A seller might ask a business broker how long it takes to sell a restaurant. The truth is that selling a restaurant can often take time, sometimes between six months to a year. Each restaurant is unique with its own pros and cons that can affect the selling time. Sellers should understand that just because their restaurant does not sell within six months of working with a broker does not mean it will not sell later. A six month listing agreement is just the start and there may still be opportunities to find a buyer after that time. Patience is key in this process.
Major Factors That Affect the Sale Time
The four main things that impact how long it takes to selling a restaurant are price, profit, rent or lease and location.
Price: Before the 2008 financial crash, buying a restaurant was easier because getting loans was simple. In the early 2000s, a restaurant that used to cost $75,000 sold for $225,000 instead. Back then, buyers often paid 50% of the price upfront and borrowed the rest from the seller. But after the crash, many buyers started making all cash offers which pleased sellers. Today, we are seeing a return to older times where more sellers are willing to finance part of the sale. Now, there are fewer buyers who can pay more than $100,000 in cash. This change has made it tough for many people to buy restaurants compared to before the financial crash.
Profit: Profitability has always mattered but now buyers are more careful before making a purchase. They spend much more time doing due diligence which means closely checking financial records, observing the business and reviewing tax documents. Nowadays, when someone buys a restaurant, they are essentially buying a job and want to ensure it will support them and their families. It is crucial for the business to show clear, proven profits that match its selling price. This way, you can selling a restaurant well in the market. Buyers want to feel confident that their investment will pay off and provide a good income.
Rent: When talking to buyers about a restaurant, the rent is a big concern. If the rent is high, buyers want to see that the restaurant makes good sales and profits. Many buyers get nervous when they see high rents. If the monthly rent is less than 6% of sales, many buyers feel comfortable. When it goes up to around 8%, some still consider it. But once the rent hits 10%-12%, many buyers especially those who are new to the business start to walk away.
Another important factor is the lease and the landlord. If the landlord is easy to work with and an independent person, it can make the sale easier. But if the landlord is part of a big company and needs to get approval from people in another state, it can slow things down.
Also, buyers might want to know if they can take over the existing lease or if they need a new one with different terms. All these factors about the lease and how easily it can be transferred can either help with the sale or cause it to fall apart which makes it hard to selling a restaurant.
Location: The location of a business is very important because it is where the new owner will spend a lot of time. Buyers often think about whether a business is in a safe area or a wealthy beach town. Some business brokers do not give clear details in their ads so that they can talk to buyers more and sell a restaurant over the phone. For example, they might only mention the county where the business is located if it’s in a less attractive area. This strategy helps them get more calls from potential buyers. The more interest there is in the business, the more likely it is that someone will make an offer and buy it. Ultimately, buyers want to know if the location is good thus they can feel happy and secure with their new investment.
We offering this long established Pizza Restaurant located in central valley of Connecticut. This location has has been a pizzeria for over 30 years. Generations have come to have a slice and a pint in the dining room or get takeout or delivery through Slice.
The Seller’s Experience: From Timing to Financing
To sell a restaurant has unique challenges. Timing is important; listing during busy times can attract more buyers quickly while off-seasons might slow things down. If the buyer needs a loan, having current financial records is crucial. Delays from accountants can slow down the sale. If the seller offers financing, the process can move faster. However, due to higher interest rates, getting loans can take longer as lenders may require more money upfront. Sellers might also consider offering a small seller note to make the deal more attractive to lenders and speed up the process.
Conclusion
The time it takes to sell a restaurant can vary greatly. Factors like location, price, and market demand play important roles. Some restaurants sell quickly while others may take months or even years to find the right buyer. To make the process smoother, it is helpful to prepare your restaurant for sale and work with a broker who understands the market. By being patient and realistic with your expectations, you can increase your chances of a successful sale. Remember, every restaurant is unique thus take your time to find the best way to sell a restaurant effectively.
