How to price your restaurant to put up for sale?

I’m pretty sure when I get called back to work I’m going to sell my pizzeria and was wondering how to figure out a price or even how to go about doing it.
I’ve only been open for 9 weeks and am averaging $8K a week.Had a high one week of $8,900 and shut the phone off for an hr during friday dinner rush.I’ve done zero advertising and have never sent out a door hanger, coupon,etc.All is from word of mouth and is a tight knit Island community of about $20K people.I have people come in daily and ask for menus and comment how our place is the talk of the Island.I don’t take CC’s either.I think there is MUCH room for growth.I own the plaza that the pizzeria is in and would charge the new owner $1,200 a month for 1,800 sq. ft.I have about $30K of equipment total and all is brand new except the BP’s.I have told a few friends of mine if they wanted it I’d give it to them for $50K which seems pretty fair and they would get my recipes and all.
Any thoughts or comments are appreciated.
Derek

no comments here?
Derek

Try the FAQ listing for a starting point. there are LOTS of threads in there about buying and selling pizza joints.

http://www.pmq.com/tt/viewtopic.php?t=3374

When you asked the same basic question in December 2006, these replies came in http://www.pmq.com/tt/viewtopic.php?t=1006

hello
how much are you neting if you to hire a manger to run the business take that net multiply that by 15 times that will be the price you ask for
if you are netting 2000 as an absentee owner a month you should ask for 60000 and your rent should be higher than 1200 if your sales 24000 a month and you have only opened 9 weeks wait till you hit a year time

What I have seen is 3.5 times to 5 times Cashflow.

It depends on the market and the strength of your brand.

So if you your cash-flowing $60,000 a year.

Your business is worth somewhere between $210,000. and $300,000.

If you are pulling down $100,000 its worth $350,000 to $500,000.

I have not seen single location indi pizza places go for higher than 3X cash flow. Smallish chains can get above that. On the other hand, you do not have enough history to define cash flow in any case. Most business brokers will tell you that a new business should be open for three years before selling if you want to use cash flow as a basis for price.

You might be best off looking at the comparison cost to get open from scratch to point you are at now and adding a small premium above that.

Honestly, I am wondering why you would want to sell such a cash cow! If your do this well, and there is no real competition, I would just hire additional labor so you don’t ever have to turn off the phone lines again, and let the spigot flow.

I don’t know what your fixed cost are, but I have a store i operate that has $1200 rent, and a total monthly fixed of $5,000, the store does $6,000 to $7,000 and my variable labor runs about 17%. I am profiting about just over $100,000 a year from that store.

If you are at $9000 and climbing your talking about a store that might bring you in as much as $200,000 a year or more. I would at least ride the wave for another 6 months to a year and see what you got then.

Numbers I see in listings (if they have cash flow) is anywhere from 1.5 to 5 times cash flow, but the listings at the high end just sit there as nobody in their right mind will pay such high numbers.

I would be willing to pay 2 times tops, or if the biz showed potential but mismanagement I would consider purchasing without cash flow.