Strategic Restaurant Ownership: Why Your Business Plan Needs an Exit Strategy

As a restaurant owner, you are passionate about your business and are focused on its performance in the community. Yet, amidst the hustle and bustle of managing day-to-day operations, it is essential to take a step back and consider the long-term trajectory of your business. One crucial aspect often overlooked in restaurant business planning is the inclusion of an exit strategy. I recently spoke on a panel at a conference to discuss this reality with hundreds of business owners nationwide. We delved into business plans and the reasons an exit strategy should not be overlooked when building them. Based on those conversations, here is how and why you should incorporate a strategy to sell your restaurant into your restaurant's business plan.

Why Include an Exit Strategy?

A robust business plan serves as a roadmap for success, guiding your restaurant towards profitability and growth. However, it is equally vital to plan your exit, including the possibility of selling your business down the line. Here is why:

Strategic Planning: Integrating an exit strategy into your business plan forces you to think strategically about your restaurant's trajectory. It prompts you to identify the strengths and weaknesses of your business so that you can position it for future success.

Maximizing Value: Addressing potential challenges, such as underperforming locations or geographical constraints, allows you to strategize ways to enhance your restaurant's value through stronger financial performance.

Adaptability: Markets fluctuate, and circumstances change. By reviewing your plan annually and adjusting as needed, you ensure that your restaurant remains agile and prepared for any eventuality, whether it is a sudden need to sell or a strong opportunity to cash out.

Understanding the Reasons to Sell Your Restaurant

Life is unpredictable, and unforeseen circumstances may necessitate a change in ownership. The three D's—Death, Divorce, and Disability—are common reasons prompting restaurant owners to consider selling their establishments. In fact, I recently worked with a restaurant owner who decided to sell after a close family-friend, who worked as the chef, passed away. Life happens, and you may be faced with a decision to sell before you originally planned. Having an exit strategy in place provides a clear roadmap for navigating such situations, ensuring a smoother transition for all parties involved.

Identifying Potential Buyers

The universe of potential buyers for your restaurant is vast and diverse. From aspiring restaurateurs eager to fulfill their culinary dreams to entrepreneurs seeking franchise resale opportunities, there are buyers ready to make an offer. We Sell Restaurants alone markets to more than 100,000 buyers nationwide who are actively searching for restaurant for sale opportunities.

Preparing Your Restaurant for Sale

Preparing your restaurant for sale involves more than just cleaning the kitchen and sprucing up the décor, although those things do help make good first impressions with buyers. Ensuring your financial statements are clean and up to date is a critical step to selling your restaurant. This also includes taking a critical eye to your profit and loss statement, tax returns, and lease assignments, and more. Here is a list of documents and forms critical to a successful sale:

Updated and accurate financial statements with owner benefit (discretionary earnings) spelled out
Confirm all income tax, property tax, and sales tax returns are filed and squared away
Confirm all UCC Liens are accurate
Confirm that you can request the lease assignment from the landlord, and that the landlord does not have the right to cancel the lease upon that request
Obtain an accurate restaurant valuation by hiring a specialized restaurant broker
Take inventory of any debt and determine if you can pay any debts off

Most buyers want to know two things when they first see your restaurant for sale: where is it located and how much money is it making? Organizing the materials above help paint a picture for the inquiring buyer and present the most crucial information in a timely manner.

Building Your Advisory Team

Selling your restaurant is a complex process that requires expertise from various professionals. To start, you will need a strong business broker who understands how to accurately value a restaurant for sale. This may mean seeking out a specialized restaurant broker, such as a Certified Restaurant Broker®, instead of a generic business broker.

Once your restaurant is priced and listed, you will need a team who can market your restaurant for sale and qualify buyers who express interest.

After you accept an offer from a qualified buyer, you will need a closing attorney to handle the closing documents.

Restaurant owners who work with We Sell Restaurants to sell their restaurant automatically gain access to a team that will value the restaurant, market the business, qualify buyers, negotiate the deal, and introduce them to trusted closing attorneys. Working with restaurant brokerage professionals, like at We Sell Restaurants, will guide you through every stage of the selling process and be your trusted advisory team.

Key Takeaways

Planning your exit strategy may not be something you think of immediately the day after you buy your restaurant. It may also not be on your mind at all if you love restaurant ownership and are enthusiastic about several more years of being a restaurateur. However, as we discussed, life happens, and you may be faced with the decision to sell before you originally planned. That is why incorporating your exit strategy into your restaurant business plan today is critical to long-term business success. It not only paves a clear path for you to exit, but it also gives a new owner a clear path in to buy. This ultimately leads to a smoother transition and more successful exit.

If you are a restaurant owner without a clear exit strategy, then download this FREE Guidebook to Selling a Restaurant to learn more about what you will need in the future to sell your business.

debra blog photo Debra Sawyer is the multi-unit Franchise Partner for the Kissimmee, Orlando, and Sanford regions. Debra is a licensed real estate salesperson in the state of Florida and is also licensed as a CPA and a CFP® professional in addition to having a master’s degree in taxation. In addition, she has completed the training and examination to earn the title of Certified Restaurant Broker® joining the select group of restaurant broker experts nationwide with this designation. Debra spent over a decade with two of the nation’s largest public accounting firms as a CPA specializing in high-net-worth individuals and closely held businesses. Debra then transitioned to lead editor and instructor for a textbook company focusing on the CFP® Certification Examination, where she helped thousands of students from multiple colleges and universities become CFP® professionals. Debra’s financial acumen, business experience and franchise experience include owning and operating 46 Sports Clips salons across four states. Debra built 15 of these locations from the ground up and purchased 31 stores in 17 deals using income valuation methods and asset purchase agreements. She worked closely with franchisees of the brand as the elected President of the Team Leader Advisory Council at Sports Clips in addition to serving multiple years on their POS/IT committee, finance committee, and charitable foundation. Debra currently serves on the Financial Planning Association of Central Florida Board of Directors. Debra’s experience and financial skills translate directly to We Sell Restaurants where she assists sellers in exit strategies and valuations of their businesses. She also assists buyers investing in restaurant opportunities. In her free time, Debra enjoys longs walks and spending time with her two daughters. They frequently visit beaches in Central Florida together. Debra can be reached by phone at 407.450.2548 or by email at debra@wesellrestaurants.com.