Questions You Need to Ask Before Selling
- How much is my business worth?
- Will I have to finance part of the sale?
- What percent is normal in financing a restaurant?
- How long will it take to sell?
- Would I stay and train the new owners?
- Why do I want to sell?
- How to market it?
- When should I sell?
- What information I need to give out to a buyer?
- Why should I use HRI Services?
Thought for the Day
“If you think you are too small to do big things, try doing small things in a big way.” – PRT
How to know what’s available before anyone else
HRI Restaurant Brokers are proud to introduce our “Preferred Buyer’s Program“.
Be the first to know about new listings and the latest trends in the industry.
Email us at firstname.lastname@example.org for more information.
Thought for the Day
“Don’t ever give up your dreams, they keep you alive.”
Stop Employee Turnover
- Ask questions: Why do you like working here? What can we do better?
- Start a recognition program: “Shift Star” or “Employee of the Month”
- Make sure you have a good training program and have the same person train
- Treat everyone the same; Be consistent in all aspects of the business
- When hiring ask your employee for referrals, and make sure to get references
- Most important say ‘Thank You’ and say it often
Thought for the Day
“Hire the best. Pay them fairly. Communicate frequently. Provide challenges and rewards, and believe in them.” – CJT
10 Steps To Successfully Selling your Restaurant
“I think I’d like to sell my business…but don’t know where to begin”
Followed faithfully, these principles will enable you to obtain the maximum value for your business.
- Remember, there is a time to sell and a time not to sell.The time to sell is when the business is doing well and any potential buyer can see opportunity for further growth. A buyer looks for pride of ownership, the ability of paying his debt services, a return on his investment, and a reasonable salary.
- The largest single reason that a business is not sold is that the owner never made the decision to do so.The reality is a natural cycle of business that every business will be sold or closed. Statistics show that over 90% of properties that are prepared to sell do sell in the future.
- Businesses are sold for many different reasons.The three most common are retirement, burnout, and major illness. Presenting your reason for selling in a positive light enhances the value of the property.
- Many business owners make the mistake of thinking that the process will be quick and easy.It is understandable since most sellers have never been involved in the sale of a business. But for every seller there are about 10 buyers, most of whom have already been involved in several previous transactions and are experienced in successful transactions and are experienced in successful business deals. So as you can see, the unprepared seller is at a distinct disadvantage.
- A basic key to maximizing shareholder value is preparing for what could become a long process.We advise our Clients to be prepared for an emotional 4 to 8 month experience. Attempts to short-circuit the natural course of events risk the chance of getting less than maximum value in the market place.
- Most sellers have little experience in business valuations.Yet no part of the process is subject to more self-deception or disappointment than valuation. The result can be disillusionment and frustration that stems from a false start or resistance in the market to what could be unrealistic expectations of value. Formulating a clear, objective value of the business to be sold is therefore crucial to a successful sale.
- Don’t let your standards slip.Given the long-time horizon that the sale of a business involves, don’t also make the mistake of allowing standards to slip in operating your company. That is particularly important in the restaurant business, as word of a quality decline among fickle restaurant patrons can prove fatal to an establishment’s profits.
- Achieving the best price for your business.This is quite often a matter of developing an understanding of the likely buyers. Putting yourself in the shoes of the buyers will better enable you to understand a buyer’s questions and concerns throughout the negotiating process.
- Sellers should conduct a due diligence review of the prospective buyer.The terms of the transaction may require an ongoing relationship with the buyer after the closing. Therefore, it is important to know with whom you are getting involved. The purpose of this “reverse” due diligence would be to evaluate the buyer’s credentials and track record, his or her credit worthiness (especially if a portion of the purchase price is contingent on the company’s future performance or is deferred in the form of notes or stocks), management style, and integrity.
Remember these Four Key Policies:
- Maximize your company’s value by effective day-to-day management
- Maintain awareness of trends and developments in your market, the industry, and the economy so that you don’t miss an opportune time to sell.
- Prepare yourself and your company before entering the market in order to maximize your market impact.
- Exercise patience and objectivity throughout the process and be prepared to step back from a transaction if things don’t seem right.
How does your Restaurant stack up to the National Average?
- Salaries and wages account for 28% to 30% of expenses in full-service and limited-service restaurants
- Median sales at full-service restaurants with check of less than $15 were $8,480 per seat
- The average daily seat turnover for full-service restaurants with average checks of $15-$25 was 1.2
- Median total sales per square foot for full-service restaurants with average checks of $25 or more were $300 per square foot
- Limited-service (quick service and quick/fast casual) restaurants average daily turnover is 4.1
Thought for the Day
“There is only one thing about which I am certain, and that is that there is very little about which one can be certain.”- Somerset Maugham, 1965
You Know When Your Restaurant is in Trouble if…
- You don’t see any new customers
- Your best customers don’t come as often
- Your sales are flat and declining
- Your customer base is shrinking
- Your best employees are leaving (The best waitstaff are the first to leave)
- Your energy level and your interest have begun to decline
- Your business isn’t fun anymore
- You are spending less time at the restaurant
Thought for the Day
“I can give you a six-word formula for success: Think things through – then follow through.” – Edward Rickenbacker, 1890-1973 Aviator
Advantages of Acquiring an Existing Business
- Being able to review a company’s existing track record as reflected in P&L statement, tax returns and other financial records can be very helpful in determining expansion plans.
- The need for additional working capital is reduced due to the immediate cash flow being generated by the acquired company.
- Gaining established customers, reducing the time to attract new customers.
- Sources of capital to purchase existing businesses are more readily available than start-up ventures. 80% of all business owners offer some type of financing.
- Growth potential can be measured based on actual experience rather than conjecture associated with start-up ventures.
Thought for the Day
“Every intersection in the road of life is an opportunity to make a decision.” – Duke Ellington
How do you develop your restaurant? Well, there is no easy answer. But, let’s explore ways that operators and owner/managers conduct themselves and their business practices.
There is the old saying “you’re only as good as the people you surround yourself with” – it’s so true!
There are those operators who have crowned themselves as the best and hire the unfortunates who dutifully serve with a skill level equal to standard mediocrity.
Let’s look at a few styles of operators:
Dictator – The “supreme allied commander approach”. No leadership, communication or gratitude. Just do as I say and not as I do.
Democratic – Allows limited participation – The elite can participate and show expression. There is an opposing side, but in the end there is a clear winner and loser.
Consensus – An environment where all participate in expression. Collective reasoning and thought processes are the theme. Any suggestions create discussions and positive narrative.
Any MBA graduate will tell you “The more people that participate in the growth and development of a business, the stronger the business becomes.”
Now, getting back to operator styles. Which best describes you?
Ownership – Employers who have “no skin in the game” have no interests in results. Your financial future is determined on results. We’re not referring to financial ownership, but more importantly “emotional ownership”. Making people (employees and your customers) feel special is the single most result producing activity you will ever experience and will determine your destiny.
Negaholics feed into the frenzy of business decline. They destroy ” business cultures” as an untreated cancer.
Assessment – Take a look at your operation. Is it the economy or you? Do you divide and conquer as opposed to support and lead?
The most effective formula to “successful business development” lies in 4 easy steps:
- ASSESS – with your team, establish an area that needs help
- STRATEGY – Develop an attack that is sure to work and will cover all situations
- IMPLEMENTATION – Develop an “action plan” to actually roll out the program as well thought out and effective
- REVIEW – How did we (it) do? Evaluate its successes and recognize the shortcomings
If the assessment yielded a four-pronged approach to re-positioning the business and 3 worked quite well, but the 4th failed – take #4 and put it through the same 4-step process by itself. Continue this process as your mantra, as it can be your blueprint of success.
Remember, and “issue” at work develops into a “situation” if not handled immediately, and becomes a problem.
Successful operators never have problems – they have situations that are dealt with through a “MBO” program – management by objective. Others use a “MBC” program – management by crisis approach. Which is your style?
Have you ever put your size 10 foot into a size 9-9 1/2 shoe? Hurts after awhile, don’t you think?
The Value of Your Business
How to Increase the Value of Your Business When the Time Comes for You to Sell
- Create a seeable lease document through negotiations with your landlord prior to the sale.
- Document sales and cost of sales, on a monthly basis.
- Develop ‘Operating and Policy’ procedure manuals for your business.
- Maintain recipe files and presentation photos or sketches.
- Have a floor plan and equipment layout diagrams.
- Maintain an equipment list with model and serial numbers, as well as date acquired.
- Keep sanitation inspection file.
- Report all sales.
Thought for the Day
“Problems are nothing but wake up calls for creativity.” – CJT
Keep Your Customers in Tough Times
During this tough economy, do not panic: It makes much more sense to expand an existing program than to roll out several new ones.
- Remember: “It costs five times as much to find a new customer, than it does to keep your existing customers. It’s all about retention, not “acquisition” You need to concentrate on your loyal customer, to keep them coming back more often. Therefore, your marketing should be geared towards them not towards getting new customers.
- Try not to pass on all your higher costs to your customers, by reducing portions or raising prices, you should concentrate on your portion controls for both food and liquor, and also teaching the wait staff how to up sell. “Watch out for the pennies and the Dollars will take care of themselves”
- Teach your staff that great food is not the only thing that brings your customers in; they want great service and a great dining experience. It is up to you to train your staff to give outstanding service and give the customer that “Outstanding Experience” Learn the names of your guest, and greet and then thank them by their name.
- Be very carful when using coupons, they don’t bring back customers as you may think, in fact they may devalue your whole menu. You are much better off to offer something free, such as an appetizer or dessert. By offering something free, it gives the customer a great feeling that they feel very important and will appreciate it.
- One good way to boost your customer count is to offer special menus for the Kids, as the kids bring the parents.