BVR's Guide to Restaurant Valuation

March 2010 978-1-935081-25-8 Hardcover, eBook, Kindle

Ed Moran

Business Valuation Resources, LLC

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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Categories: industry analysis


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