How to Value a Restaurant
We Sell Restaurants has written the industry textbook on restaurant valuation and the restaurant sales process. Appetite for Acquisition has been described in the business as the “definitive guide for anyone looking to enter the restaurant industry.” It is available in bookstores nationwide, online from Amazon.com or by direct order from the Atlanta office
Cash Flow Method
We Sell Restaurants uses their exclusive Valuation Analysis Tool© to be sure that we are accounting for all opportunities to find cash flow. This cash flow translates to the sales price for the seller. We work on a daily basis with restaurant, bar and franchise profit and loss statements. We understand the appropriate add backs and recast your financial statements using Generally Accepted Accounting Practices (GAAP). From this baseline, we can then apply industry benchmarks and comparative data to reach a valuation.
Asset Valuation Method
If your restaurant is not generating cash flow, we rely on the value of the assets to help set pricing. While this is much less than you may have originally invested, in most cases, a buyer will not pay a premium if you are not generating cash flow. This is not always the case however, as a restaurant in a prime location with a good transferrable lease may be more valuable than assets alone. We look at all variables in setting a price for assets that will get your restaurant sold including location, value of the lease and comparable sales in the marketplace for assets.
Gross Sales Valuation Method
There is a last technique where gross sales may be used as a "rule of thumb" to gauge pricing. This method is rarely used and mostly by those who don't have the financial skills to conduct a strong review of the business and prepare a valuation. Most buyers want to see detailed profit and loss statements to justify their purchase. There are limited instances where this may be an appropriate method to but generally is only applied when someone is acquiring a location first and foremost for conversion to their own concept.
We Sell Restaurants has knowledge, experience and education in the valuation process. The We Sell Restaurants leadership team is headed by Eric and Robin Gagnon, industry experts and authors of Appetite for Acquisition described in the business as the “definitive guide for anyone looking to enter the restaurant industry.” Both are nationally known for their expertise and education. Eric Gagnon is designated a National Industry Expert by Business Brokerage Press. He is also the 2011 President of the Georgia Association of Business Broker and served on the executive board for more than eight years where he has been named to the Lifetime Million Dollar Club. Robin holds an MBA in finance and develops all valuation tools.
When packaging your listing for sale, we draw upon our financial knowledge to set the right price. We know the common ratios for food costs, labor costs and occupancy costs. We not only establish the right pricing, we also use prepare our extensive nine page Business Analysis Tool© to show buyers the opportunities for improvement.
We know what other restaurants are selling for. As one of the nation's largest restaurant brokers, We Sell Restaurants has access to business valuation comps for all restaurants and franchise re-sales nationwide. We look at similar size, volume, profitability and pricing to gauge days on the market and help determine pricing. As a designated Business Industry Expert by Business Brokerage Press, other brokers rely upon our modeling to assist in their pricing.
Our professional team has a financial services background that translates into a first class listing and selling presentation package- the We Sell Restaurants Business Analysis Tool© that is unrivaled nationwide. Buying a restaurant is a complex transaction requiring skilled professionals. We Sell Restaurants puts all agents through a rigorous financial training course to insure their financial skills are among the best in the industry.
We Sell Restaurants has established market dominance as the acknowledged sector leader in selling restaurant and food related businesses, franchise re-sales, and site location for the food service industry.
For specific information on how to value a restaurant, purchase Appetite for Acquisition, the textbook for restaurant buyers and sellers for valuation and described in the business as the “definitive guide for anyone looking to enter the restaurant business.” To purchase Appetite for Acquisition, visit bookstores nationwide, order online from Amazon.com or direct order from the Atlanta office. It is also available as an instant download for a Reader, Nook, Kindle 2, iPad, and iPhone 4
For a complimentary valuation of your restaurant, email firstname.lastname@example.org or contact our office at 404 513 5378.