Guide #3: How To Sell Your Restaurant

How To Sell Your Restaurant, Part 1:

Preparing for a Successful Exit Before Engaging a Broker

First, Some Background

The structured process of preparing yourself, your finances, and your business so that the sale of your restaurant(s) goes as smoothly, and profitably, as possible is called Exit Planning. Exit planning isn’t something we invented at Lyon Wealth Advisory. It’s a process that has been proven across industries to add significant value to business exits. The industry benchmark for doing this work is through a Certified Exit Planning Advisor (CEPA®), and the industry-standard framework used by CEPA® advisors is called the Value Acceleration Methodology™. I’m a CEPA® and have successfully managed restaurant exits.

This methodology has three phases. Each phase is extensive, so I’ve summarized the key aspect of each phase here:

Phase 1: Decide to sell & get organized
Phase 2: Improve business to maximize value
Phase 3: Execute sale

Today, I’m going to focus on the first phase. But I’m going to organize it around the reality of a restaurant owner, because while the methodology is universal, the way you apply it to a restaurant business is very specific. I’ve also excluded from this discussion what to do if you own the underlying real estate that your restaurant sits on. That’s a very valid question of course, and one I’ll certainly hit on in the future.

The most important thing I’m going to explain to you today is this: you want to complete as much of the Phase 1 work before engaging a broker.

Let me explain: brokers are a vital part of this process and a good one is worth their weight in gold. Contrary to what is sometimes said, brokers are not “paid for doing nothing.” We pay them for four important services:

Market reach: They market your restaurant to the largest possible pool of buyers, which helps ensure you get the best possible price.
Buyer qualification: They know how to qualify those buyers and focus your time on people who actually have the ability and intent to close a deal.
Know-how and contacts: They provide sellers and buyers with helpful institutional knowledge and connect them with other important experts in the industry.
Deal management: Every deal brings a complex set of emotions and dynamics. Through all this, they keep both sides informed and moving forward, and ultimately get the deal done.

That said, brokers are intermediaries. They are not your fiduciary, nor are they supposed to be. That’s why the way you approach them matters. You want to show up in your Sunday Best. You want them to immediately recognize you as a well-prepared, attractive listing they’ll be excited to represent. This is particularly important for restaurant owners because, as you might imagine, we have a “reputation” in the brokerage industry for being less than well prepared .

Why Exit Planning Can Make an Impact on Your Sale

#1. The Selling Process is Long and Emotional

Selling a restaurant is not a quick transaction; it’s a marathon. You’ll experience emotional highs when a strong buyer makes an offer, and deep lows when that buyer backs out months later after you’ve poured energy into due diligence. That rollercoaster is normal. The most important thing you can do during this time is to keep running your restaurant well. Nothing derails a deal faster than declining sales or operational performance while your restaurant(s) is on the market. Having done prep work before talking to the first potential buyer will keep you rational and calm.

#2. Exit Planning Can Add Substantial Value to Your Sale Price

Recall the sales equation (there are other methods, but this is the most common):

Sale Proceeds = Seller’s Discretionary Earnings (SDE) × Market Multiple

The market determines the range of multiples that are possible (for restaurants, it’s going to be 0–5×; again, the market controls the range, not you).
The seller (and the economy, over which the seller has no control) determines the SDE.
But the seller has significant influence over where they land on the range of possible multiples.

Here’s an example to explain why this matters:

Jim and Barbara own a diner generating $300,000 in SDE. They’ve decided it’s time to sell.

Case 1: Jim and Barbara call the broker the same weekend they decide to sell. They enter the process unprepared, stressed, and often emotional. Because they’re so attached to the business, they overestimate its value and push back on reasonable feedback. The sale drags on, consuming their time and energy, and they struggle to keep the diner running smoothly after all the employees find out they’re selling. Eventually, the deal closes, but only after months of frustration, at 2.5× SDE, or $750,000.
Case 2: Jim and Barbara spend six months preparing before they ever contact a broker. They’ve cleaned up their books, implemented overdue process improvements, and clarified exactly what they want from the sale. When buyers enter the picture, they’re calm, decisive, and able to keep their restaurant performing well throughout the process. The result? The deal closes faster, with less stress, and at a stronger valuation, 3.5× SDE, or $1,050,000.

That’s $300,000 more, but the real difference isn’t just the money. In the second case, Jim and Barbara stayed in control of the process, kept their restaurant strong, and avoided the emotional rollercoaster that often wears sellers down.

A quick note on numbers: Big jumps in SDE over a short period are uncommon for restaurant owners. The illustration above holds SDE constant and shows how a well-executed sale can reasonably achieve a higher multiple than a poorly executed one. In my experience, a ~1.0× multiple swing between poor vs. strong execution is very plausible.

The Lyon Wealth Advisory Exit Planning Program: Phase 1

This is our 4-step process for Phase 1. There’s a lot of technical work, discussions and analysis that goes into our process. But you can use this as a baseline to DIY your own exit planning.

Step 1: Take Stock of Where You Stand

This is your starting point: a clear, honest picture of where you stand today. 75% of business owners regret selling within a year. Let’s be part of the 25%. We do the following:

Asset Map: Document your complete business portfolio (entities, locations, etc) with expected cash flows.
Owner Readiness Assessment: Interview you to get an honest opinion about your mindset. Are you tired and ready for change? Do you know what comes next after the restaurant?
Document Checklist: Gather financial statements, tax returns, leases, and contracts.
Stakeholder Analysis: Identify who on your team needs to know (and when), and consider how to incentivize them to support your transition.

Step 2: Financial Review

The financial review ensures you have a good understanding of what your restaurant is worth and how your sale will impact your personal financial future. This step reveals the all important “value gap” (see below). We’ll consider whether waiting, cleaning up your books, and growing SDE is worthwhile. Or if a speedy sale is more important than maximizing value. Either way, we want clarity. We do the following:

SDE Calculation: We recast your financial statements to show your “sellers discretionary earnings”.
Value Analysis: Most buyers will use bank financing. What will a lender actually value your restaurant at? We use industry information to determine an expected sale range based on several factors.
Scenario Modeling: Compare impact to your personal finances of an immediate sale vs. an optimized sale in 2–3 years using reasonable assumptions.
Calculate Value Gap: We calculate what you need for retirement vs what you have available (including the estimated sale price of your restaurant). If there’s a gap (we call it the “value gap”) and we build a plan to address it. See step 4, retirement action plan below for more info on this.

Step 3: Restaurant Operations Review

This is where we examine how dependent your business is on you, key employees, and vulnerable relationships. Restaurant buyers run the gamut; some want to purchase a business with existing management in place while others are comfortable doing the work, but they’re worried about how close you are to your customers. In either case, the less dependent the restaurant is on your presence, the higher the multiple you can command. We do the following:

Key Person Risk: Through interviews with you and reviewing your marketing materials we make an assessment as to how your business would perform in the event your GM or chef walked out.
Owner Involvement: We evaluate how entangled you are in daily management of your operation(s).
Lease Transferability: We review your lease assignment clauses and rate them as either industry standard, more difficult than industry standard, or less difficult than industry standard.
Operational Processes: We assess whether your systems are documented.

Step 4: Personal Readiness

This step is all about your future and arguably the most important step. Selling is really a life transition. Contrary to what most tired restaurant owners think, “not working” is not a retirement plan. We do the following:

Vision Work: We discuss what you will do next. Retire, invest in real estate, consult, or something else?
Retirement Action Plan & Spending Analysis: We help you build an understanding of what your lifestyle will cost in retirement, and the extent to which your financial plan will support that.
Alternative Paths: At this stage, we like to open the discussion up to make sure there are no other alternatives you might want to consider (e.g., partial sales, management buyouts, or holding the real estate while selling the operations, etc.)

Phase 1 Conclusion – Turning Preparation Into Action

Up to this point, the work in Phase 1 (Steps 1–4) has been about understanding where you stand today: your current position, your financial situation, the strength of your business, and your personal readiness. This is where it all comes together.

At this stage, we do three things:

Bring It All Together: We consolidate all the information, analysis, and insights into a clear report. This gives you complete clarity on your current position and what’s possible moving forward.

Communicate With Stakeholders: Selling a restaurant impacts more than just the owner. We help you prepare a vision that you can deliver to key stakeholders (partners, key employees, managers) so everyone understands the path ahead. This sets expectations and reduces uncertainty.

Decide What Comes Next: This is the transition point. From here, you choose whether to:

Pursue Operational Improvements (Phase 2): If there’s a meaningful “value gap” or you want to strengthen your business before listing, we develop a detailed, time-bound action plan. It will include actions such as:

Immediate (0–6 months): staff retention, full financial clean-up, landlord conversations, begin replacing owner involvement.
Near-Term (6–18 months): document systems, process upgrades, consistent marketing, SBA pre-approval conversations.
Longer-Term (18+ months): finalize sale decision, shortlist and meet brokers, position for the highest multiple and a smooth transition.

Move Straight to Market (Phase 3): If you don’t want to spend any time on improvements, we create a much shorter action plan (focused on final clean-up, stakeholder alignment, and selecting the right broker) and then transition directly into execution.

Take Aways

Selling your restaurant is one of the biggest personal decisions you’ll ever make.
True preparation is about being mentally ready, not just financially and operationally.
Doing this work before engaging a broker gives you leverage.
Preparation creates the best chance of walking away emotionally satisfied.