How to calculate the Price of restaurant
I am looking to make an offer for an independent restaurant. I need some help in finding out the fair value I can offer. The following are some details required to arrive at the value.
1) Restaurant used to make 70 to 80 thousand revenue two years back.
2) Due to management change, cost cutting, and poor service etc, sales now is only about 40 to 50 thousand and going down everyday.
3) Don't think a competing new restaurant has been opened in the area recently. Whatever was there two years back is still there. Will investigate further on that.
4) The current infrastructure in the restaurant is total crap. Entirely has to be renovated from the floor to ceiling including all furniture and kitchen. Roughly estimated at 100,000. Did not get a firm estimate yet.
5) Owner asking 150,000.
6) Restaurant is in a very prime location with potential to win back customers if renovated and service levels improved.
7) No value for restaurant name. Have to change totally. Planning to go the franchise route.
What is the fair price I can offer?