What is the best time to sell a restaurant?
EATS Restaurant Brokers Blog
Timing is defined as the choice, judgment, or control of when something should be done. Most Realtors would tell you the best time to sell a house at its highest price point would be May-August. What is the best time to sell a restaurant? EATS Restaurant Brokers would tell you January is the best time to sell a Restaurant!
The months of November-December are the slowest months for restaurant resales. Buyers are spending more time with their families, wrapping up year-end items, and not worried about buying a restaurant. The number of buyers inquires decline on restaurant listings for sale and spike back during the months of January-April.
Once the New Year arrives the Restaurant Buying Season begins and it’s a beauty contest. The number of listings increase and buyers have more inventory to choose from. Restaurant owners should keep one thing in mind. It takes time to sell a restaurant. It typically takes 6 to 9 months to sell a restaurant, but for planning purposes, you should plan for a year.
Fierce competition with the number of restaurants for sales on the market makes the restaurant listing package extremely important. The decisions Restaurant Owners make in January can have a big factor in if the restaurant sells or fails in selling in 2020.
EATS Restaurant Brokers provide 3 Tips for Selling Your Restaurant in January
1.Tax Return numbers are important when selling a restaurant:
Restaurant owners can deduct legitimate restaurant expenses against the revenues they take in. Restaurants, however, have some unique expenses that they can deduct against their taxable income. The most common deductions include food costs, server and kitchen labor, operating and advertising expenses, and capital expenses.
I have seen some very interesting deductions that are not restaurant-related. The most-odd deductions have been $10,000 Hawaii Trip for Restaurant research, luxury car for marketing, food cost for a personal family reunion, and private school tuition for kids.
These expenses save the Restaurant Owner liabilities on taxes owed but devalue the business for resale. The first line item most buyer looks for when reviewing a Tax Return or Profit and Loss statement is the Net Income. Writing off non-restaurant expenses on the restaurant’s books and records actually hurt the chances of the restaurant selling.
Restaurant Brokers Tip: Pay the IRS upfront on total sales with limited deductions, to increase your chance of selling on the back end for maximum profits. Consult your CPA or Tax Professional on ways to increase your chances of selling your restaurant.
January is the perfect month to list a restaurant because you haven’t completed your tax returns for the previous year. This is a great time to review your past tax returns with a Restaurant resale specialist for a valuation. This strategy can help you talk with your CPA or Tax Professional on how to file your upcoming tax return. The difference of writing off $10,000-$50,000 of unnecessary expenses, could cost you $30,000-$150,000 on resale value using a 3x multiple.
2.Use a trained Restaurant Broker
When someone gets sued usually the first task, they accomplish is to hire a lawyer to represent them legally, explain the court process, and to be a consultant. Lawyers will usually charge a retainer fee or consulting fee to address your concerns. Why do people hire a lawyer and not represent themselves in court? The obvious answer is that lawyers are trained in law and the general public is not.
One of the most common statements in Restaurant Brokerage is that operating a restaurant is much different from selling one! Restaurant Brokers are trained in real estate and business brokerage professionals. Restaurant Brokerage professionals are specialists in the field of restaurant resales and restaurant consulting.
The best part of hiring a Restaurant Broker is no upfront fees in most cases. EATS Restaurant Brokers only earn a success fee when the restaurant is sold. We know how to locate the buyers in the market and understand the restaurant resale process.
3.Clean up the restaurant and books and records
January is a perfect time for restaurant owners to focus on any tax liabilities, suspended licenses, lawsuits, claims, UCC liens, or landlord default payments owed. All this information is important to know and to be working on before your restaurant is listed for sale. The closing attorney does a UCC lien on the restaurant equipment and will require a sales tax clearance letter from the seller to conduct a closing.
Cleaning a restaurant and fixing broken equipment could make the difference to a buyer with so many restaurants for sale on the market. The primary factor of what a restaurant will sell for is determined by its earnings, or owner’s cash flow, and the market multiple. Using these tips can help a restaurant owner sell in 2020.
January-April is the restaurant buying season if you are a restaurant owner who wants to sell this year, you should be listed on the market now. Restaurant sales decline in the summer when the home buying season is hot.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at firstname.lastname@example.org. Visit our website at www.EATSbrokers.com