Restaurants / Bars
Restaurants / Bars
* 1.5 to 2.6 times SDCF, plus inventory
* 40% to 50% of annual Gross
* 1 Times SDCF, plus market value of furniture and fixtures
Key Drivers to examine
* Costs are key in this category. Food Cost 27% to 33%, Labour Cost 25% to 30%, Occupancy less than 1%. If costs are at low range then value at high range
* Businesses with more perishable inventory (seafood etc) at higher end of range
* Lease term and rate are key (are renewals required in near future)
* Location review, growth area or not
* Only proven sales should be paid for (no value for unreported sales)
* Asset purchase rather than share purchase due to risk of unreported sales and audit risk
Structuring the Deal
* Downpayment 50%, Vendor financing 50%
* Banks very reluctant to finance this industry, except for operating line for inventory in certain circumstances.