Buying a restaurant is a math problem with a right and wrong answer. If your broker can’t answer these questions about how much to pay for Atlanta restaurants for sale, find another one.
There are three methods of establishing valuation of Atlanta restaurants for sale used in the industry. An expert Atlanta restaurant broker should be familiar with all three though the Income Valuation Method is the most favorable and trusted method used to value Atlanta restaurants for sale. In the days of lending for Atlanta restaurants, it was the method used to secure financing on a business. If the restaurant had solid profits, and under normal economic conditions, it's likely a buyer could purchase the Atlanta restaurant for sale with 20% down and obtain an SBA secured or other type business loan. At some point those lending scenarios will return. Until then, it still provides the most acceptable method of valuation for banks, lenders and individuals in assessing how much to pay for a restaurant. In a situation where an Atlanta restaurant buyer is paying cash, this helps to reduce fear of the transaction as the business has a proven track record.
An Atlanta restaurant for sale with strong books and records, assessed under the Income Valuation Method has the highest number of potential buyers and hence commands the highest possible price. An expert Atlanta restaurant broker can go through the Profit and Loss statement along with tax returns to find the Seller’s Discretionary Earnings (SDE) or owner benefit that is customarily accepted by lenders to value the business. This includes net income PLUS reasonable and customary add-backs.
What is not allowable for “add-back” purposes are efficiencies a new owner could potentially achieve that the current operator hasn’t. It should factor in your decision to buy but should not be calculated in the pricing of any Atlanta restaurant for sale. The entire purpose of the add backs is to calculate owner benefit and ultimately pricing of the business. If you can identify strategies to be more successful in the future than the current owner, that benefit belongs to you as a buyer, not to the seller in the pricing of the business.
Once the Seller’s Discretionary Earnings is appropriately determined, then it becomes the basis for a “multiple” for pricing Atlanta restaurants for sale. Every buyer wants the answer to the question, “What’s the multiple for restaurant pricing?” and the response rarely satisfies anyone. In general, Atlanta restaurants for sale can be offered and sold somewhere between 1.70 and 2.75 times earnings, with market factors adjusting this up or down. For purposes of this article, we are limiting our discussion to single restaurant units. Multi-unit sales (anything above two, especially franchise) changes the multiple significantly and requires a whole different analysis and pricing model.
“How much to pay for an Atlanta restaurant for sale? ” can be affected by any of the following variables including: strength of books and records, saturation of concepts in the marketplace, seasonality, location, comparable Sales Information or “comps,” franchise or independent offering, geography and competition.
Strong brokers that know the Atlanta market and should be able to share exactly where a restaurant is priced based on the multiple and why. Ask some questions of your broker to be certain they fully understand restaurant pricing. If you’re not satisfied with the response, find an expert Atlanta restaurant broker to help you buy a restaurant.
Robin Gagnon is Atlanta Restaurant Broker and Vice President of We Sell Restaurants and wesellrestaurants.com . Robin holds an MBA in Finance. She frequently writes on the topics of restaurants sales, restaurant valuation and financial topics surrounding the buying and selling of restaurants, bars and clubs. She previously served as Vice President of Strategic Marketing for Macy’s South, a $4 billion dollar retail division. Robin has served for more than a decade as a member of the ASU Business Advisory Council. She is also a founding member of the ASU Entrepreneurship Board. Robin is a licensed real estate salesperson in both Georgia and Florida. Robin is a weekly contributor to the Atlanta radio show "Dishing with Donna" where she and Eric host a segment on the restaurant and business brokerage industry.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
Showing posts with label sell a bar. Show all posts
Showing posts with label sell a bar. Show all posts
Tuesday, March 30, 2010
Things Every Bar Owner Should Know About How to Sell My Bar in Atlanta, GA
There’s more than one way to sell a bar in Atlanta. Some bar owners have learned the hard way it’s a job best left to expert restaurant brokers.
In trying to sell a bar in Atlanta there are a few categories of listing agents that should be avoided. The current economic downturn, coupled with the hit to the housing market has led to less specialized agents attempting to enter the restaurant brokerage field. This can be dangerous for the Atlanta bar owner looking to sell. Here are a few categories of representation the seller of an Atlanta bar may want to avoid.
At all costs avoid residential real estate agents. If an agent focuses on houses rather than commercial transactions they will not have the skill to sell your bar. It’s not unusual to encounter a family member or acquaintance who wants your business. This is not a good decision for a seller, much less a buyer and here’s why. First, a valid Georgia real estate license does not prepare any agent for restaurant brokerage it only licenses them to transact real property. Residential real estate agents do not have the education, background or experience to properly value or sell a restaurant. They do not have the skill to perform a financial business valuation or pre-qualify anything other than a real property purchase. Lastly, they don’t have the ability to confidentially market since they are involved in public, not private listing. For those reasons, it’s best to avoid doing your nephew Bob a favor and allow him to sell your bar.
Another type of agent that you should steer clear of is a commercial agent. This type of agent will have financial skills and more commercial expertise than a residential agent but they are still a beginner when it comes to restaurant brokerage. CAP rates, land value, investment properties and ground leases are part of his or her standard skills. Buyer pre-qualification, liquor licenses, and confidential listings are now. They will also struggle with getting your bar for sale into the normal advertising stream for businesses for sale since they deal in a different arena. Lastly, they deal with public, not private listings so their expertise to write a compelling ad masking the identity of your Atlanta bar for sale while driving traffic will be limited.
The best choice is obviously a qualified Atlanta restaurant broker but you may also be approached by a general business broker. A general broker lists everything from manufacturing facilities to a day care. Often these are good brokers but they are all things to all people. They do not have a database of buyers focused on restaurants for sale. Though he has access to comps and financial information, he won’t specialize so he may be learning the financial parameters of an Atlanta pub for sale (like yours) on the job.
Lastly, he won’t know what bars and clubs are selling and be able to price instantly based on his knowledge.
Ultimately, it’s the expert Atlanta restaurant broker that can get you to the closing table. His specialized knowledge and skills are a perfect match to your desire to sell your Atlanta bar. He’s experienced the intricacies of liquor licensing, state sales tax authorities and all other elements particular to selling your bar many times before. You don’t want your broker stuck in “dial 1 for payoffs and dial 2 for notices” at the eleventh hour before closing when you can’t transfer a liquor license. His knowledge, skills and experience are exactly what every bar owner deserves access to when you are selling your Atlanta bar.
Ignore the requests to list your bar with anyone other an expert Atlanta restaurant broker and you’ll see the bar sell quickly, at the best pricing and with the fewest issues on the way to closing.
Robin Gagnon is Atlanta Restaurant Broker and Vice President of We Sell Restaurants and wesellrestaurants.com . Robin holds an MBA in Finance. She frequently writes on the topics of restaurants sales, restaurant valuation and financial topics surrounding the buying and selling of restaurants, bars and clubs. She previously served as Vice President of Strategic Marketing for Macy’s South, a $4 billion dollar retail division. Robin has served for more than a decade as a member of the ASU Business Advisory Council. She is also a founding member of the ASU Entrepreneurship Board. Robin is a licensed real estate salesperson in both Georgia and Florida. She is a member of the Business Brokers of Florida. Robin is a weekly contributor to the Atlanta radio show "Dishing with Donna" where she and Eric host a segment on the restaurant and business brokerage industry.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
In trying to sell a bar in Atlanta there are a few categories of listing agents that should be avoided. The current economic downturn, coupled with the hit to the housing market has led to less specialized agents attempting to enter the restaurant brokerage field. This can be dangerous for the Atlanta bar owner looking to sell. Here are a few categories of representation the seller of an Atlanta bar may want to avoid.
At all costs avoid residential real estate agents. If an agent focuses on houses rather than commercial transactions they will not have the skill to sell your bar. It’s not unusual to encounter a family member or acquaintance who wants your business. This is not a good decision for a seller, much less a buyer and here’s why. First, a valid Georgia real estate license does not prepare any agent for restaurant brokerage it only licenses them to transact real property. Residential real estate agents do not have the education, background or experience to properly value or sell a restaurant. They do not have the skill to perform a financial business valuation or pre-qualify anything other than a real property purchase. Lastly, they don’t have the ability to confidentially market since they are involved in public, not private listing. For those reasons, it’s best to avoid doing your nephew Bob a favor and allow him to sell your bar.
Another type of agent that you should steer clear of is a commercial agent. This type of agent will have financial skills and more commercial expertise than a residential agent but they are still a beginner when it comes to restaurant brokerage. CAP rates, land value, investment properties and ground leases are part of his or her standard skills. Buyer pre-qualification, liquor licenses, and confidential listings are now. They will also struggle with getting your bar for sale into the normal advertising stream for businesses for sale since they deal in a different arena. Lastly, they deal with public, not private listings so their expertise to write a compelling ad masking the identity of your Atlanta bar for sale while driving traffic will be limited.
The best choice is obviously a qualified Atlanta restaurant broker but you may also be approached by a general business broker. A general broker lists everything from manufacturing facilities to a day care. Often these are good brokers but they are all things to all people. They do not have a database of buyers focused on restaurants for sale. Though he has access to comps and financial information, he won’t specialize so he may be learning the financial parameters of an Atlanta pub for sale (like yours) on the job.
Lastly, he won’t know what bars and clubs are selling and be able to price instantly based on his knowledge.
Ultimately, it’s the expert Atlanta restaurant broker that can get you to the closing table. His specialized knowledge and skills are a perfect match to your desire to sell your Atlanta bar. He’s experienced the intricacies of liquor licensing, state sales tax authorities and all other elements particular to selling your bar many times before. You don’t want your broker stuck in “dial 1 for payoffs and dial 2 for notices” at the eleventh hour before closing when you can’t transfer a liquor license. His knowledge, skills and experience are exactly what every bar owner deserves access to when you are selling your Atlanta bar.
Ignore the requests to list your bar with anyone other an expert Atlanta restaurant broker and you’ll see the bar sell quickly, at the best pricing and with the fewest issues on the way to closing.
Robin Gagnon is Atlanta Restaurant Broker and Vice President of We Sell Restaurants and wesellrestaurants.com . Robin holds an MBA in Finance. She frequently writes on the topics of restaurants sales, restaurant valuation and financial topics surrounding the buying and selling of restaurants, bars and clubs. She previously served as Vice President of Strategic Marketing for Macy’s South, a $4 billion dollar retail division. Robin has served for more than a decade as a member of the ASU Business Advisory Council. She is also a founding member of the ASU Entrepreneurship Board. Robin is a licensed real estate salesperson in both Georgia and Florida. She is a member of the Business Brokers of Florida. Robin is a weekly contributor to the Atlanta radio show "Dishing with Donna" where she and Eric host a segment on the restaurant and business brokerage industry.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
Things You Should Get Ready If You’re Leasing an Atlanta Restaurant
Remember the Boy Scout motto and be prepared if you want the best Atlanta restaurant space for lease.
For a new restaurant owner, few things are more intimidating than facing a landlord with a prime Atlanta restaurant for lease if you don’t have expert help from a restaurant broker. If you want to be first in line to receive the space there are definite ways to package your restaurant and yourself to cast the winning bid. First and foremost, don’t try to negotiate first and introduce yourself second. A landlord wants to know who you are before he opens up discussions on terms.
Developers want to see certain items each and every time before they consider a new tenant on an Atlanta restaurant for lease. If you arm yourself with these materials at the outset, your presentation and completeness will leave competitors for the space by the wayside. Instead of dragging pieces and parts together a little at a time, tie everything together in one presentation for the landlord and your application is the one he will focus on. That’s very important in large restaurant areas like Atlanta where competition for space is fierce. Don’t make the rookie mistake of requesting a meeting before you present your materials. Your package is your introduction and the only thing the landlord cares about. He’ll meet after the fact and not before.
Successful Atlanta restaurant brokers have already cemented deals in the past with most developers and will use these relationships to improve your likelihood of winning the restaurant lease. That’s important since the Atlanta restaurant broker is representing you to the landlord. He’ll communicat with him about your restaurant and experience. When a landlord considers multiple offers, experience and relationships matter. The largest landlords in metro areas have in-house teams that check credit and perform background reviews but they still pick up the phone can call the expert Atlanta restaurant brokers for input.
A presentation that is missing key elements or the demand for an early meeting may railroad you with the landlord early in the game. It can indicate inexperience on the part of the broker or proposed tenant and find your application pushed back. This is especially true for REITS or large organizations while the smaller landlord is much more accommodating. Your expert Atlanta restaurant broker should have a good idea of where they landlord you’re inquiring about falls in the mix.
Your package must lead with a statement of net work or personal financial statement. This should be up to date with the latest information. Pull your own credit so you have an idea of what a landlord will see because they will do this too. Tax returns round out the initial list of financial requirements. This financial snapshot will tell a landlord if you pay your bills, if you have money to run the business and if you have assets on hand to secure his risk. Landlords will want credit checks so be prepared to give them approval to pull your credit. The least important elements to the landlord for Atlanta restaurants for lease is the menu and business plan, generally the most important to you.
Once the landlord has met you on financial terms and learned a bit about your business, deliberations on the lease begin. The more powerful your initial package, the more influence you’ll have over the outcome of the negotiations. This is where the advice of your Atlanta restaurant broker pays off since your package will win you the strongest position in discussions. Don’t panic if you credit or cash position is less than stellar. Overcoming credit risk should be no problem with the recommendations of an expert Atlanta restaurant broker familiar with lease negotiations.
Eric Gagnon is a designated industry expert in Restaurant Leasing, Restaurant Sales and Restaurant Business Brokerage. He is a frequent writer and speaker on the topic of restaurant sales and restaurant valuation. He is the president of We Sell Restaurants and wesellrestaurants.com an online resource for buying and selling restaurants in Atlanta, Georgia and across the southeast.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
For a new restaurant owner, few things are more intimidating than facing a landlord with a prime Atlanta restaurant for lease if you don’t have expert help from a restaurant broker. If you want to be first in line to receive the space there are definite ways to package your restaurant and yourself to cast the winning bid. First and foremost, don’t try to negotiate first and introduce yourself second. A landlord wants to know who you are before he opens up discussions on terms.
Developers want to see certain items each and every time before they consider a new tenant on an Atlanta restaurant for lease. If you arm yourself with these materials at the outset, your presentation and completeness will leave competitors for the space by the wayside. Instead of dragging pieces and parts together a little at a time, tie everything together in one presentation for the landlord and your application is the one he will focus on. That’s very important in large restaurant areas like Atlanta where competition for space is fierce. Don’t make the rookie mistake of requesting a meeting before you present your materials. Your package is your introduction and the only thing the landlord cares about. He’ll meet after the fact and not before.
Successful Atlanta restaurant brokers have already cemented deals in the past with most developers and will use these relationships to improve your likelihood of winning the restaurant lease. That’s important since the Atlanta restaurant broker is representing you to the landlord. He’ll communicat with him about your restaurant and experience. When a landlord considers multiple offers, experience and relationships matter. The largest landlords in metro areas have in-house teams that check credit and perform background reviews but they still pick up the phone can call the expert Atlanta restaurant brokers for input.
A presentation that is missing key elements or the demand for an early meeting may railroad you with the landlord early in the game. It can indicate inexperience on the part of the broker or proposed tenant and find your application pushed back. This is especially true for REITS or large organizations while the smaller landlord is much more accommodating. Your expert Atlanta restaurant broker should have a good idea of where they landlord you’re inquiring about falls in the mix.
Your package must lead with a statement of net work or personal financial statement. This should be up to date with the latest information. Pull your own credit so you have an idea of what a landlord will see because they will do this too. Tax returns round out the initial list of financial requirements. This financial snapshot will tell a landlord if you pay your bills, if you have money to run the business and if you have assets on hand to secure his risk. Landlords will want credit checks so be prepared to give them approval to pull your credit. The least important elements to the landlord for Atlanta restaurants for lease is the menu and business plan, generally the most important to you.
Once the landlord has met you on financial terms and learned a bit about your business, deliberations on the lease begin. The more powerful your initial package, the more influence you’ll have over the outcome of the negotiations. This is where the advice of your Atlanta restaurant broker pays off since your package will win you the strongest position in discussions. Don’t panic if you credit or cash position is less than stellar. Overcoming credit risk should be no problem with the recommendations of an expert Atlanta restaurant broker familiar with lease negotiations.
Eric Gagnon is a designated industry expert in Restaurant Leasing, Restaurant Sales and Restaurant Business Brokerage. He is a frequent writer and speaker on the topic of restaurant sales and restaurant valuation. He is the president of We Sell Restaurants and wesellrestaurants.com an online resource for buying and selling restaurants in Atlanta, Georgia and across the southeast.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
Things to Consider When Hiring an Atlanta Restaurant Broker Who Knows How to Sell a Bar
The five questions establish the difference between an expert and a novice when it comes to placing your Atlanta bar or restaurant for sale.
If you want to know the most important person in the transaction when you are trying to sell your Atlanta bar, the answer is simple. The Atlanta restaurant broker serves as the quarterback for pricing, valuation, documentation, packaging, managing and closing the transaction. From start to finish, his skills as a business intermediary sets the tone to bring your Atlanta bar onto the market and ultimately to the closing table. His efforts keep you focused on what you do best – running a bar or club while he works on getting the right price for your Atlanta bar. Any restaurant broker you are considering should be able to instantly respond to these five questions to insure you are weeding out the experienced from the trainee.
Job one of any restaurant broker is pricing so probe to find out “how much is my bar worth?” Getting the highest price is your priority and a broker must be able to substantiate the pricing to potential buyers for your club or restaurant. Make sure your broker is educated and open about pricing models and value strategies. If he can’t tell you the multiple for pricing based on the Atlanta market, he may not have the experience to sell your business. Restaurant brokers have a combination of experience and education that should culminate in valuation analysis. Ask him or her to explain what the Income Valuation model for pricing is and how it will be used for pricing your bar for sale. If he can’t explain pricing to you, how will he establish value with a buyer? If he asks you to give him the price you want for the business, you’re probably done with this beginner. Allowing the seller to price the business is the approach of a neophyte and probably signals he doesn’t have the true experience to tell you how much your Atlanta bar is worth.
Ask your prospective Atlanta restaurant broker exactly how many restaurants he has personally sold in the past six months. If he begins spouting off statistics of restaurants listed, once again, you may have a beginner on your hands. At the end of the day, restaurants sold in Atlanta are the key number to focus on since anyone can list a restaurant for sale at any price. It takes experience and knowledge to get ot the closing table and that’s what you want when you sell your bar.
As any Atlanta restaurant broker you interview whether he shares commission with other brokers and co-brokers. The Atlanta market has a pool of buyers all working with other brokers. Some are restaurant brokers. Some are residential agents while others are general business brokers. If a broker isn’t willing to work with all of them, your chance of selling is dramatically reduced. You go from an army of thousands selling your business (still limited by confidentiality agreement) to the one guy standing in front of you. It’s impossible to have all the buyers and you don’t want to eliminate this important pool.
Any Atlanta restaurant broker should also answer the question, what do you need from me to value my business for sale? A bar or club for sale can only be valued on an income valuation method if you allow access to your books and records (P&L, Tax Returns, Lease and more). He will also ask for a list of physical assets that will transfer (kitchen equipment and so on). If you aren’t asked to prepare these materials for immediate review by a competent broker or if he has to take them back to the office for someone else to set pricing, once again you might be dealing with an apprentice. There’s no harm in that but may not be who you want to sell your Atlanta bar.
Every bar owner deserves to know the cost to sell their business. The services of an expert restaurant broker are not cheap but they are based on results. Expect to fairly compensate a broker who shows he can get the job done with commission at closing and not before. Ask what you receive in terms of service before the sale is consummated. Does he have a system to issue reports on listing activity? Will he contact you weekly with updates on your listing? Getting the listing is easier than servicing the listing so depending on your information requirements, a restaurant broker who lists and runs may not be the broker for you. You should also ask about minimum fees. A broker that doesn’t charge a minimum may feel pressured to keep a listing overpriced since his commission is set by the value. Over priced listings don’t sell and you get one chance to make that entry into the Atlanta market as a new bar for sale. occur when the market is shifting by season or activity.
Hold any restaurant broker you are considering in Atlanta responsible for answering these questions and you’ll quickly separate the beginner from the real talent. The broker is the most important element in selling your Atlanta bar so conduct your interview and choose carefully. Then your Atlanta bar will sell for the most money in the shortest time.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
If you want to know the most important person in the transaction when you are trying to sell your Atlanta bar, the answer is simple. The Atlanta restaurant broker serves as the quarterback for pricing, valuation, documentation, packaging, managing and closing the transaction. From start to finish, his skills as a business intermediary sets the tone to bring your Atlanta bar onto the market and ultimately to the closing table. His efforts keep you focused on what you do best – running a bar or club while he works on getting the right price for your Atlanta bar. Any restaurant broker you are considering should be able to instantly respond to these five questions to insure you are weeding out the experienced from the trainee.
Job one of any restaurant broker is pricing so probe to find out “how much is my bar worth?” Getting the highest price is your priority and a broker must be able to substantiate the pricing to potential buyers for your club or restaurant. Make sure your broker is educated and open about pricing models and value strategies. If he can’t tell you the multiple for pricing based on the Atlanta market, he may not have the experience to sell your business. Restaurant brokers have a combination of experience and education that should culminate in valuation analysis. Ask him or her to explain what the Income Valuation model for pricing is and how it will be used for pricing your bar for sale. If he can’t explain pricing to you, how will he establish value with a buyer? If he asks you to give him the price you want for the business, you’re probably done with this beginner. Allowing the seller to price the business is the approach of a neophyte and probably signals he doesn’t have the true experience to tell you how much your Atlanta bar is worth.
Ask your prospective Atlanta restaurant broker exactly how many restaurants he has personally sold in the past six months. If he begins spouting off statistics of restaurants listed, once again, you may have a beginner on your hands. At the end of the day, restaurants sold in Atlanta are the key number to focus on since anyone can list a restaurant for sale at any price. It takes experience and knowledge to get ot the closing table and that’s what you want when you sell your bar.
As any Atlanta restaurant broker you interview whether he shares commission with other brokers and co-brokers. The Atlanta market has a pool of buyers all working with other brokers. Some are restaurant brokers. Some are residential agents while others are general business brokers. If a broker isn’t willing to work with all of them, your chance of selling is dramatically reduced. You go from an army of thousands selling your business (still limited by confidentiality agreement) to the one guy standing in front of you. It’s impossible to have all the buyers and you don’t want to eliminate this important pool.
Any Atlanta restaurant broker should also answer the question, what do you need from me to value my business for sale? A bar or club for sale can only be valued on an income valuation method if you allow access to your books and records (P&L, Tax Returns, Lease and more). He will also ask for a list of physical assets that will transfer (kitchen equipment and so on). If you aren’t asked to prepare these materials for immediate review by a competent broker or if he has to take them back to the office for someone else to set pricing, once again you might be dealing with an apprentice. There’s no harm in that but may not be who you want to sell your Atlanta bar.
Every bar owner deserves to know the cost to sell their business. The services of an expert restaurant broker are not cheap but they are based on results. Expect to fairly compensate a broker who shows he can get the job done with commission at closing and not before. Ask what you receive in terms of service before the sale is consummated. Does he have a system to issue reports on listing activity? Will he contact you weekly with updates on your listing? Getting the listing is easier than servicing the listing so depending on your information requirements, a restaurant broker who lists and runs may not be the broker for you. You should also ask about minimum fees. A broker that doesn’t charge a minimum may feel pressured to keep a listing overpriced since his commission is set by the value. Over priced listings don’t sell and you get one chance to make that entry into the Atlanta market as a new bar for sale. occur when the market is shifting by season or activity.
Hold any restaurant broker you are considering in Atlanta responsible for answering these questions and you’ll quickly separate the beginner from the real talent. The broker is the most important element in selling your Atlanta bar so conduct your interview and choose carefully. Then your Atlanta bar will sell for the most money in the shortest time.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
Tips on Leasing a Restaurant in Atlanta Georgia –What Landlords Expect From a Tenant
You can get great deals on Atlanta restaurants for lease as long as you take the time to assemble a package with the help of an expert restaurant broker.
Leasing property in a major market like Atlanta, Georgia can be a daunting task for the inexperienced restaurant owner. Here’s everything you need to know to present your offer in a way to get serious consideration from landlords who see multiple submissions for the best space. Start and end your negotiations with the landlord on the best foot by treating this as a serious business deal.
Lending covenants or other restrictions on landlords often dictate the mandatory materials he needs to consider any new tenant. This can be for a new lease or even a transfer of an existing one. By understanding the requirements early in the game and presenting a well organized and complete package, your application moves to the top of the list, important in competitive bidding major markets like Atlanta. Once the landlord has a package, he will meet with the proposed tenant and generally not before. The best spaces move quickly and often Atlanta restaurant brokers have relationships with landlords that give them the first look at new restaurants for lease in the market.
Using a restaurant broker that has established a rapport with the landlord increases your chance of success. Since the landlord isn’t meeting directly with you as the tenant, he’s relying on the expertise of the Atlanta restaurant broker to communicate information about your concept and you personally. That’s important when the developer is weighing multiple offers or considering tenants that do not have as strong a credit position. Locations that are in demand like most Atlanta restaurants for lease are typically managed by firms who are very experienced in conducting background reviews and credit quality reviews on would-be tenants.
You can indicate a lack of sophistication or inexperience on the part of your broker if your package is incomplete or missing elements. For big landlords, this can be a deal breaker when there are competing packages though less established or single unit operators are more forgiving. Anyone leasing an Atlanta restaurant should get a full list of requirements from the broker.
Be prepared to produce any or all of the following items. The most important item is your financial statement. This should be accurate and dated within the last 30 days. Landlords will want credit checks so be prepared to give them approval to pull your credit. Often they will want two years of federal income tax returns. Most of this is a required need to have not a nice to have. The landlord is looking for three things: cash on hand to operate, assets sufficient to secure the lease and history of paying bills on time. In addition, they want to understand how you will operate in their restaurant for lease so provide a copy of your menu and outline of your business.
The actual discussions on lease terms begin after the full package is submitted. If you have a powerful package and strong financial results you’ll have more negotiating room in the lease terms. If there are lots of people vying for the same space and your Atlanta restaurant brokers submits the best package on your behalf, you’ll win out. Weak credit or insufficient cash positions can be overcome in multiple ways. A strong Atlanta restaurant broker can offer you suggestions to overcome or secure the landlord’s risk on these elements.
Eric Gagnon is a designated industry expert in Restaurant Leasing, Restaurant Sales and Restaurant Business Brokerage. He is a frequent writer and speaker on the topic of restaurant sales and restaurant valuation. He is the president of We Sell Restaurants and wesellrestaurants.com an online resource for buying and selling restaurants in Atlanta, Georgia and across the southeast.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
Leasing property in a major market like Atlanta, Georgia can be a daunting task for the inexperienced restaurant owner. Here’s everything you need to know to present your offer in a way to get serious consideration from landlords who see multiple submissions for the best space. Start and end your negotiations with the landlord on the best foot by treating this as a serious business deal.
Lending covenants or other restrictions on landlords often dictate the mandatory materials he needs to consider any new tenant. This can be for a new lease or even a transfer of an existing one. By understanding the requirements early in the game and presenting a well organized and complete package, your application moves to the top of the list, important in competitive bidding major markets like Atlanta. Once the landlord has a package, he will meet with the proposed tenant and generally not before. The best spaces move quickly and often Atlanta restaurant brokers have relationships with landlords that give them the first look at new restaurants for lease in the market.
Using a restaurant broker that has established a rapport with the landlord increases your chance of success. Since the landlord isn’t meeting directly with you as the tenant, he’s relying on the expertise of the Atlanta restaurant broker to communicate information about your concept and you personally. That’s important when the developer is weighing multiple offers or considering tenants that do not have as strong a credit position. Locations that are in demand like most Atlanta restaurants for lease are typically managed by firms who are very experienced in conducting background reviews and credit quality reviews on would-be tenants.
You can indicate a lack of sophistication or inexperience on the part of your broker if your package is incomplete or missing elements. For big landlords, this can be a deal breaker when there are competing packages though less established or single unit operators are more forgiving. Anyone leasing an Atlanta restaurant should get a full list of requirements from the broker.
Be prepared to produce any or all of the following items. The most important item is your financial statement. This should be accurate and dated within the last 30 days. Landlords will want credit checks so be prepared to give them approval to pull your credit. Often they will want two years of federal income tax returns. Most of this is a required need to have not a nice to have. The landlord is looking for three things: cash on hand to operate, assets sufficient to secure the lease and history of paying bills on time. In addition, they want to understand how you will operate in their restaurant for lease so provide a copy of your menu and outline of your business.
The actual discussions on lease terms begin after the full package is submitted. If you have a powerful package and strong financial results you’ll have more negotiating room in the lease terms. If there are lots of people vying for the same space and your Atlanta restaurant brokers submits the best package on your behalf, you’ll win out. Weak credit or insufficient cash positions can be overcome in multiple ways. A strong Atlanta restaurant broker can offer you suggestions to overcome or secure the landlord’s risk on these elements.
Eric Gagnon is a designated industry expert in Restaurant Leasing, Restaurant Sales and Restaurant Business Brokerage. He is a frequent writer and speaker on the topic of restaurant sales and restaurant valuation. He is the president of We Sell Restaurants and wesellrestaurants.com an online resource for buying and selling restaurants in Atlanta, Georgia and across the southeast.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
Caveat Emptor or Buyer Beware. What Every Buyer Should Know About How to Buy a Bar in Atlanta, Georgia.
You get what you pay for when you buy a bar in Atlanta. Read this article to make sure you’re paying the right price.
There’s a method to value a pub or bar based on earnings called the Income Valuation Method. Expert Atlanta restaurant brokers use this method to set pricings on listings and give sellers an idea of where their bar or restaurant will sell. It’s based on earnings plus usual and customary additions called “add backs.” Books and records are used to validate both sales and the profits. Issues come into play however when an owner takes money “under the table” and wants to value their bar or pub on that basis.
When Atlanta buyers for sports bars see something online described or promoted with earnings “to be proven” by the seller, it often means the income can’t be substantiated. Sellers of Atlanta bars are saying they do not disclose their full earnings to the taxing authorities. Very different from add backs which are confirmed through due diligence, “under the table” earnings are taken on faith. An expert Atlanta restaurant broker will have a difficult time performing a valuation on this type listing and some won’t accept or sell this type listing for several reasons.
Pricing cannot be established on the listing since the seller is not basing it on confirmed sales and earnings. Based on the books, the price will always be too high since earnings are understated. Also, as a buyer, you would have to continue functioning the same way or you’re looking at a distorted view of any earnings. Lastly, the seller has already received a benefit in the operation and is now attempting to get it in the pricing. Because the books and records are showing reduced federal and state income tax, he’s easily reduced his tax liability per year by thirty-five percent or so. The seller of the Atlanta bar or club is now attempting to be paid on these same earnings though they can’t be established with certainty.
One solution if you choose to buy such a business is to change the operations so the money’s on the books. However that would require recasting the profit and loss statement to account for taxes. The impact of this may reduce the earnings into a loss at that point.
For most risk adverse buyers for Atlanta bars there’s another problem. You’re dealing with a seller for an Atlanta pub that’s already admitted he’s been less than honest with the IRS, the Georgia Department of Revenue, and his accountant. Miraculously, he would like you to believe him now that he’s selling you his Atlanta bar. Unless you take a job in the bar for a period of several months, there’s no way to establish the real sales and profit.
Those who want certainty in the numbers and do not want to questions their decisions should avoid “under the table” or “to be proven” opportunities. They may seem like a good value but in the end, buyers for Atlanta pubs, clubs or bars who think it sounds too good to be true may learn the hard way that’s the case. Confirm all their earnings and add backs with records and the help of an Atlanta broker specializing in clubs and bars. An accurate portrayal of earnings can be laid out in short order for verifiable listings.
Robin Gagnon is Vice President and Director of Marketing for We Sell Restaurants and wesellrestaurants.com. She holds an MBA in finance and frequently writes on the topics of restaurant sales, restaurant valuation, and financial topics surround the buying and selling or restaurants, clubs or bars.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
There’s a method to value a pub or bar based on earnings called the Income Valuation Method. Expert Atlanta restaurant brokers use this method to set pricings on listings and give sellers an idea of where their bar or restaurant will sell. It’s based on earnings plus usual and customary additions called “add backs.” Books and records are used to validate both sales and the profits. Issues come into play however when an owner takes money “under the table” and wants to value their bar or pub on that basis.
When Atlanta buyers for sports bars see something online described or promoted with earnings “to be proven” by the seller, it often means the income can’t be substantiated. Sellers of Atlanta bars are saying they do not disclose their full earnings to the taxing authorities. Very different from add backs which are confirmed through due diligence, “under the table” earnings are taken on faith. An expert Atlanta restaurant broker will have a difficult time performing a valuation on this type listing and some won’t accept or sell this type listing for several reasons.
Pricing cannot be established on the listing since the seller is not basing it on confirmed sales and earnings. Based on the books, the price will always be too high since earnings are understated. Also, as a buyer, you would have to continue functioning the same way or you’re looking at a distorted view of any earnings. Lastly, the seller has already received a benefit in the operation and is now attempting to get it in the pricing. Because the books and records are showing reduced federal and state income tax, he’s easily reduced his tax liability per year by thirty-five percent or so. The seller of the Atlanta bar or club is now attempting to be paid on these same earnings though they can’t be established with certainty.
One solution if you choose to buy such a business is to change the operations so the money’s on the books. However that would require recasting the profit and loss statement to account for taxes. The impact of this may reduce the earnings into a loss at that point.
For most risk adverse buyers for Atlanta bars there’s another problem. You’re dealing with a seller for an Atlanta pub that’s already admitted he’s been less than honest with the IRS, the Georgia Department of Revenue, and his accountant. Miraculously, he would like you to believe him now that he’s selling you his Atlanta bar. Unless you take a job in the bar for a period of several months, there’s no way to establish the real sales and profit.
Those who want certainty in the numbers and do not want to questions their decisions should avoid “under the table” or “to be proven” opportunities. They may seem like a good value but in the end, buyers for Atlanta pubs, clubs or bars who think it sounds too good to be true may learn the hard way that’s the case. Confirm all their earnings and add backs with records and the help of an Atlanta broker specializing in clubs and bars. An accurate portrayal of earnings can be laid out in short order for verifiable listings.
Robin Gagnon is Vice President and Director of Marketing for We Sell Restaurants and wesellrestaurants.com. She holds an MBA in finance and frequently writes on the topics of restaurant sales, restaurant valuation, and financial topics surround the buying and selling or restaurants, clubs or bars.
To learn more about buying or leasing Atlanta restaurants CLICK HERE
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