Bars are a unique business. I'm not talking about clubs or flashy places where the young hang. I'm talking about that special place which is both a watering hole as well as a psychological therapy hang out for the locals that are 21+.
These are rare to find being sold and when they do come on the market, they usually don't last long and they sell for a higher multiple than the standard restaurant and bar. Why?
First, there usually is one product being served - Alcohol! That makes doing inventory easy. That makes cost control easier than a full restaurant. It is easy to know the ounces in a bottle and the price being charge per ounce. These are relatively easier businesses to operate.
Second, the clientele tend to be loyal. People like to hang out with people they know and a neighborhood bar is the best place to do that.
Finally, there tends to be more cash involved in these businesses, making them more attractive to buyers.
I often see these business selling for between 2.5 and 3.0 times cash flow depending on how strong the numbers are, the condition of the bar, the growth of the area, and if a lease is involved the strength of the lease in terms of time remaining and the rent factor. clearly the strong on each point will demand a higher multiple.
Mel Jones is one of the premier restaurant brokers in the nation having published hundreds of articles on buying and selling a restaurant and bar business, selling thousands of restaurants in CA., WA and AZ and building one of the most copied business models in the brokerage industry. Mel started SellingRestaurants in 2004 with the one simple concept, give the buyers the information they need to make intelligent buying decisions without being pestered by a broker or hiding information, prepare the business for market by researching key details that make or break deals and educate the buyer on the buying process to create an intelligent buyer. Prior to SellingRestaurants, Mel was a Chief Financial Officer for Universal Music Group, the largest music company in the world. There he participated in more than $11.5 billion of merger and acquisition transactions. He also work for top companies such as Nestle Foods, USA. He hold a Bachelors in Business Administration Finance as well as attened Law School at Gonzaga University. Give Mel a call at 480.274.7000 or e-mail him at [email protected] if you have any questions.