Having conducted business with restaurateurs for over 20 years, and being a past state restaurant board member, restaurant brokerage is my expertise and passion.
Let’s begin with the correlation of restaurant square feet to the number of seats it holds and how that then equates to the rent.
A few years ago I had two restaurant listings in the same town, both were approximately 1,700 square feet (SF). One restaurant had 70 seats and the other had 44 seats.
At about the same rent of $50.00 per SF, which was the better deal? All things being equal, obviously selling the restaurant with more seats was a much better opportunity.
The discrepancy in number of seats was because one restaurant had no basem*nt, so their office, storage space and prep room took up valuable dining space.
Without two restaurants to compare, how do you know what is the right amount of seats for any size restaurant when selling a restaurant?
Believe it or not, there is a formula: Total SF divided by 2, then divided again by 15 will give you a good estimate of how many seats should fit into a space.
The logic is that 50% of a restaurant is taken up by the kitchen, bathrooms, storage and hallways. The number 15 represents the square foot size of one seated customer.
- Example: 2,000SF /2 = 1,000SF/15= 66 seats. This could extend to 70+ or shrink to less than 50 depending on the layout of the restaurant. But now you have a formula to base how many seats a certain SF should have.
Why is this important? Because your rent is based on SF.
- Example: 2,000SF x $50.00SF = $100,000.00 in annual rent, and $8,333.33 of monthly rent.
Obviously the more seats you have in the space, the higher your potential sales can be. This formula is also very important if you are creating a floorplan for a new restaurant.
When searching, every restaurant you see will be different in SF, seats and rent. Now you have a formula to compare and determine which one is the most cost effective.
There are various aspects to buying or selling a restaurant that require industry-specific knowledge and experience to execute properly.
Confidentiality is a vital component to the process. Maintaining privacy in selling a restaurant is very important to every seller. This is true even for restaurant buyers, particularly if you are a chef.
Unfortunately, many business brokers and real estate agents are unaware of the process of how to sell a restaurant and maintain confidentiality.
Public awareness of a potential sale severely cuts the demand for future parties. You also run the risk of losing your key employees, and overall staff morale is compromised.
I take this concern and risk very seriously. All of my potential restaurant buyers are carefully screened. Each is also given a confidentiality agreement to sign, before they are provided with the name or location of a restaurant that is for sale.
This process also separates the “lookers” from the serious buyers. Contact me for a free estimate of the value of your restaurant if you are considering selling a restaurant.
