Running a coffee shop may seem easy for those who don’t own one. Actually, a lot of people think that a coffee shop administration is very similar to a restaurant or bakery. These businesses have their similarities, it’s true, but a coffee shop demands some specific strategies.
Promoting multiple sales, limiting coffee and snacks assortment, a well-done merchandising and advertising, offering a counter service and, of course, being known for the best espresso in the surroundings are essential factors for coffee shop owners to succeed.
It’s not a surprise that some people who own a business like is looking forward to sell it. Sometimes the hard work it is taken to run a coffee shop is not worth it.
In the next topics, you will learn how to sell your coffee shop for the best price.
What is your Coffee Shop worth?
In order to know exactly what your coffee shop is worth, you have to understand which aspects can contribute to the business valuation.
First, gather the finance reports from the last five years and compile it to provide potential buyers with as much finance information as you can, especially if your business has been successful in the past years.
Than, include into the same report information regarding other coffee shop, making sure you specify how competition harms your business.
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes a Coffee Shop worth more?
A good location, a modern and well decorated space, use of loyalty cards and high investments in technology and website infrastructure are some differentials that makes your business worth even more.
But there are a few metrics you can follow to calculate exactly how your coffee shop can be more valuable. Take a look:
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
What does the average Coffee Shop sell for?
Since 2005, when our research began, there has been 237 coffee shop negotiations in the United States. In this period, all of them were valued at $31 million, with an average sales price at $131k and average multiple rate of 2.81.
It means that, in the past ten years, coffee shop owners who have decided to sell their businesses usually got almost three times more money from the sale from what they had in gross income.
What is the most frequent deal size?
Most frequent deal size is $50k, a little bit smaller than average sales price.
It means that, even though average negotiations for all 237 coffee shops that have been sold, most of them were sold for $50k, as you can see in the chart.
Is the Coffee Shop market getting bigger?
There has been very few coffee shop sales in 2015, so we will not consider in in this analysis. 2014, on the other hand, was the best year for coffee shops since 2008.
It’s possible to say, however, that coffee shop market is getting bigger. Coffee shop is the typical kind of business that will never get unpopular, as everyone usually get something to drink, even if you don’t drink coffee.
Are bigger businesses worth more?
In 2013 and 2014, smaller deal sizes were more valuable than higher ones. It did not repeat in the other years, when the higher the multiple rate was the higher the profit coffee shop owners got.
What states have the most business deals?
California, Florida, Minnesota, North Carolina, Oregon and Washington were the best states to sell a coffee shop in the past ten years, but it does not mean that the other US states are not good places to negotiate a business like that.
Why would you sell in the first place?
The reason to sell always varies from each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your business?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 12 months, but you can also see deals getting closed in 6 to 9 months depending on the opportunity.
What is the process of selling your business?
This step by step process will help you get less confused when you make sure you are ready and confident to let go of your business, and perform a nice and positive sell. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. Don’t forget to go through all of these, and if you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your Coffee Shop, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the coffe shop industry it may likely be a person who already had a store in the field.
There has been 237 coffee shop sales in the past ten years, when businesses were sold for almost three times more than owners used to have in gross incomes.
If you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today! Leave your comments on any doubts or feedback, we are glad to hear your thoughts!