Whether you're ready to sell your restaurant this year or just want to know your options someday, the value of your business is being built, or lost, right now.
In this episode of the Restaurant Rockstars podcast, host Roger talks with Robin Gagnon, co-founder and CEO of We Sell Restaurants, a restaurant brokerage that has helped owners buy and sell restaurants since 2004.
Robin explains how buyers and lenders decide what a restaurant is worth, starting with clean profit and loss statements (P&Ls) and the owner's true take-home, known as seller's discretionary earnings (SDE). She shares the everyday habits that raise a restaurant's value long before a sale, including written systems, menu costing, on-the-books payroll, regular maintenance and a lease you can transfer. For owners closer to the finish line, she covers what to expect in due diligence, how listings stay confidential, why the average sale takes about 190 days, and whether to sell the real estate or keep it and become the landlord.
What You'll Learn…
- Why your CPA should be your best friend, and why monthly or quarterly P&Ls matter years before a sale
- How add-backs work: "What goes away when you go away?"
- How to use AI to turn your recipes and know-how into written systems a buyer can run
- How menu costing raises profit, and value, today
- Why paying staff off the books can delay a sale by two to three years
- What to check in your lease now: assignability, options and renewal terms
If you're ready to sell:
- How restaurants are valued using comparable sales and multiples of sales and SDE
- What buyers check in due diligence, from sales tax filings and point-of-sale (POS) reports to deferred maintenance
- How long a restaurant sale takes, and how to keep it confidential
- When to sell the business but keep the building and become the landlord
- How long to stay on to train the new owner
Frequently Asked Questions
Q: What is my restaurant worth?
A: We Sell Restaurants values restaurants using comparable sales, including its own closed deals and the BizBuySell database, as a multiple of sales and of seller's discretionary earnings (SDE). The broker first recasts your P&L to add back expenses that leave with you, such as depreciation, loan interest and personal expenses paid by the business. Robin says about half of owners think their restaurant is worth more than the market will pay.
Q: How can I increase my restaurant's value before I sell?
A: Keep clean P&Ls at least quarterly, pay everyone on the books, write down your recipes and systems so the restaurant can run without you, cost out your menu, stay on top of maintenance and know the terms of your lease. Each one makes your numbers easier for a buyer and a lender to trust.
Q: How many years of financials do buyers want?
A: Buyers typically look at the past two years plus the current year, because that's what Small Business Administration (SBA) lenders review. With those records, Robin says financing is possible for any restaurant that is cash flow positive.
Q: How long does it take to sell a restaurant?
A: The average restaurant takes about 185 to 195 days from signing the listing agreement to closing. Robin suggests expecting a one-year listing agreement and three to six months to attract a buyer. Franchise approvals, landlord approvals and lease assignments take up much of the time.
Q: Should I tell my employees my restaurant is for sale?
A: It depends on your team and your community. Most We Sell Restaurants listings are confidential, and buyers sign a confidentiality agreement before seeing the restaurant. When you do tell your staff, Robin's advice is to do it with heart and give your employees dignity.
Q: Should I sell my restaurant with the real estate?
A: About 75 to 80% of restaurants sell without the real estate. If your building is worth more than the business can support, Robin often recommends selling the business and leasing the building to the buyer, which creates ongoing income and can be a good tax strategy.
About Robin Gagnon
Robin Gagnon is the co-founder and CEO of We Sell Restaurants, a restaurant brokerage founded in 2004 that represents restaurant sellers across the United States, with franchise offices in markets around the country. The company has about 1,750 restaurant listings, which Robin describes as the largest restaurant listing website in the nation. She is the co-author of "Appetite for Acquisition" (2012) and publishes a restaurant market report on the We Sell Restaurants website.
Connect with Robin Gagnon and We Sell Restaurants
Website: https://www.wesellrestaurants.com
Robin on LinkedIn: https://www.linkedin.com/in/robingagnonrestaurantbroker
We Sell Restaurants on LinkedIn: https://www.linkedin.com/company/wesellrestaurants/
We Sell Restaurants on Instagram: https://www.instagram.com/wesellrestaurants/
We Sell Restaurants on YouTube: https://www.youtube.com/wesellrestaurants
We Sell Restaurants on Facebook: https://www.facebook.com/WeSellRestaurants
Resources Mentioned
- Free restaurant valuation from We Sell Restaurants: https://www.wesellrestaurants.com
- We Sell Restaurants restaurant market report, at the top of wesellrestaurants.com
- "Appetite for Acquisition" by Robin Gagnon, including the chapter "The Landlord Is Not Your Friend"
- BizBuySell, the business-for-sale database used for comparable sales
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Have you ever thought about selling your restaurant? If so, there are so many details to consider. What's my restaurant worth? How long will it take to sell? What do I need to do to prepare and get my restaurant in shape to show the most value? Do I need my books in order and taxes filed? These are just a few of the questions we talk about in this episode.
I'm speaking with Robin Gagnon, the co-founder and CEO of WeSellRestaurants.com. She's approaching 25 years in business, so listen on
Welcome back, audience. Thanks for being here. This is a super relevant topic. It's all about selling restaurants. And with me today, Robin, welcome to the show
So glad to be back. Thanks so much for inviting me, Roger
Yeah, we had an excellent episode, but I think it's been a couple years now, and things have changed. Obviously, it was pre-pandemic when we spoke, but here we are again. So let's dive in. What should a restaurant owner do months in advance before they even think about selling their restaurant?
Absolutely. Yeah, so my best advice is make sure that your CPA is your best friend. Make sure that your numbers are tied down, you know exactly what you're doing. Not just sales, that's easy enough. That's just table stakes. We need profit and loss statements. We need to make sure that it's clean of any owner expenses and we need to make sure that we're representing what a new owner can get from the business.
Sometimes recur- referred to as owner benefit, sometimes referred to as seller's discretionary earnings. What's someone new gonna put in their pocket? So if you've been paying your car lease through the business, certainly allowable through the IRS, a good restaurant broker is gonna sit down, understand all those expenses.
But if your starting point is a mess, then we don't even have a place to begin. So make sure, and in today's day and age, it's so easy to get it done, make sure your P&Ls are up to snuff. Make sure you're doing them at least quarterly, if not monthly. But get those receipts out of the cigar box, out of the closet
The cigar box. So many restaurants need to have their finances dialed. That's really great advice. That sort of jumps ahead to the cash flow and the valuation issue here. So a CPA, probably most restaurant owners aren't financial experts. They're not CPAs. They're not tax pros, and all these things will affect taxes in the future and all of that. But in mine, I've sold several of my restaurants, and it was always about putting together a cash flow statement, which generally shows what the restaurant gives off in cash. And you're talking about add backs. Do the owners have special benefits? Is there a company car? Do they have personal expenses? All these things.
Some of these are realistic that a new buyer can assume, some of them maybe not. So I'm glad you mentioned that. It's really important to determine what can a new buyer decide I can take this or I don't have to take this, and that just adds to the cash flow of the business. So thank you so much for that. Let's talk about necessary systems, because a restaurant for sale is so much more valuable if it is dialed, if it doesn't necessarily require the owner to be on site. If it's all systemized, you got great management in place, you've got a great team in place. What are some of those systems that you've seen be really valuable to a prospective buyer?
I, and I will tell you, this is where there's all this conversation about how AI can help businesses. Roger, this is the way that AI can help a business owner. Take all that knowledge that you have, that institutional legacy knowledge, get it out of your head, and just dump it into AI and say, "Build this into recipes.
Tell me how many people it feeds." Get it so that, someone coming into the restaurant with their hands tied behind their back could read this and actually execute against the business model. And that's what we don't see too frequently. Franchises have that nailed down because that's a replicatable system that's shared from one person to another.
But there are absolutely great systems out there that can help an independent operator get there as well. And sometimes I think there's this fear, "If I write down Grandma's secret sauce, someone's gonna get ahold of it." No, Grandma's secret sauce, that's what they're buying. They need to understand what they is, what that is.
And then the other thing is to look at the profitability of your menu. Someone else is gonna come in and do that too, and your food supplier will help you do this. Understand, what does that plate cost? Are you portioning it properly? How much is protein? How much is all the different elements of the plate?
Because sometimes you don't price out a higher priced plate. You're concerned about offering that when, in fact, on a per plate basis, it's gonna deliver a greater margin to the restaurant than something that you think is your standby favorite. And you're, you're just spinning through it in the kitchen, but it's taking more labor and more time and more effort, and it's delivering two or three dollars a plate when something that's at a higher price point can deliver seven, eight, $9 in margin
Wow, I talk to owners and operators about this all the time, and so few restaurant owners are regularly costing their menus, as you mentioned. And what we find out most often, as you said, lower profit items take sales away from higher profit items. You might fill your seats, but obviously you're not printing money.
It's not going to the bottom line. You're wondering, "Why is my bank account not growing?" Because I'm not selling the most profitable items. You also mentioned portion controls. These are all critical systems. And the AI piece, wow, that goes without saying. AI is a somewhat challenging subject for a lot of operators.
There's so much intimidation around AI right now, but there are basics. You can have a basic ChatGPT, and you can just keep entering, like you said, enter information about your property and how it works and what your m- what your optimum schedule is every week and what your optimum sa- all this information.
The more you feed it, the more it learns about your business, and then if you can give that information to a potential buyer, wow, that's valuable. Super fantastic answers there. Thank you. Mistakes. I bet you, sellers make mistakes all the time. What are some typical mistakes that cost a seller money when they're going through this process?
And obviously you advise them against these things, but what have you seen, Robin?
So one of the biggest things is a- and we're seeing less and less of this, but paying employees off the books. If you're not paying that person on the books pardon me, paying the employment taxes, doing all of those things, you're misrepresenting the labor costs, and we have to adjust for that when we're talking to a new buyer.
And buyers are so sophisticated and so smart today. They have all the tools available to them as well, so they're gonna do the same thing with your restaurant. They're gonna throw the financials through AI and say, "No, you can't sur- you can't run a restaurant on 13% labor. It doesn't happen. It's not... It doesn't exist."
So y- understanding what are reasonable and customary margins, and then thinking that you're making more money than you are because you're paying it off the books is not a smart strategy. If you're doing it, then you can have a two to three-year window before you're able to sell, because you gotta bring that onto the books over time, and make sure you get yourself ready to be in a position to defend the numbers on that P&L
You triggered another thought. I've come across so many restaurants that spend their sales tax, and then at the end of the month, they don't have it to pay the state. And it's like, what a pitfall that is. These are some of the things you need to clean up, like you mentioned, to get your books in order.
Work with your CPA, make sure your books are as clean as possible, have no obligations, no red flags. If you wanna move your property, literally you need to eliminate the red flags and just show value everywhere. Let's talk about a typical due diligence process, and how do you prepare your clients to go through due diligence?
What do they need to get in order? And tell us about the process in general.
Well, thankfully, we've been doing this for over 20 years, Roger. And the old days of having to go and collect all this in person and make copies of it and go sit down with the buyer are done and over with. Now, due diligence is simply conducted electronically. We open up a Dropbox, and the materials that somebody wants to see can get moved in easily.
So you've got your financial due diligence, which is, matching revenue. Does your P&L match your sales tax filings? Does your sales tax filings match your year-end reporting? Does all of that match your POS system? So it's just a simple matching exercise there. And then the other side of due diligence is your physical inspection.
Do you have deferred maintenance? Are putting a piece of tape on the cooler to, stop a leak instead of getting the seals and gaskets repaired? Are you on a maintenance contract for your HVAC? Are you living on a prayer that it won't go out on Memorial Weekend? All those things are going to be part of what a buyer is going to ding you for during the due diligence.
So even if you arrive at a price for the business based on what the, what it's spinning out in cash, you're not gonna be able to save that during due diligence if there's a ton of deferred maintenance or other items that are going to hurt you. And the other thing that comes up in due diligence so frequently is our book Appetite for Acquisition, which came out in 2012, so it's getting old now, but I had a chapter in there called The Landlord Is Not Your Friend.
Just remember that before you ever think about selling, what's the situation with your lease? I talked with someone yesterday doing about $280,000 in sales, small little yogurt franchise, and the landlord wants to raise the rent. She's like, "It's the-- We'll have to do a new lease with the landlord." No assignment, no time left, and they want $6,000 a month base before CAMs, taxes, and insurance.
We're talking about $80,000 a year with 30% of sales. That-- The math does not math.
no.
You can't do it. And so understanding what is the position. So you need to do a little due diligence on yourself before you get into a due diligence situation with a buyer. And if you enter into someone who's experienced and knowledgeable and knows all this, they're going to ask up front, "Let me see the lease.
What are not only the current terms, what's the assignability, what are the options, and what do we have on the back end to renew, and are those defined?" All of those things not handled up front are gonna come back. They're big mistakes in the due diligence process
There are good landlords and leases and there are terrible landlords and leases. Do you see one more than the other? Is it a balance?
It's not a balance. I see terrible landlords. I hate to say that, but, landlords, part of it is that there's a supply and demand issue. I just wrote an article that's gonna be in Modern Restaurant magazine about space. There is no space. It's the lowest level of starting, of starts for commercial space w- in 2025 in history, right?
It's just no new space. So there's a supply and demand issue. So what happened is we had COVID, and landlords got a little gun-shy then. We came out of it, they got a little bit healthier and felt pretty good about things, and then we went into this high interest rate environment where no one's putting a shovel in the ground and building any new space.
So now the outcome of that, fast-forward five years later, and we're sitting out here with no space. So landlords are really pushing existing tenants out because they want new tenants in. They can raise their rates. Unfortunately, there's no room in the margins to do that.
Oh, not a great time to start a new restaurant and look for a lease.
But it's a great time to acquire an existing restaurant. And interestingly enough, I did a re- a report on everything that happened in the first six months of the year. Our most popular inquiries were for restaurants that aren't making any money today. Rob, why? Because a restaurant is a restaurant, right?
The infrastructure's there. They've got a hood, they've got a grease trap, they've got all the equipment. Just come in, change the concept, and somebody doesn't have to worry about permitting, they don't have to worry about building, they don't have to worry about impact fees, and they can acquire a lease with option terms on it that are often markedly better than going into a new lease situation.
So the hottest deal in town right now is the existing restaurant not making any money for a conversion.
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Interesting. That brings me back to my very first restaurant so long ago when I was looking for a lease. I ultimately owned the real estate on most of my restaurants, but I had to start. I had to walk before I could run. And I just remember there were four failed restaurants in the space that was the only space available in the town I started the restaurant, had four failed restaurants before I got there.
Had to overcome the stigma. It's like we have to create a dynamic concept. We have to offer amazing food, amazing service. Everything has to reverse everything people thought about this space before. Ultimately, we succeeded, but that's something that you have to think about when you're going into a space.
What was there before? Did it have a reputation? Was it good? Was it bad? All those things. So that gets into the goodwill. We're gonna talk about that in a few minutes. Let's go back to getting the house in order financially. You talked about P&Ls, you talked about obviously balanced books, CPA, all that sort of thing.
How many years of finances do you need? Is it still three years? Do buyers look beyond that point?
So buyers will typically look back two years, and then they'll want the current year. And the reason for that is pretty much that's what SBA lending looks at. They're looking at the past two years and then the current year performance and a current year balance sheet. And so with those items, we can get financing on any business that's cash flow positive.
Really to look back beyond that doesn't make a whole lot of sense, right? Because the SBA lenders are looking at the same thing we are. What's the most current situation of the business? What's the viability today? And then what can somebody do in the future to make more money?
Okay. Do many of your clients think that their restaurant is worth more than what's realistic or what you believe to be realistic? And how do you advise a client on a price? And you must have a very methodical process here, and it varies lease-- obviously with a leasehold versus real estate.
We'll get into that. But tell us, is that typical? Like everybody wants because, why not? I need to get as much as I can possibly get for this place. Do they ask you what's realistic or they just say, "I want $500,000 for my restaurant," or whatever the number is. What do you see?
So sometimes I would say it's about 50/50. Often they're coming to us because they absolutely want to get an expert opinion. And when we give them evaluation, we're basing it on comparable sales because we are literally selling more restaurants than anyone else in America, so we can give them those comps.
We also rely on comps from the BizBuySell database, so we know what rest- restaurants were trading at as a multiple of sales, as a multiple of SDE. We have all these calculations that go into it. So we're not giving them a theory, we're giving them l- hard math that says, "This is what the business is worth.
This is what similar properties have sold for. This is what you can expect." Now, we do have people that say "This is what I owe. This is what I need to get because this is what I owe." We can overcome that as well. We have a situation where we're closing in a couple of weeks on a, a large deal, and they actually owed more than the business was worth.
But you can make an offer and compromise with the SBA. If someone knows what they're doing, they can work with you to work with the SBA lenders to, do something that says, "This is what I'm able to get for the business." Ultimately, banks and SBA lenders overall, same thing really, but banks don't want used equipment and they don't want to run restaurants, right?
So if we can give them an offer and compromise that makes sense, often we can make that go away for them. But yes, overall I'd say about 50% of the people think their restaurant is worth more than it is, and that's always a tough message to deliver
That's excellent advice. I always say you don't ask, you don't get, right?
Right
negotiable, and nothing's a done deal until it's a done deal. So never take no for an answer. Thank you for that. Let's talk about days on market versus price, and how long is it reasonable for a property to be valued?
You put a listing price on it, and it sits there for a couple of months. Maybe you move, within a month or two, but where's the balance between days in market and price, Robin?
Yeah, so the average days on market for a restaurant right now is around 190 days, and that actually has moved a little shorter in the last quarter of data. And I have a, a whole restaurant market report at the top of my website people can check out if they're interested in seeing exactly how the market is moving.
But when we calculate days on market, we're looking at from the day you sign the listing agreement until the day money came in at the closing table. So if it's a franchise, you've got this franchise approval always except for in the case of a, a property, you've got landlord approval and assignments and things that have to be done.
So it's not that the sale takes that long. Attracting the buyer doesn't take as long as it takes to actually handle all the other elements of the deal and actually get it to the closing table. But yes it's not an overnight thing. It's not oh, I listed my house, and it sold in five days, or I listed my house and it was 31 days.
You really need to look at this as it, it's expect to sign a listing agreement for a year, expect it to take three to six months to s- to attract the buyer, and on average 185 to 195 days to sell.
That brings up the next question. Obviously, you wanna keep operating that business and not close it while the time it's for sale, but that makes it squirrely for the customers and the team members that sometimes find out a restaurant's for sale, they head for the lifeboats. "Oh, I don't know.
Is the new owner gonna be a jerk? I'm gonna find another job." And then suddenly you have a non-viable business when prior to that it was a performing asset. What do you do about that? That is-- I'm sure that comes up all the time. Do I tell my team it's for sale? Do I tell my vendors? Do I keep it quiet?
Do we have it somehow hidden? We're still seeking a buyer, but you know what I'm saying. What's the balance there?
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Yeah, so it really does depend on the situation with your employees and with your community. We have had buyers go both ways, but primarily, we keep all listings confidential. Everyone has to acknowledge confidentiality, sign a confidentiality agreement before they see the restaurant. And then the more valuable the restaurant, then we would require proof of funds from the buyer.
And what I tell my sellers is it's very rare when someone's given me their bank account, that they'll go blabbing all over town that, such and such is for sale, because we're so strict about that requirement. But some sellers are like my fr- my my employees won't mind. They don't care."
And I will say this, Roger, sometimes you think that they're super loyal to the business. What they're used to, what they like something that they're used to. They like the pay that they're getting. They like the shifts that they're getting. They're in a comfortable space. You really have to knock them out of that space to get them uncomfortable.
So based on the relationship with your employees, it- it's not a bad idea just to sit down and say, "Hey, Beth and I are looking for a change. We've had a great run. We trust in each and every one of you, and we're only going to select a candidate to come in here who's gonna run this business the same way we did, and make it thoughtful."
And if you wait till the last minute, which is fine, we always say, "If you run a pizza shop, bring in dessert. If you run a dessert place, bring in pizza. If you show up in the morning and the closing is happening, bring some donuts and make it a powerful thing. Listen, this is how this is going to transfer now.
I'm gonna be around. My wife's gonna be around. We're all in this together." And run the exit the same way you run the business, with heart and with soul, and give dignity to your employees.
and transparency and that's humanity. That's being a good person, and that's showing people that you care about their future and their livelihood and their wellbeing and all those things. So thanks for sharing. is a really good time to talk about the difference between a real estate sale versus just a name, goodwill, furniture, fixtures, and equipment.
Two different valuations there. And what do you see most? Do you h- you handle both, obviously
We do handle both. Primarily restaurants sell without the real estate I would say 75 to 80% of the time. But we are seeing more and more deals with real estate come on the market. The, somebody asked me about this just a couple of days ago who was listing, saying, "Should I go and buy all my properties?"
I was like, "Absolutely don't do that." That's, because one problem you can have when you own the real estate is that your building can become worth more than the cash flow your business can pay to support the debt if you sell it. So I'll give you an example. Say your business is throwing off cash of 150,000.
Somebody wants to come in and buy the building, and all of a sudden you realize that, "Hey, I got an appraisal. My building's worth two million." You can't service the debt on the building for the cash flow from the business any longer. Y- a- and many times what we do with people who own the real estate is we go into a scenario where we sell the business, furniture, fixtures, equipment, right to operate, goodwill, all those things, and then they're a landlord over time.
So they have this ongoing recurring revenue coming into them over time, and that can be a good tax strategy for them as well.
Do you ever see a real estate situation where the highest and best use is not a restaurant and that the new buy-- potential buyer sees that and they're offering a really good price because they see the value because they're gonna put condos in the building or they have a manufacturing company they're gonna put in there or just something where suddenly it will cash flow and there's still value to the buyer even though it's a much higher price? Does that ever happen?
Oh, it absolutely does. And we had a situation about six months ago where it was a franchise brand, and they were at the end of their their franchise agreement. And another brand that was totally unrelated, so w- it wasn't like a tear down and let's put condos in there, but this was a great spot. They'd had it for 20 years.
Their franchise used to be up and coming 20 years ago. Now it's declining and tired, and the new buyers are, like, putting a, a brand... They wanted that drive-thru spot. They're putting a brand-new coffee concept in there, and it's going gangbusters. So they paid they paid nothing. They paid 100% on the real estate, and it was much more valuable than it would've been selling the business itself
You've probably run into the valuation percentages of real estate versus goodwill versus equipment versus inventory, and there's a tax advantage to either the buyer or the seller, and the whole point is somehow to get a balance there so that someone doesn't have a win over the other person, and that's well beyond, my understanding.
I had a CPA and attorneys that advised me in every case to get a, a solid a benefit as we could. But you must run into that and advise your clients too, and does it always go back to the CPAs and the lawyers to figure this out? Do you get involved in that?
I would it's hands-off for us. You don't, you, we don't wanna be practicing law without a license or practicing accounting without the proper credentialing. But our asset purchase agreements do call. There's a specific IRS form that has to be filed at closing, that there has to be mutual agreement between the parties.
So that gets hammered out before they ever get to the closing table so that because goodwill is going to be a benefit on one side, it's gonna be a, an, a negative for the other side. So it has to be managed carefully
Okay, excellent. Let's talk about, let's just say someone in my audience, many people, hopefully they contact We Sell Restaurants, but let's go through the process. I'm interested and I want to sell my restaurant. Is it-- how do you start? Everything is digital or you meet face to face with your clients, you give them sort of a survey to fill out.
It's like, where do we begin? We have meetings, we say, "Okay, these are the steps you need to... Here's a checklist. Here's how to prepare for the sale." Or do you try to get the listing right away and then give them this information? Tell me how it works.
Okay. So many times they just go direct to our website, wesellrestaurants.com, and they just put in, "I'm interested in getting a free valuation," or they contact us through social media or some other channel. And the starting point is just a conversation, right? That you said this a few minutes ago it's all about humanity.
The first thing is, "Tell me what's going on." Because that seller's why is going to dictate some of the rest of the path that we go down. If he's saying to me, and I had a call with a seller this morning, he was just so gracious. I just brought him an offer, and he said, "I want you to know you took two years gave me two years back on my life, 'cause I've been so stressed about this.
And I, have multiple things going on and two stores, and this one's an hour from my house, and this is such a great thing." So first, we just understand what's going on in his life, what's driving the decision-making because that will influence whether we're looking for time or money. Then it's a financial report.
We just need the most recent P&L, most recent filed tax return, most recent P&L, and that conversation continues to understand what is the management structure. How many hours are you there? To your earlier point, right? Is it all about that seller, and he's the only one that can get the results out of that restaurant?
Or does he say to me, "Oh, my guy in the back of the house has been there seven years. He's great. He does this. He does that. And this, my bartender, he's been with me for three years, and he's committed." Understanding the story of the restaurant, then looking at the P&L. And many times our sellers don't understand they, they're, their CPA is doing the dead level best for them to make sure they don't pay a penny more in taxes than they ever have to.
So they are, chopping adding as many expenses as possible and chopping the net income down as much as possible. My role is to come back and recast that the way in which we are allowed to do that, the way in which the bank will accept it, and add back those things that were taken out.
We're gonna add back depreciation, for example. We're gonna add back any interest that the
Seller is paying. We're gonna add back those expenses that we talked about earlier. And the way I describe those to a seller is, "What goes away when you go away?" If the business is paying your cell phone bill, when you go away, that's not in the buyer's...
he doesn't have to deal with that anymore. Your interest, your note goes away. He's not paying that anymore. So what are all those small, and maybe large, items the business is paying on your behalf? So we recast the business, then we go back into another meeting. So if I'm in person or one of my franchisees is in person, because we operate all over the country, and we have franchisees of We Sell Restaurants in markets that can visit with them in person, or it's a phone call or a Zoom meeting.
We go through those add backs and we talk about them. We make sure everything's legitimate. We make sure everything's on the book. We question, if they... Again, if they're running, if they're running food costs at, 12%, something's wrong. I don't know. They're buying food off the back of a truck or something, right?
It doesn't make any sense. It doesn't compute.
red flag. Yep.
so ask all the relevant questions, get the lease, go through that. And from that, we will be able to give them a very, very solid determination of what the business is worth in today's market. We can back that up with comps. So it's a maybe a three to four conversation three to four meeting kind of a, a process.
And then when they say, "That sounds like a good number to me. Let's go," then there's a listing agreement. Then there's everything's electronic. We do everything is so technologically advanced. We ship them everything on a checklist that says, "Check this if you got a four-burner stove, a six-burner stove, a one fryer, two fryer, three fryers," so that they can, we can get that listing on the market as quickly as possible
Is it like a multiple listing service MLS thing, or it's just within We Sell Restaurants Across the Country and all your listings are visible, so even if I'm based in Miami and I, frequently visit San Francisco, I might want to buy a restaurant in San Francisco. It's available to the public on your website?
Absolutely. We have about 1,750 listings as of this morning, about 650 million in listing inventory. So it's the largest it's the largest listing website in the nation, and those are actually our listings. We represent the seller. So it's not a listing service. We actually represent that seller on the other side of the table in every single one of those transactions
You're doing a great service to the industry. You've been at this how long now, Robin? How long has We Sell Restaurants been around?
2004, we just had to figure that out for something else. So 21 years, we've been around 25 years almost. We're looking for that 25-year anniversary in a few years that we can really celebrate.
That's a
Yeah
milestone. There's so many reasons why someone wants to sell a restaurant. Maybe you've been at this forever, you got a successful property, you're retiring, your kids don't want the business. That's one legitimate reason. Maybe you want to transition to a totally new career path or do something else.
That's another reason. There are health issues, there are desperation sales, all those things. We talked earlier about genuineness and transparency, but sometimes this is like a poker game. It's like you can't show all your cards. What do you suggest about smoothing over some rough patches that might be either easily solvable or not so easily solvable?
The place is a disaster, but I just got to get out. It's like there's everything in between. What do you say? What do you see?
So I ask my sellers to give me the whole story, right? Tell me, because I represent you. I am going to put that forward in the best possible light. And I will say to them, "Okay, this is great. Your food costs are running 42%. I'm throwing you totally under the bus with the buyer and telling him that he can do a better job, 'cause you're not paying attention and you're distracted and you're doing these things."
Right? There are legitimate reasons why a business isn't being managed well today. Sometimes it's like my situation with my seller who just called me a few minutes ago. He has two stores, one's an hour from his house. He started a wellness business on the side. We like, we get disgra- distracted and there's bright, shiny objects everywhere, and you take your eye off the ball.
But, I recast that for the buyer in terms of opportunity, right? It's this is where all your opportunity is to just come in and get quick fixes. You don't even have to raise sales. You just have to f- you know, if they just focus on the fundamentals, food and labor, and then see what we can do about occupancy.
Ev- everything else is just, everything else is just pennies to the bottom line. But those are the big ones
Very good. Very good. Let's talk about the transition to the new owner of this business. What's reasonable for the seller to help the new person understand the business, work for a couple of months in there h- side by side, or just walking away entirely? You've seen that all as well, right? What do you normally see, or what do they ask for?
Yeah, so I have seen people ask for anywhere from two weeks to six months. And y- but I will tell you this, those who ask for the longer period of time, they're the ones that call me back and say, "How fast can I get him out of here?" Like they want... Once it's theirs, then after a week or two, they want the training wheels off, and they want to run things on their own.
But some of it depends on how well that question you talk, you ask at the top of the show. What are the systems? What are the processes? Are they in place so that someone else can take over? If you really wanna cut down that transition time, then you've got to have your ducks in a row at the front end of the business.
What are the recipes? What is, how, who are you ordering from? All the transitions have to be in place to make that simpler
Fantastic. Do you see more hands-on owners buying businesses or people buying for investment purposes if it's a really valuable property?
You know what I tell people every day? I'm so fortunate because I get to sell the American dream one business at a time.
I
I truly see people come in, and they're hands-on. This is their dream. First generation Americans people who have been in the, you know, watched their parents, work a government job and said, "I wanna do something different."
I've got so many government employees right now who have been, sitting behind a desk and doing this government work for all these years, and they know and love restaurants. And they're like this one's profitable, and the systems are here, and I can come in and plug and play and maybe improve."
So yes it is absolutely it can be one person or another, but generally hands-on. We don't do that much with hands-off operators
Okay, very good. This is a business of passion and relationships.
And again, you're doing a great service for the industry. Thanks for doing what you do. WeSellRestaurants.com. Robin Gagnon, thanks so much for being a great guest on this show.
Thank you
That was the Restaurant Rockstars podcast. Thank you audience for tuning in. Thank you to our sponsors this week. Can't wait to see you in the next episode. Stay well, stay tuned, and I will see you then.
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