A deal terminated today.

Not because the buyer didn’t want the restaurant at $245,000.
Not because he wasn’t qualified or couldn’t get financing.

It fell apart because the seller simply waited too long to sell.

The landlord had finally lost patience. Past-due rent had piled up, and with new tenants willing to pay more, he refused to wait another day. Meanwhile, the bank, tired of unreturned calls, refused to cooperate with the release of the assets.

In the end, the deal collapsed under the weight of inaction. The opportunity to sell was gone, and so was the restaurant.

This story isn’t uncommon. Many restaurant owners wait until circumstances force their hand. By then, the options are limited, leverage is lost, and recovery is nearly impossible.

How can you recognize when the clock is running out on selling your restaurant? Here are three warning signs that it may already be later than you think.

The Reality: Market Data You Should Know

Timing your sale correctly matters more than ever. According to BizBuySell’s latest Q3 2025 Insight Report, the median number of Days on Market for restaurant sales has improved significantly, dropping from 205 days at the beginning of the year to 172 days by the third quarter.

That’s a 16 percent reduction in the time it takes to sell a restaurant in less than a year, evidence of stronger buyer demand and more competitive listings.

However, this data also reveals a harsh truth. Even in a strong market, you still need several months to complete a transaction. Waiting until rent, loan payments, or cash reserves are already depleted leaves little time for buyers to act or financing to be secured.

Sign #1: Rent Obligations Can’t Be Met

Falling behind on rent is the first red flag. Landlords often operate with short patience, especially for valuable, well-located spaces that can be re-leased quickly to a new tenant at higher rates.

If you have an under-market lease, that’s an asset, but only while you’re in good standing. Once you fall behind 30 to 60 days (depending on local law), the landlord can take possession of the property, wiping out your ability to sell.

What you should do:
Be proactive. If you know you’re slipping, contact your landlord and explain that you intend to sell. Request three to six months to complete the transaction. Most landlords will cooperate if they see an opportunity to keep the space occupied and rent flowing.

What you should not do:
Hide the issue from your broker. If you’re behind on rent, your broker needs to know. They are investing time, marketing dollars, and resources to sell your restaurant. Concealing the problem means they’re promoting a deal that could vanish overnight. Transparency allows your broker to strategize properly, perhaps by structuring a deal that satisfies the landlord’s needs as part of the closing.

In most instances, liability under the lease, or the personal guaranty, does not end with the re-lease of the property. If the landlord takes possession, he may still pursue you for past due rent and the cost to re-lease the space. That’s why it’s critical to get his buy in to allow you to sell and offload the lease liability.

Sign #2: Loan Payments Are Late or Stopped

The next major warning sign is falling behind on bank payments. If you financed equipment or purchased your business with a loan, your lender likely holds a lien on the restaurant’s assets. Once you default, the bank gains control, and selling becomes nearly impossible without their cooperation.

The worst thing you can do is go silent. Ignoring calls or avoiding communication signals distress and risk, which makes the bank less likely to work with you.

What you should do:
Call your lender before they call you. Let them know that you are preparing to sell and want to ensure they are repaid from the proceeds. In many cases, lenders are willing to cooperate if they see a clear path to recovery rather than the costly process of repossession. In virtually every case, the bank has no interest in restaurant equipment or the effort and cost to sell it. They would rather negotiate a deal to have a new owner and write off some portion of this loan.

What your Certified Restaurant Broker needs to know:
Be honest about the loan balance and terms. Your broker can’t effectively price or negotiate the deal without knowing what liens exist. A professional restaurant broker can often help navigate lender negotiations, ensuring the deal structure satisfies all parties. We are very experienced in bank workouts at We Sell Restaurants, helping sellers and lender navigate a solution that works for all parties.

Sign #3: No Cash Reserves to Sustain Operations

Even if your rent and loans are current, a lack of working capital can doom a sale. Selling a restaurant is not instantaneous. With the national median time to sell now at 172 days, you need enough cash to maintain the business during the marketing and negotiation process.

If you’re running on fumes and can’t sustain operations during that period, you’re jeopardizing the deal. Buyers want stability. When sales fall, staff turnover increases, or operations falter, buyers lose confidence.

What you should do:
Evaluate your reserves honestly. You need enough cash to cover operating losses for at least six months while your broker markets the business, qualifies buyers, and negotiates terms.

If that’s not possible, discuss creative options with your broker. Some sellers cut expenses, reduce hours, or transition to part-time staffing to conserve cash. Others may price the business more aggressively to accelerate the sale. A good restaurant broker can model both options.

The Cost of Waiting

Every week that passes after these signs appear reduces your leverage. Once a landlord files an eviction or a lender moves to repossess assets, the sale value plummets. At that point, even qualified buyers and willing brokers can’t save the deal.

Sellers often say, “I just need one more good month,” but in most cases, that month never comes. The restaurant continues to decline until the sale is no longer viable.

A Common Misconception: If You’re Losing Money, It’s Not Worth Anything

Many owners mistakenly believe that if their restaurant isn’t profitable, it has no value. That’s simply not true. Even if you’re operating at a loss, your restaurant can still be a valuable and sellable asset. Buyers often look for second-generation restaurant spaces because they save significant time and cost compared to building out a new location. Your equipment, lease rights, licenses, brand recognition, customer base, and online reputation all carry value. A professional restaurant broker understands how to position these strengths to attract qualified buyers who see opportunity where you see challenges. Selling before the situation worsens allows you to recover a portion of your investment and give a new operator a strong head start.

The Better Path: Sell Before the Crisis

Successful restaurant sales happen when owners plan early. If you see challenges ahead, declining sales, rising costs, or shifting market conditions, start the process before you’re in distress.

At We Sell Restaurants, we routinely work with sellers months in advance to evaluate market value, review lease terms, and identify potential deal obstacles. The goal is to sell while the business still has strength, not when it’s on life support.

A restaurant that is marketed proactively, priced correctly, and represented by a Certified Restaurant Broker® can often sell for significantly more, and in less time, than one listed after the warning signs appear.

Final Thoughts

If your restaurant is struggling, you’re not alone. The hospitality industry is demanding, and even great operators face tough cycles. What matters is taking control of your exit before circumstances do it for you.

Be honest with your broker, your landlord, your lender, and yourself. The earlier you act, the more options you have. The longer you wait, the smaller the window becomes.

Selling a restaurant isn’t failure, it’s transition. But waiting too long to make that decision can turn a manageable challenge into a permanent loss.

For information on what your business is worth, contact We Sell Restaurants to find out what your business is worth.