For many people looking to buy an existing restaurant, price is a big concern. Trying to determine whether or not you are getting a reasonable figure for the restaurant can be a daunting prospect. There are numerous variables to consider, including local real estate trends, the clientele, the franchise particulars, and more. Fortunately, Fit Small Business provides us with ways to get a decent ballpark idea of what you should be spending for any given restaurant:
Method 1: Median Industry Sales Prices
This is the best method to use if all you know is that you want to buy a local restaurant, and you haven’t yet settled on which one you want to buy. This is where you take sales data from the restaurant industry, which shows us that a restaurant generally sells for a median price of $150,000. You may be able to find a restaurant for less than this, but remember that roughly half of all restaurants are going to go for more than this median, so plan to spend at least this much.
Method 2: Industry Multiples
This is a good method to use if you know the SDE of the restaurant you wish to purchase. The SDE equals the business’s pre-tax income, after costs, but including the salary of the owner and certain other expenses. Once you know this figure, you can multiply it by the restaurant industry multiplier to calculate a cost. SDE multiples are usually somewhere between one and three, with restaurants generally falling on the lower end. So, based on a multiplier of 1.96, a restaurant with an SDE of $100,000 can be expected to sell for roughly $196,000.
Keep in mind, of course, that these figures will only get you a rough estimate. Consult our Bellevue restaurant real estate company for more information.
In our information-heavy world, the internet may very well be the most valuable marketing tool at your disposal. But how can you best leverage the internet towards your restaurant’s advantage? Here are some tips to get you moving in the right direction: Continue reading
In a highly unexpected move, Expedia recently announced that it would be moving out of its office space in downtown Bellevue. The company and its roughly 3,000 employees shall be transitioning to Seattle. Their new offices shall be located in the 40-acre campus on the waterfront of Smith Cove in the Interbay neighborhood, which Expedia bought from Amgen for $228.9 million.
This news is a blow for local businesses, bars and restaurants in particular. Expedia has represented a large employer for the area, who have historically pumped a lot of their lunch money into the downtown eateries. The 3,000 workers who are now leaving the area represent more than six percent of the workforce in downtown Bellevue. So, what kind of impact should aspiring restaurateurs expect to their profitability?
Seattle and many other cities around the country are gearing up to raise the minimum wage to new highs. These new minimums are promising to close the economic gap, improving the quality of life for low-level workers so that the average rental rates fall within an acceptable range of affordability. Unfortunately, raising the minimum for tipped workers is causing some concerns for restaurant owners.
First move – Invest the time, energy, and expense needed to evaluate the site before you commit! Evaluate what will fit!
- Consider the Cost
- Examine Visibility, Signage, & Parking
- Analyze Your Competition
- Look at the Property at Different Times
- Research & Development
- Occupancy Costs
- Know Your Demographic
Consider the Cost
If you’re like most people, you are working with a limited budget. Your first step should be to consider what it will take to build out a new restaurant space or remodel an existing restaurant. Hiring a professional consultant can be a valuable way to get the most out of your initial investment. Continue reading