How to sell a restaurant
How can I offer an existing fast-food location in Puerto Rico to parties that may be interested?
Last week’s question on setting a value on a restaurant for potential sale clearly had operators dreaming of putting their feet up and counting wads of money. There were a few similar followups for our expert Harris Eckstut, a Philadelphia-based restaurant consultant—now that we can determine the value, how do you actually sell?
First, be sure you can. Start with your attorney. Do you have a franchise agreement that allows for a sale? Does your ownership structure create hurdles—would you have to buy out or get agreement from investors? What restrictions are in place in your lease? Once those questions are answered, you may be ready to sell.
Eckstut advises, “When selling an active restaurant operation, confidentiality becomes a critical factor. If one tries to market the property through traditional public means (on the internet, print and other public media), people will know you are selling—including your customers and employees. It has been my experience that more often than not, the employees start looking for other work (and find it) and customer counts go down. So, it is essential that you find a broker who knows and understands the confidentiality process. That person should explain to you how he or she will reach out to potential buyers through confidential means and then follow up with confidentiality agreements that the potential buyer must honor before they even find out the location and name of the business and property.”
A good broker is key to the process. Some guidelines for choosing one:
- Beware of cash-in-advance. Most reputable brokers charge a commission rather than an up-front fee.
- Check credentials. Eckstut recommends membership in the International Business Brokers Association (IBBA) or similar organization.
- Check references. Make sure the broker has restaurant experience and expertise and ask if you can speak with past clients.
Finally, once you’ve found your broker, be realistic and don’t pursue a listing if the numbers don’t match your hopes and expectations. Eckstut advises, “They also will be straightforward in telling you what the market—as they know it—will bear for selling your business. In other words, if they list your business, they expect to sell it at the price that they feel you can get. This is how they make a living.”
More on selling your restaurant here.