Understand Buy & Sell Restaurant – Advice on Buy Sell Restaurant

We Sell Restaurants Bests the Market by 23 points in Selling Restaurants

Written by Robin Gagnon | Jun 9, 2022 2:00:00 PM

 

The BizBuySell Insight Report is currently available for the first quarter of 2022. Restaurant transactions increased at a faster rate than other business types.

BizBuySell reports that business brokers are reporting large gains in restaurant units sold and higher prices. Units sold for the quarter outpaced last year by 42%, a massive increase in transactions for restaurant brokers and those specializing in the hospitality industry. The median price in 2022 (restaurant selling prices) also rose 51% over last year, and more importantly, outpaced the prices commanded by restaurant sales in 2019. This demonstrates both the breadth of resiliency and depth of recovery in the intervening years since the COVID crisis.

We Sell Restaurants continues to set the market standard for restaurant sales, with a 65% increase in transactions during Q1 2021. The impressive statistic is 23 points higher than overall marketplace growth and reflects buyers’ confidence that they can rely on our guidance when buying or selling restaurants through advice from industry experts who have been providing consultation for two decades.

Eric Gagnon, President of We Sell Restaurants says, “We continue to outpace the industry in selling restaurants, a trend proven by the BizBuySell Quarterly Insights Report once again. Buyers and sellers in the marketplace know that the advice and consultation they receive from our brand is the most up to date on sales, pricing, and lending. That leads to more closed transactions.”

How closely did selling prices match the asking price? This is a measure of how competitive the marketplace is as selling prices closely align with asking prices. For the industry, selling prices came in at 90% of asking price. For We Sell Restaurants' first quarter of 2022 this metric was 98%. This number is the average selling price divided by the average asking price.

Robin Gagnon, CEO of We Sell Restaurants says, “Getting the pricing right on a restaurant leads to faster turnover, assurances for lending and fewer days on the market for buyers. Hitting that valuation number properly is critical. It is a testament to the skills of our Certified Restaurant Brokers that selling prices in first quarter came in at 98% of the asking price.”

In reviewing overall sales volume for the quarter, the We Sell Restaurants restaurant brokers turned in results that were 190% ahead of the same time last year in sales dollars over the comparable months; January, February, and March of 2022. BizBuySell does not offer a similar statistic for comparison.

The BizBuySell Quarterly Insight Report also tracks median revenue of sold units. The restaurants sold during the quarter were posting annual sales of $720,000 versus 2021 sales of $600,000 and far exceeding 2019 revenue reported at $580,000. While it is not always, the case, generally, the higher the sales volume, the greater the likelihood of profitability. Sales often flow through to stronger earnings and thus, higher selling prices.

For the Restaurant Brokers at We Sell Restaurants, median revenue reported in at $755,550, again higher than the comparable Insight Report number or nearly five percentage points ahead of the national trending.

Overall, the national trend for first quarter was powerful but the We Sell Restaurants team again, outperformed the industry on every metric. Robin Gagnon, CEO of We Sell Restaurants, penned an article comparing restaurant sales in the industry for BizBuySell which is available at this link.

What does the future hold for restaurant sales? The second quarter of 2022 remains extraordinarily strong at the brand. Factors influencing buyers and sellers to enter the market include:

Strong Results by QSR brands in particular, a position Entrepreneur Magazine recently including an in article quoting Robin Gagnon and saying, “..coming out of the pandemic, we're really seeing all QSR models pricing at the highest multiples and selling at the fastest rate, and the turnover associated with that is in the best range."

Robust offers on Turnaround Situations or Asset Sales. The availability of a fully equipped store is highly coveted in a market where delays in obtaining equipment can lead to lengthy postponements for restaurant operators ready to launch today.

Entry to the Market while Interest Rates Remain Historically Low. Interest rates are expected to continue to rise as an offset to inflation, they are still low overall and that is incenting buyers to act now, rather than wait for the increase in rates.

Sound Lending Market. Lenders are still very comfortable lending on restaurants in our experience. Our specialized brand leverages strong relationships to make lending associated with selling restaurants simple and straightforward. Since lending can be a barrier to buying, this is also driving results.

Overall, restaurant sales remain strong and factors point to continued results for the balance of the year. The full BizBuySell Insight Report is available here and includes results for both the restaurant industry and the overall business for sale marketplace.

The BizBuySell Insight Report is a economic indicator that tracks the health of the U.S. small business economy. Each quarter, BizBuySell analyzes sales and listing prices of small businesses across the United States based on approximately 50,000 businesses for sale and those recently sold, reporting changes in closed transaction rates, valuation multiples and other economic indicators for the small business transaction market. Closed transactions are reported to BizBuySell.com on a voluntary basis by business brokers nationwide. Each report includes real small business data on over 70 major U.S. markets and across 65 small business industries.

Robin Gagnon, Certified Restaurant Broker®, MBA, CBI, CFE is the co-founder of We Sell Restaurants and industry expert in restaurant sales and valuation. Named by Nation’s Restaurant News as one of the “Most Influential Suppliers and Vendors” to the restaurant industry, her articles and expertise appear nationwide in QSR Magazine, Franchising World, Forbes, Yahoo Finance, and BizBuySell. She is the co-author of Appetite for Acquisition, an award-winning book on buying restaurants.