Selling a restaurant can be tricky business. Customers can often interpret news that a premises is for sale as a sign that something is awry; it is a small industry and rumours can easily damage trade. If the reason for the sale is that declining turnover is leaving your overheads as a liability, this can compound the issue.
The first step is to decide the reason for the sale and be honest with yourself, otherwise this will be apparent to buyers. The main reasons for sale are usually retirement or a change in life circumstance; that the business has become a liability; or due to exhaustion in a tiring non-stop service industry.
The next step is to seek advice from a specialist restaurant property agent, whose advice should be discreet, professional and free. Do some research and don't be afraid to question the agent on their credentials. Choosing who to handle the sale is vital as there can be a number of pitfalls from staff finding out about onerous lease conditions that may put off purchasers.
The reason for the sale will impact the way the restaurant will be marketed, and it will also have a bearing on what you can expect to achieve from a sale. If the business is not profitable, usually the most you can expect is a deal that will release you from your liabilities. If the restaurant is profitable in a good location with a number of positive points such as a late premises licence, outside seating, owner's or manager's accommodation, and a modern fit out, then there may be the opportunity to achieve a premium.
Depending upon the reason for the sale and your agent's advice, there are a number of options. If the site is in demand a good agent should be able to "place" the opportunity to potential buyers over the telephone. This creates the least disruption to the business and ensures that your time involvement and costs are kept down.
Realistically the process of finding a buyer may take anything from three weeks to six months. The process of completing the legal work depends on the complication of the lease and the demands of the landlord and is sometimes out of your control - it would usually take 6-12 weeks if all three sets of solicitors are efficient and the landlord is able to grant the assignment quickly. It is vital to keep your attention on the business until completion of the sale as purchasers can pull out even after exchange, although this is rare.
One of the things that owners do not realise is that the price achieved is determined by the market, not the value of the business on the books from an investment point of view or necessarily a factor of the profit that you are making. Investment in the business should have been written off over the years you are trading and new owners will most likely be reinvesting in the site. Potential purchasers may not take the view that turnover today will necessarily mean that the turnover will be there tomorrow.
Rob Meadows, Davis Coffer Lyons
Five steps to selling a site
1 Don't tell anyone initially and prepare your premises for sale. Ensure that the place is in tip-top condition from the accounts to the paintwork.
2 Collect information. The lease, licence documentation, fire certificates, accounts, etc.
3 Consult a specialist restaurant agent who will be able to advise you on the lease provisions relevant to a sale and the best course of action from a market demand perspective. This advice should be free and confidential.
4 Discuss things with your solicitor and accountant. They will make you aware of all implications from "TUPE" issues to tax and VAT obligations.
5 Begin the marketing process with your agent. They should be able to perform a large number of suitable marketing initiatives.