Restaurant Handbook - Tools & Rules - Valuate buy & Sell Summary:

RESTAURANT VALUATION - WHAT IS IT WORTH? - Section Six
Buy/sell/lease, all dictate major cash flows. Deal from strength to protect your continued cash future.
Here we show how to arrive at objective valuation of restaurant property. How much is it really worth? You can triangulate a value using income capitalization, cost or replacement, and area sales comparison. These are the same tools used by professional estimators. We give clear examples.
The objective values provide a solid basis for negotiating the deal. We cover rules of negotiation, and important clauses to consider in any deal to insure you are not ambushed.
Detailed checklists force attention to all relevant data that forms the science to bolster the art of your deal.
Do not leave major dollars on the table. Use these proven tools.
Section 6     VALUATION FOR BUY/SELL
    REASONS TO KNOW THE VALUE
FAIR MARKET VALUE
SELL
BUY
INCOME CAPITALIZATION
     CASH FLOWS DISCOUNTED
    CAPITALIZATION RATE OR MULTIPLE
COST OR REPLACEMENT
    ASSET VALUATION
        LAND
HIGHEST AND BEST USE
        BUILDING
        OTHER ASSETS
AREA SALES COMPARISON
NEGOTIATE
    THE DEAL
    ATTITUDE
    STRATEGY
    RULES
        TECHNIQUES & TACTICS
LEASE
FINANCE
SUMMARY
VALUATION BY CAPITALIZATION CHECKLIST
BUYING CHECKLIST
    OPERATION
    FINANCIAL INFORMATION
    BUILDING AND LAND
    COMPETITOR ANALYSIS
    LEASE
    PURCHASE AGREEMENT


About the Author:

Roderick Clelland, MBA, has over two decades of restaurant experience, in both operations and consulting to the industry. He formed a consulting firm with Joseph M Tierney, MBA, and Glen A Wilt, PhD to bring science and research to the fundamental restaurant decision process. While completing contracts with successful restaurant chains, he naively decided to start his first restaurant on the side, and quickly learned that great restaurant management cannot be a part-time job.

He designed, financed, built, staffed, and operated several highly profitable and popular award-winning restaurants. “My proudest achievements were the low turnover of my restaurant staff over the years, and the large number that became wealthy in their own operations. When you select great people and insure they have excellent knowledge and skills, you have happy staff and happy customers”

Mr. Clelland continues to consult to the industry, and is still constantly dismayed by observable poor restaurant operating practices. He currently lives in San Francisco.