What you need to do before you put your restaurant on the market
If you are planning to sell your restaurant business, remember that how you handle the process will have a direct impact upon the price you secure. Interested buyers will be mostly looking for a healthy, well-run business with potential.
A successful sale is the outcome of good preparation. So, here are some tips to help you bring your restaurant business to the market in apple-pie order, and thus disappear off the shelf at the same speed as the aforesaid delicacy.
Even if you’re not in a position to sell just yet, taking some of these points into account now will set you in good stead when the time eventually comes for you to hang up your chef’s hat.
Freshen up the visuals
Hygiene and cleanliness are a core requirement in the food industry, so make sure your premises meet every expectation of your customers, food inspectors and potential purchasers. In terms of décor, it’s well worth going far beyond the functional ‘coat of paint’ if you want a high price.
So, your front of house and main windows should ideally present an attractive visual scheme which supports your business name and also reflects your business values. Don’t forget staff uniforms must be smart as well as clean. And in addition, don’t cut corners behind the scenes – it’s not a risk worth taking. So why not show your customers your kitchens are of the same high standard – perhaps by including a professional photo in your menu, or on your publicity material.
Remember too that worn out equipment can also drag standards down – e.g. a noisy coffee machine, a malfunctioning toaster which toasts unevenly – and thus create a negative impression when viewed by prospective buyers.
Your major equipment should not only be clean, it should be in good condition and have records to show it has been well maintained. This kind of detail is essential if you want a keen buyer to even think about paying top dollar when you market your restaurant.
Make sure your financial details are up to date
Any serious buyer, and especially their due diligence team, will want to see details of how your restaurant business performs. So, you must have up-to-date accounts which track your progress over at least three years and show your annual profit/loss position.
Beyond this, you will need to list your debts and business liabilities, and any positive projections about cash flow, sales revenues and future profits will also be extremely helpful. If you employ regular and/or temporary staff, you should also include copies of your staff contracts.
Obtain a business valuation
Any potential buyer’s due diligence team will want to know your valuation of the business. But even more importantly, they will want to see how this value is calculated. Whilst it’s their job to challenge your valuation during any initial sale negotiation, you can always prepare for this by obtaining a professional calculation.
If this is prepared by a valuer who understands the food industry, your valuation document will follow accepted sector formats as regards the presentation of profits and business assets. This information will make it much easier to convince the ‘buy side’ that your business is indeed worth the figure you are quoting.
Learn more about valuing a business here: uk.businessesforsale.com/uk/selling-a-business#valuation
Who runs the business?
Clearly you presently own the restaurant, but you’ll get a considerably higher price if you can show that someone else handles at least the day-to-day. Though this may mean giving more responsibility to a member of your staff, it will avoid any suggestion you’re selling a ‘one man band’.
If buyers suspect that customer numbers, supplier goodwill, culinary standards and everything else a good restaurant business must have in place are all down to you, you may expect the offer price for your business to fall considerably.
Remove yourself from the front line and focus heavily on training up and supporting those who could manage the business in the future. This move will be well worth your while at sale time.
Business on the up?
How are your covers doing on a fairly average night? And what are the trends and seasonal fluctuations? Not only should you be tracking such information via an effective POS system, you need such data to run the business successfully, and also to support your ‘business for sale’ marketing.
If you are doing well, you should be able to put ‘flesh on the bones’ to explain how the figures relate to your business planning, and what they mean for the future. However, if there are any signs of a downturn, you will need to diagnose and address the cause as soon as possible. For example: Are you paying too much for supplies? Do you need to research and revamp your menus? Would technology reduce your staffing or make your service more efficient? And what about your advertising?
Are your customers satisfied?
What are your reviews like? Are your customers happy? No one is going to want to buy a restaurant with a bad reputation, even if the prospective owner has plans to make changes.
It will of course depend on the style and type of restaurant you are running as to how important customer satisfaction is. If your reputation is below bar, find out why. Making a few tweaks and positively responding to negative feedback can be enough to add a few extra pounds to your sale price.
Ultimately, putting the work in before you bring your restaurant to market is what’s going to help you get the best possible price when it comes to selling.
Find out more about advertising your restaurant for sale on BusinessesForSale.com here: uk.businessesforsale.com/uk/sell-a-business
