculations.
- Why do lenders care about financial presentation?
Lenders need clear, consistent records to underwrite loans. Poorly prepared financials can make even a profitable restaurant look risky.
- How can a Certified Restaurant Broker help with my financials?
They ensure your earnings are calculated correctly, identify issues before listing, and present your records in a way that builds buyer and lender confidence.