Restaurant valuations give ‘food for thought’

Restaurant valuations have long been the “bread and butter” of many appraisers, offering a smorgasbord of data and opportunities to consider a rich assortment of inputs and assumptions—including whether “rules of thumb” can ever form the basis for a conclusion or are merely “icing on the cake.” Another easy mis-assumption to make: Similar restaurants in the same town run by the same management can serve as good comparables. For instance, in Shalley v. Borough of Sea Bright, 2009 WL 1324024 (May 15 2009), the New Jersey Court of Appeals considered a restaurant owner’s proof of lost profits for a proposed restaurant based on his prior operations. Among other differences, however, the proffered comparables didn’t share the same menu, suppliers, financing schemes, locations, or size, and the court dismissed the evidence as “pure speculation.”

To separate fact from fiction in the food world, join experts Ed Moran, Kevin Yeanoplos, and John Hall (McDonald’s Corp.) in “Valuing Restaurants,” the next in BVR’s Industry Spotlight Series teleconferences, taking place tomorrow, August 6th. For more information, including a special discount on the teleconference and Moran’s Guide to Valuing Restaurants, click here.