How to Get the Highest Price for a Restaurant

You don't hear much about a restaurant changing hands, but it happens quite frequently. Maybe the owner wants to sell because he plans to retire. Then again, there may have been the death of an owner or the restaurant lost its lease. There are a number of reasons why someone might want to get out of the restaurant business, but one thing is constant. All owners want to receive the most for their businesses.

Instructions

1. Make sure that your restaurant is maximizing profitability. Look at your biggest costs such as labor, food and beverages because they offer you the greatest opportunity to increase profits. See if you can run the restaurant with fewer people, or install procedures to increase efficiency. Determine if there are ways to buy product more efficiently and to reduce your inventory. Profitability is the first thing that a prospective purchaser will look at.

2. Make sure that the terms of sale allows enough profit for the prospective buyer if you own the real estate where the restaurant is located. If you have a long-term lease on that real estate, make sure that it can be transferred to a third-party without re-negotiation. Otherwise, discuss your intentions with the landlord and try to determine the terms of the lease if a new available to a buyer. Also, find out what qualifications a new owner must meet to allow you to transfer the liquor license.

3. Improve the appearance of your restaurant to spark buyers' interest. Cosmetic improvements like a fresh coat of paint, a kitchen that is clean and an uncluttered office area will go a long way to pique prospects.

4. Ask your accountant to organize your books so that you can show a prospective buyer the business's profitability, where you spent your money and what the cash flow of the business is. Having a well-organized set of financial statements to show a prospect will not only answer the financial questions he has but it will demonstrate that you have been running the restaurant in a business-like fashion.

5. Structure the business in such a way that it will be attractive to a buyer. In most cases, restaurants are run as corporations. Check with your attorney about your flexibility to either issue all the stock in the company to the new buyer or to effect an installment sale which might lower your capital gains tax, and give the buyer extra time to pay for the business.