Restaurant For Sale By Owner-Common Mistakes
A common question I receive monthly as a Restaurant Broker is, “Why list with a Broker, I can sell my restaurant For Sale by Owner (FSBO)? I understand the question because today’s websites offer sellers potentially cost-effective routes to selling a Restaurant online.
EATS Restaurant Brokers understand getting a buyer that is interested in buying a restaurant is the easy part, getting that buyer to the closing table is where the difference of being a trained Restaurant Broker compared to a restaurant seller trying to sell a restaurant for the 1st time makes a HUGE difference.
For that Restaurant, Owners thinking about selling by For Sale by Owner (FSBO), the skill set to operate a day-to-day restaurant is different than selling your restaurant. EATS Restaurant Brokers have created a list of, “The most common mistakes in selling your Restaurant for sale by owner”.
Review Books and Records- Listing price for restaurant
When it comes to selling a restaurant the owner is selling one of two valuables- Salary or Equipment. To receive the highest valuation on a restaurant the seller needs to have 3 years of strong verified tax returns. Once a seller has the tax returns coming up with a listing price is a mathematical equation and not a guess or price based on emotions.
Overpriced or Underpriced restaurants is a common mistake with For Sale Owner listings. Not having clean books and records, tax returns, profit, and loss statements will hurt the possibility of selling a restaurant.
Restaurant Brokers know the acceptable add-backs on tax returns, to provide the seller with the highest selling price. An EATS Restaurant Broker is trained on reviewing profit and loss statements and tax returns to provide a restaurant valuation that will be approved by the bank for lending.
Selling a restaurant without good books and records takes another skill set most Restaurant Owners don’t have because they don’t sell restaurants daily. The listing price has to be based on an Asset Sale which includes equipment, goodwill if any, and rights to lease assignment. This method receives a much smaller valuation and should be priced according to market prices.
Time and Effort
Selling a restaurant is a contact sport meaning you will have tons of buyer inquiries, questions, requests, calls, emails, docs requested, information requested, and hopefully, the buyer moves forward. Most For Sale by Owners don’t understand the average length of time on the market for a restaurant is 9 months. Over these 9 months the frustration of not selling, time commitment, and marketing fees can start to affect the operation of the restaurant.
Buyers are Liars and Seller are Too
Finding the truth between a For Sale by Owner and an unqualified buyer can be a tough situation. The ownership of a Restaurant is a symbol of the American Dream for tons of people. Everyone has that recipe or idea from their family that will make their restaurant successful. The actual reality is that most people are not ready to open a restaurant and are merely inquiring about information on restaurants they can’t close on.
Providing too much information upfront to a buyer without qualifying the buyer is a big mistake. We have found sellers are so eager to sell their restaurant they will meet with just about anyone. During these meetings, the sellers provide buyers with confidential information regarding their business. Wasting time dealing with unqualified buyers that say they have the money but don’t show the money is a huge common mistake for For Sale by Owners.
Many educated and sophisticated buyers have experienced a negative time working directly with owners who don’t know how to sell a restaurant, so they simply avoid those listings. Why would you list your restaurant For Sale By Owner if you are eliminating some of the available buyers in the market?
Attracting serious qualified buyers while maintaining confidentiality is a key component of what we do. We use our time and effort and pay all the marketing dollars to get a restaurant sold, we only get paid a Success Fee once we have sold a restaurant.
When you’re ready to sell your restaurant, contact us.