Aug 21, 2012 Article #126 Author: By Mel Jones - President SellingRestaurants
In the past 8 years we've sold more than 500 restaurants and we run across all sorts of restaurant owners who are in trouble with their business. If you are missing rent payments and you have vendors pounding on your doors, and missing payroll, it is probably already too late for you to try to sell. But if you sense you're on the edge and about to default on the rent and stop paying vendors or not make payroll, then be smart about selling.
What do we mean by be smart. Too many restaurant owners in these hard economic cases can't swallow their pride and admit failure. They become belligerent about getting what they put into the business out or some number that is way above market. And in the end, they not only lose their investment because the price is too high, but they also have the state, feds, employees, landlords chasing them down. Not a good situation at all.
So if you’re in a tight situation, first tell us you are so we can price it accordingly. Second, talk to the landlord about what your doing to help him get paid and give him a timeline, even ask for a rent reduction…but you can expect to pay the reduction back during escrow. Third, clean-up the restaurant. All too often, cleanliness goes out the door when a restaurant gets in trouble. People notice and you can bet a buyer will notice. Fourth, work with your broker to have constant price reductions during the process to find the buyer. $5k here and there really does help move properties.
Remember, you made a big bet when you got into the business that you’d make money. If you did make money, then great you’ll be able to hopefully get your invest and more out of the business. But if you lost the bet, then expect to take a big loss on your investment. Don’t be foolish and try to hold-out for a high price. In the end, you’ll regret it!