Commonly Asked Questions
Why work with us?
Texas Restaurant Advisors focuses on the restaurant industry where we offer sell side, buy side, landlord and tenant representation. There are variables and details that other brokers do not ask that are second nature to our team. Why? Because we are owners too and understand your experiences.
Who are we?
Texas restaurant Advisors is the business brokerage side of the bigInk organization, led by President of Business Brokerage, Aaron Evans who started the company in 2019 after 22 years in the food service business. He joined Jeffrey Yarbrough’s bigInk commercial real estate firm in 2020, himself a fellow restauranteur.
What are your fees?
There are no upfront "listing fees", we believe our compensation should be on success. Some business brokers and restaurant websites charge retainers anywhere from $10,000 to $15,000 just to market your business. Our compensation is structured where there is an incentive to get a deal in place in as short a time frame as possible. Normal fees are 6% to 10% of the sale price or $5,000 whichever is greater for a successful transaction.
How much will my business sell for?
For restaurants, usually it's a multiple of seller’s discretionary cash flow or gross sales. For independent GOING CONCERN restaurants, the multiples range from 1 to 3 times and sometimes 4 times owner earnings. If a business is an asset sale, it's typically the fair market value of the assets or a multiple of gross sales which range from 15% to 35%. If there is real estate involved, that influences the sale price as well.
What keeps a restaurant from selling?
The most common factor is the sale price a seller desires is unrealistic based on profitability and accurate financial statements to support the price expectation. Other most common factors include owner involvement, geographic location, the landlord, owner time, lack of operating history and deferred maintenance issues. Unfortunately, only 20% of all businesses that are listed for sale in the Main Street Market (under $5 million in revenue) will actually sell.
What is a "going concern" business?
This is a restaurant that operates well and creates steady, historical earnings for the owners for at least 2 years. This type of business is purchased so the new owners can enjoy the same earnings and benefits. All furniture, fixtures equipment, goodwill, recipes and other intangible assets are included in this type of sale. There are earning multiples used to determine a probable sale price based on seller discretionary earnings (SDE) or the earnings before interest, depreciation, taxes and amortization (EBIDTA).
What is an "asset" sale?
These types of businesses new, losing money or showing little profit. These businesses are purchased by buyers who want to convert to another concept. This way, they save the time and expense of a full, new build out at another location. The most probable sale price for these types of business ARE based on the fair market value of the assets and improvements, a multiple of gross sales OR THE PRICE THE BUYER AND SELLER ULTIMATELY AGREE TOO.
What documents do we need to gather to start the process?
The most critical are accurate, professionally prepared financial statements. Most buyers will not trust owner prepared excel spreadsheets and other documents unless they can match with tax returns.
Two or three years of profit and loss statements and/or trailing 12-month profit and loss statement and most current balance sheet.
Any “off-balance sheet” items that bring value such as trademarks, intellectual property, copyrights, etc.
Approximate saleable inventory value (food, alcohol and custom packaging and merchandise) to include or exclude from a deal.
Furniture, fixture and equipment (FFE) list including condition. Lenders will require serial numbers in some cases.
The current lease and all addendums (most landlords have assignment clauses and requirements)
List of any liens, loans or leases that the business has against it.
Franchise disclosure document (if applicable and authorized to share)
Personal, owner benefits that are expensed through the business. (Often called seller’s discretionary expenses).
