What a buyer checks first
- Years left on the lease and the assignment clause
- Liquor license type and whether it transfers cleanly
- Food and labor cost as a share of sales
- Sales reports that match tax returns
- Condition and ownership of the kitchen equipment
- Whether the chef or manager plans to stay
Your Lease Decides Whether There Is a Deal
Most restaurants and bars in San Francisco lease their space, and rents are high. A buyer is not only buying your sales. They are buying the right to stay at your address at a rent they can live with.
Two things matter most: how many years remain, including options, and what the lease says about assignment. If the landlord can refuse consent, or can raise the rent on transfer, that clause shapes every offer you will see.
Read the lease before you talk to anyone. If it expires in two years, start the extension conversation now, while you are still the tenant they know. Our note on assigning a commercial lease covers what landlords usually ask for.
How Does a Liquor License Change the Timeline?
If you hold a California ABC license and it is part of the sale, plan for a longer close. When a license moves to a buyer for a price, an escrow has to be opened before the transfer application is filed.
The money stays in that escrow until ABC approves the transfer. A notice of intention to transfer is filed with the county recorder. Transfers commonly run two months or more, and the city may have its own permit rules for serving alcohol.
Some license types are capped by county, so a license can carry real market value on its own. Price it separately. The steps are in our guide to liquor license transfers.
A buyer pays for profit once. For the space, the license and the equipment, they pay what it would cost to build again.
Earnings Sale or Key Money Sale
A profitable restaurant sells on its earnings. Buyers look at seller's discretionary earnings, the cash one working owner could take out, and apply a multiple. That is a business sale.
A restaurant that breaks even still has value. But the buyer is paying for the lease, the buildout, the hood and the license. That is a key money or asset deal, priced on what it would cost to open fresh.
The gap between the two can be large. Owners are sometimes surprised to learn that a busy room with thin margins sells closer to the second kind. Our valuation page explains how earnings are recast.
Books a Buyer's Lender Will Accept
Cash sales that never reached the tax return do not count. A buyer and their lender will only pay for income they can verify, and most buyers in this range use an SBA loan alongside cash and a seller note.
Before you list, line up these records:
- Three years of tax returns and monthly profit and loss statements
- POS sales reports that tie to deposits
- Payroll records and tip handling
- Vendor invoices showing food and beverage cost
- The lease, all amendments and any personal guarantee
Owner meals, a family member on payroll who does not work, and a one time repair can be added back. Each add-back needs a paper trail.
Equipment Is Worth Less Than You Paid
Kitchen equipment depreciates fast and resells for a fraction of its cost. Buyers count it as part of the business, not as a separate line they pay full value for.
What helps is a clean list: what you own outright, what is leased, and what belongs to the landlord under the lease. Leased equipment and anything still financed needs to be paid off or assumed at closing.
Keeping the Kitchen Staffed Through Closing
Your crew is a large part of what a buyer is getting. If the chef or general manager leaves mid sale, the buyer will reprice or walk.
Keep the sale quiet until it is close to final. Then tell key people early in a planned way, framed as continuity. A new owner needs them as much as you did, and most buyers will say so.
Permits and Inspections Belong on the Checklist
Health permits, fire inspections and business registrations generally do not transfer automatically. The buyer applies for their own, and the city requires a new owner to register with the Treasurer and Tax Collector.
Open violations or a history of failed inspections will come up in diligence. Clear them before you list. The asset sale also triggers California's bulk sale notice and a sales tax clearance, which escrow usually handles.
If you want a realistic range before you call your landlord, use the estimate form on this page or call (415) 555-0163.