Printer-Friendly Table of Contents In BVR’s Guide to Restaurant Valuation, expert Ed Moran, along with a small army of other franchise and restaurant professionals, walks you through the complicated, yet fascinating, process of determining a restaurant’s value — while sharing some of his favorite eating establishments along the way! Written in an engaging conversational tone, this user friendly Guide is an essential reference for any appraiser conducting valuations in the volatile restaurant industry.
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Table of Contents
Introduction
Chapter 1: Rules of Thumb
Examples of Rules of Thumbs
Restaurant Example
Why Do Owners Use Rules of Thumb?
Simple Formula for Future Net Cash Flow
Transfers at “Cost”
Summary
Chapter 2: Restaurant Economy and Restaurant Industry Overview
We Are Already Experts In Restaurant Valuation
My Valuation Thoughts after Looking into these Winning Kitchens
Types of Restaurants
Industry Information You Will Not Get
National Economic Factors
Regional and Local Economies
Industry Outlook
Effects of the Economic and Industry Outlook on this Valuation
Chapter 3: Restaurant Site Visit
Introduction
Assumption
Restaurant Drivers
Arriving at the Restaurant
Plan Your Visit
Competitors
Chapter 4: Market Research
Nielsen Claritas
Executive Summary
The Retail Market Power (RMP) Opportunity Gap—Retail Stores
Restaurant Top Chain with Map
Traffic Patterns
Examples
Advanced Capabilities
Why Use Market Reports?
Growth Rate Development
Problem Markets
How Do You Assess the Market?
Linkage to Subjective Risk Premium
Chapter 5: Management Interview & Request for Info Addendum
Valuation Information Request (VIR)
Chapter 6: Fixed Assets and Capital Expenditures
What Happens on the Street
The Company Depreciation Schedule
Tax Free Exchanges
Cost Segregation, All the Rage
What Does It Cost New?
Tax or Book Depreciation, Cross Your Fingers
Are Depreciation Projections Necessary?
Amortization, a Different Animal
Re-Investment in Restaurants, When and How Much?
Refresh or Renew Means What?
Chapter 7: Franchised Restaurants, Are They Really So Different?
Overview
How to Read Franchise Documents
Can Franchisors Value a Franchise?
Interaction with the Franchisor
UFOCs and More
Reinvestment
Check out the Franchisor
More Rules of Thumb Talking
Lending to Franchisees
Legal Disputes, Valuations, and Franchisees
Risk of Renewal
Chapter 8: Financing
Types of Loans You Will See in this Industry
Thoughts on Ratios and Financial Analysis
Here is What I See
Here is What a Restaurant Banker Sees
What Happens if Something Goes Wrong?
Example of Financial Analysis
Summary of the Financial Condition of the Company
Restaurant Loan Packages
What a Top Financial Restaurant Executive and Editor See
Good Advice from a Man That Knows
Chapter 9: Smorgasbord
Entity Structure Overview
Property and Sales Taxes
Loser Store
Asset Approach
Value Each Store or All Stores
Lease Problems
S-Corporations
Shady Dealings
Excellent Owners
Regional Differences
Marketability Discounts on Minority Interests
Marketability Discounts on Control Interests
Lack of Control Discounts on Minority Positions
Drive- Thru Sales
Subjective Risk Premiums for the Subject Restaurants
Is There A Value to Knowing Potential Future Restaurants’ Locations?
Canned Software Packages
What Makes a Great Restaurant?
Alcohol, Sports Bars, Bars, and Taverns
Mid-Year Convention on Discounting
Accounting Periods
Gift Certificates
Chapter 10: Market Approaches in the Restaurant Industry
The Public Guideline Company Method
The Private Transaction Market Method
Chapter 10 Attachment
Chapter 11: Restaurant Projections
Restaurant Financial Statements
Why Are They All Different?
One Order of Projections to Go, Please
BREAKEVEN From the Restaurant Point of View
Industry Peer Statistics
Industry Binoculars or Where to Look
Let’s Go to Monaco!
Why Use Crystal Ball Software?
Restaurant Example Using Crystal Ball
Chapter 12: Determination of Value for Restaurants
Review of Where We Are
Depreciation, Cap Ex, and Amortization
Next Year’s Projection
Working Capital Adjustments
Income Taxes
What Debt Should We Use?
Determine a Cost of Capital
Simple or Complex, Is that the Question?
What Approach To Use?
The Discounted Cash Flow Method
APV (Adjusted Present Value) method.
Chapter 13: Justification of Purchase Price
Business ValueXpress
Calculations of Value
Example of Input and Output
Chapter 14: Conclusion
