Ryan Hutchins, ABV, AM-BV, CMEA 📌SBA Business Valuation Expert💥’s Post

🍔 Assessing the Value of a Limited-Service Restaurant: A Buyer's Guide 💰 As a potential buyer, understanding the value of a limited-service restaurant is crucial before making a purchase. Meet John, a savvy investor who recently acquired a thriving sandwich shop. He shares his experience and the valuation approaches he used to make an informed decision. John's Steps to Assess Value: 📊 Analyze Financial Statements - Review income statements, balance sheets, and cash flow statements - Look for consistent revenue growth and profitability - Identify trends in expenses and margins 🏠 Evaluate Location and Lease - Assess the location's visibility, foot traffic, and competition - Review lease terms, including length, renewal options, and rent increases - Consider the potential for future development or changes in the area 🕵️♂️ Conduct Due Diligence - Examine contracts, licenses, and permits - Verify ownership of assets - Investigate any legal or regulatory issues Valuation Approaches: 💰 Income Approach - Determine the restaurant's future cash flows - Apply an appropriate discount rate based on risk - Calculate the present value of the expected cash flows 📈 Market Approach - Compare the restaurant to similar businesses recently sold - Adjust for differences in size, location, and profitability - Use valuation multiples (e.g., revenue, EBITDA, and SDE) to estimate value 🏗️ Asset Approach - Identify and value the restaurant's tangible assets (e.g., equipment, inventory) - Consider the value of intangible assets (e.g., brand, customer base) - Subtract liabilities to determine the net asset value By following these steps and applying multiple valuation approaches, John gained a comprehensive understanding of the sandwich shop's value. He negotiated a fair price and has since grown the business successfully. Assessing the value of a limited-service restaurant takes effort, but with due diligence and the right valuation techniques, buyers can make well-informed decisions. 🌟 #RestaurantValuation #BuyingARestaurant #LimitedServiceRestaurant #InvestInRestaurants #RestaurantDueDiligence Peak Business Valuation

🧑🍳😫Struggles of a restaurateur😫🧑🍳 Running a restaurant business is operationally intensive and requires a lot of dedication and discipline. The ops include managing labor, raw materials, food quality, customers, marketing, product development, innovation, and finance. Running a restaurant business can be daunting, regardless of whether you are a single restaurateur or a chain owner. I experienced this when I used to run a restaurant chain some time ago. However, our industry experience and learnings helped us develop a super app for restaurant owners, regardless of whether they have a single restaurant or a chain. We launched the prototype and tested it in our restaurants over time. We have made significant improvements to the product, making it easy for anyone to start their own business in less than 10 minutes. We believe that to grow, business owners should focus on their passion and business rather than on operations. #restaurant #ops #struggle #business IVEPOS #food #passion #owner #finance #profit #manage #superapp #growth #customers #marketing #innovation #finance #restaurants #experience #development #businessowners #quality

🍽️💰 Valuing a Limited Service Restaurant: Mastering the Income Approach Are you considering buying or selling a limited service restaurant? One of the most critical aspects of the process is determining the business's value. The Income Approach, which includes the Capitalization of Cash Flow (CCF) and Discounted Cash Flow (DCF) methods, is a powerful tool for assessing a restaurant's worth. Let's dive into each method and explore their pros and cons. 🔍 Capitalization of Cash Flow (CCF) The CCF method calculates a restaurant's value based on its expected cash flow in a single period, divided by a capitalization rate that reflects the business's risk and growth potential. Pros: ✅ Simple and straightforward ✅ Suitable for restaurants with stable, predictable cash flows ✅ Requires less detailed financial projections Cons: ❌ Assumes constant growth rate and cash flow ❌ Doesn't account for potential changes in the business or market ❌ May not be suitable for restaurants with irregular cash flows 🔎 Discounted Cash Flow (DCF) The DCF method estimates a restaurant's value by projecting its future cash flows and discounting them back to present value using a discount rate that reflects the time value of money and the business's risk. Pros: ✅ Accounts for variable cash flows and growth rates ✅ Considers the time value of money ✅ Allows for more detailed financial modeling and scenario analysis Cons: ❌ Requires more extensive financial projections and assumptions ❌ Sensitive to changes in discount rate and growth assumptions ❌ May be more complex and time-consuming to perform When applying the Income Approach to value a limited service restaurant, consider the following: 🟡Analyze historical financial performance and normalize cash flows 🟡Project future cash flows based on realistic growth assumptions 🟡Determine an appropriate capitalization or discount rate based on the restaurant's risk profile 🟡Consider industry benchmarks and market conditions 🟡Seek the advice of a restaurant valuation professional By understanding the CCF and DCF methods and their application to limited service restaurants, you can make more informed decisions when buying or selling a business. Remember, the key is to use realistic assumptions, consider multiple scenarios, and seek expert guidance when needed. Happy valuing! 🍔💸 #RestaurantValuation #IncomeApproach #CapitalizationOfCashFlow #DiscountedCashFlow #BuyingOrSellingABusiness

The best way to prepare yourself to scale your restaurant business is this... Adopt a mindset as though the additional business is already underway. Implement systems that will liberate you to begin making crucial financial decisions that will facilitate your journey towards business growth. #restaurants #growth #scalability

While dynamic pricing may make immediate business sense, does it make longterm brand sense? Food is so different from something like concert tickets and last mile delivery, where we have learned to expect the surges and determined if we wanted to splurge. But those are not perceived as essential, whereas food is. Whether fast food is *actually* essential is not really important here. Consider the customer segment that tends to go The Wendy's Company during "high traffic times" tend to be working class people grabbing lunch. They likely have a set amount they want to and plan to spend for lunch. Putting myself in the shoes of a customer going to grab lunch and being surprised by a different price depending on factors beyond their control, it would probably be frustrating and may prevent me from making that my lunch spot. Dynamic pricing can also lower benefit people when it goes down, offering discounts at certain times, of course. But the narrative focused on surging pricing. Some good conversation around dynamic pricing today, something Wendy's is testing out. What are your thoughts? #customerexperience #qsr #retentionstrategy

Hello restaurant owners and business owners! Want to maximize your restaurant's sale price? 💰 Watch this quick video to learn how optimizing key financial metrics like EBITDA and SDE can dramatically impact your valuation. You'll discover: - What EBITDA and SDE are and why they matter so much to buyers - Ideal targets for costs like food and labor to improve profitability   - Actionable tips to boost your financials before listing - How small operational tweaks can result in big valuation gains Position your business for top dollar by following these steps. 🚀 Want a free evaluation of your current performance and suggestions to increase business value pre-sale? Reach out for a consultation - we'll analyze your financials and provide a customized roadmap. https://lnkd.in/gr6NKeTP #RestaurantSale #BusinessValuation #EBITDA #SDE #RestaurantOwners #BusinessOwners

Every restaurant needs a break to play in the big leagues and we can help you get there. Line up 13 dominos The one at the front is the smallest, just 5mm high (it's tiny). Each domino is 1.5 times larger than the one in front. The 13th one will be more than a 3 feet tall. Push the tiny one at the front, and it will trigger a chain reaction. The chain reaction will create such momentum and energy along the line, that all 13 dominos will tumble. This is the power of domino reaction. In the world of small businesses, EXCESS CASH FLOW creates the domino effect. The more cash flow you have, the more it multiplies. - You can use cash flow for effective marketing and boost your revenue. - Hire great managers and employees to create a better and more efficient operation to boost your revenue and cut wastage. - Eventually, excess cash flow can finance expansion and rinse, repeat. So this all boils down to creating enough excess cash flow in the first place. That's where we come in. We are financial and operational experts. We cut wastage, reengineer the menu and lower food costs and create this excess cash flow for your #restaurant. We directly contributed cash flow of restaurants by $40MM. We guarantee our results so there is no financial risk for your business.

3 keys to running a profitable restaurant ⬇️ 1️⃣ . Impressive or, by default, unimpressive: If what you serve and do is run-of-the-mill, then why come there again? It has to be impressive. Everything about it has to be impressive, or, by default, it is unimpressive. 2️⃣ Menu Engineering: without proper menu engineering tied to successful metric tracking, you could be selling to your blue in the face and actually lose money 🔑 3️⃣ Employees dig their job: if your staff is not motivated to be there, it will resonate with the customer experience and nothing will matter and customers won't return. They can't just be motivated by money. They have to be motivated by your vision, and that means you have to have a vision. 📈 Follow me for daily tips to grow your restaurant business. ✅

A Tale of Two Industries : The National Restaurant Association recently published a report that has many in the space feeling optimistic about the future of the restaurant industry. The prospect of over 500,000 seasonal jobs this summer and record sales data certainly paints a rosy picture. (link in comments) This contrasts heavily against a wave of largely negative news in previous months which saw large chains announce substantial amounts of store closures and even a few bankruptcies. (link in comments) Proponents with a more pessimistic view on the market are scrutinizing the rosy data by arguing that cash value of restaurant sales is a skewed metric by which to measure industry growth because the persistent inflationary pressures of the last few years has resulted in many companies raising prices. Combine that with the fact that 3rd party delivery companies are starting to see some headwinds after a red hot 2023 like Uber swinging to a loss after it's first full year of posting a GAAP operating profit and DoorDash posting weak Q2 guidance after a record Q1, it looks like this view does hold some weight. Are we seeing another situation where figures from what's supposed to be a credible source of data differs greatly from the reality of many consumers? I can't help but notice a similarity in the way that some CPI prints this year have looked promising only to see myself wince when paying for groceries. Would love to hear some thoughts on this!

Uber delivering your Olive Garden order: Olive Garden’s parent company is finally catching on that the best place to enjoy a steaming plate of fettuccine Alfredo is from the comfort of your bed. Darden announced yesterday it is entering an exclusive partnership with Uber for the next two years to deliver its lasagna to customers. After long resisting third-party delivery apps, Darden said that by May of 2025, diners around the US will be able to order their zuppa through Olive Garden’s app or website and have Uber deliver it. Some locations will pilot the program this year. The announcement came as Darden reported lackluster quarterly earnings for the restaurant many 12-year-olds consider the height of luxury: Same-store sales at Olive Garden fell 2.9% last quarter, more than analyst estimates of 1.8%. CEO Rick Cardenas said July was much slower than the company expected, but restaurant traffic did pick up in August thanks to an early start to its Never Ending Pasta Bowl promotion (it usually starts in September). Big picture: Darden reported revenue of $2.76 billion, missing Wall Street estimates of $2.8 billion, but its stock still jumped more than 8% thanks to the Uber collab.—MM https://lnkd.in/e8CqxyMH