Thinking of Selling Your Restaurant?
The hospitality sector in Brighton, Hove and Sussex is one of the most active in the business transfer market. Restaurants, cafes and bars regularly change hands, and there is consistent demand from buyers ranging from first-time entrepreneurs to experienced operators looking to expand their portfolios.
However, selling a restaurant is more complex than selling many other types of business. The combination of perishable stock, staff, licences, equipment and lease considerations means that careful preparation and professional guidance are essential. Here is our step-by-step guide to achieving the best possible outcome.
Step 1: Preparation (2-3 Months Before Marketing)
The work that goes into preparing a restaurant for sale often determines the price you achieve and how quickly the sale completes.
Get Your Accounts in Order
Buyers and their accountants will scrutinise your financial records closely. Ensure you have at least two, ideally three, years of accounts prepared by a qualified accountant. If parts of your income are not fully documented, understand that buyers will only pay based on what they can verify. The cleaner and more transparent your accounts, the higher the price you can justify.
Review Your Lease
Check the unexpired term, the current rent, and whether the lease permits assignment. If the lease has fewer than 10 years remaining, consider negotiating a renewal with your landlord before marketing, as a longer lease significantly increases value. Also check whether there are any outstanding breaches of covenant that need to be resolved.
Maintain the Premises
First impressions matter. Address any deferred maintenance, ensure all equipment is in good working order, and consider a cosmetic refresh if the dining area is looking tired. A clean, well-presented restaurant sells faster and for more money than one that looks neglected.
Licences and Compliance
Ensure your premises licence is up to date and that your food hygiene rating is current. A rating of 5 (very good) provides reassurance to buyers. If your rating is lower, address the issues before marketing. Check that your gas safety certificate, electrical installation condition report, fire risk assessment and public liability insurance are all current.
Step 2: Valuation and Pricing
Invite a specialist business transfer agent to provide a professional market appraisal. At Watkins Commercial, we visit the premises, review the accounts, assess the lease and consider comparable sales evidence before providing a realistic asking price.
Resist the temptation to inflate the price. An overpriced restaurant will sit on the market, deterring serious buyers and ultimately achieving a lower sale price than if it had been correctly priced from the outset.
Step 3: Marketing Your Restaurant
Confidentiality is paramount when marketing a restaurant for sale. News of a sale can unsettle staff, concern suppliers and deter customers. A good agent will market the business discreetly, using carefully worded descriptions that attract interest without identifying the specific premises.
Your agent will prepare detailed business particulars including a description of the premises, key financial information, lease details and photographs. These are provided only to vetted, serious applicants who have signed a confidentiality agreement.
Step 4: Viewings
Viewings of restaurant businesses are typically arranged outside trading hours to minimise disruption and maintain confidentiality. Your agent will accompany applicants and manage the process professionally.
During viewings, buyers will want to assess the condition of the kitchen and equipment, the layout of the dining area, storage facilities, and the general state of repair. They will also want to observe the location, footfall and accessibility during trading hours, though this is usually done informally before the accompanied viewing.
Step 5: Negotiation and Heads of Terms
Once a buyer has expressed serious interest, your agent will manage negotiations on your behalf. Key negotiation points typically include:
- The purchase price for the business (goodwill, fixtures and fittings)
- Stock valuation at completion (usually at cost price)
- The completion date and any handover period
- Training to be provided by the vendor
- Staff transfer under TUPE regulations
- Any items specifically excluded from the sale
Once terms are agreed, your agent will prepare heads of terms, a written summary of the deal that is passed to both parties' solicitors to begin the legal process.
Step 6: Legal Process and Completion
With heads of terms agreed, solicitors take over the technical work. The buyer's solicitor will raise enquiries about the business and the lease, and the landlord will need to consent to the assignment of the lease to the new tenant. This process typically takes 6 to 12 weeks, though it can be longer if complications arise.
Your agent will remain in close contact with all parties throughout, chasing progress, resolving issues and keeping the sale moving towards completion.
On Completion Day
- Stock is valued and paid for (usually the day before or on the morning of completion)
- Keys are handed over
- The purchase price is transferred
- Staff are informed (if not already aware) and TUPE transfer takes effect
- Utility meters are read and suppliers notified of the change of ownership
How Watkins Commercial Can Help
With over four decades of experience selling restaurants and hospitality businesses in Brighton, Hove and Sussex, Watkins Commercial has the expertise and local knowledge to achieve the best possible price for your restaurant. From initial valuation through to completion, we provide hands-on, confidential support at every stage. Contact us on 01273 709090 for a no-obligation discussion about selling your restaurant.