Selling a Coffee Shop: How to Sell a Coffee Shop Business

How to Sell a Coffee Shop Business: Guide to Find Coffee Shop Buyers

There may come a time in your entrepreneurial journey when you need to sell your coffee shop. Maybe your business is percolating along nicely, and you want to reap the rewards of your hard work. Perhaps you’d like to move on to a new coffee concept or something different altogether. Retirement, partnership disputes, divorce, low profitability, and plain old burnout are commonly cited reasons for selling a small business.

No matter what the reasons, all coffee shop owners — and all entrepreneurs, for that matter — go through a similar process when selling. We won’t sugarcoat it; there’s way more to it than finding a buyer to sign on the dotted line.

The coffee market in the U.S. as a whole is the largest in the world, bringing in an annual revenue of $80 billion. And while most of the coffee is enjoyed at home, cafes play a huge part in keeping people caffeinated and sales bubbling. The good news is demand has aligned with pre-pandemic levels, and the future looks bright (and very delicious). The bad news? An oversaturated market makes selling a coffee shop that much more difficult. 

As Howard Schultz, the former CEO of Starbucks, once said, “I am convinced that most people can achieve their dreams and beyond if they have the determination to keep trying.” The idea of selling a coffee shop might seem overwhelming, but if you approach it with determination, it will make all the difference. 

How exactly do you prepare? It involves equal parts analysis, action, and negotiation — with a heaping spoonful of number crunching mixed in. You’ll need to determine the value of your business, polish up your finances, prepare your coffee shop for sale, negotiate contracts, and, of course, hand over the keys (sometimes the most challenging part). 

In this article, we’ll walk you through the steps of selling a coffee shop and provide guidance on when to call in the financial pros.

Preparing Your Coffee Shop for Sale

Now that you know your current value, you can set the wheels in motion for the sale. It’s important to get all aspects of your coffee shop in tip-top shape before you put it on the market, from sprucing up the physical appearance to buttoning up your financial and legal documents.

Find a broker (or decide to do it yourself!)

Perhaps you’re a seasoned restauranteur who buys up coffee kiosks and cafes like hotcakes. In this case, you might want to act as your own broker. But remember, you only have one shot to get it right. There are many complex moving parts to consider: brokers will hype up your business, vet and qualify prospective buyers, negotiate prices, facilitate the process of due diligence, and more. This is why even veteran restauranteurs turn to brokers. You’ll need time to focus on the following three issues, which are biggies. 

Enhance curb appeal and update technology and equipment

Just like with a fixer-upper house, if the paint is chipped, the signage is broken, and the point-of-sale tech is clunky, you won’t be able to entice as many potential buyers. Likewise, outdated barista equipment and dusty décor are just plain unappetizing. Updating your equipment and implementing a technology upgrade will make your coffee shop all the more attractive to buyers.

Organize financial and operational documentation

Are your important financial statements more confusing than that order of nonfat double blended upside-down with whipped cream Gingerbread Frappuccino? Now is the time to clean up your accounting software, prepare financial statements, resolve any outstanding liabilities, and organize any other fundamental financial metrics.

Resolve any outstanding legal or regulatory issues. If there’s one area that can sink a deal before it even gets started, it’s this. It’s best to begin reviewing documentation as soon as possible. Ensure all leases are in good order, all taxes have been paid, and there are no liens against any assets that have not been disclosed. Your financial and operational documentation should be clean and up-to-date. You may consider an independent audit of your financials to ease any worries for potential buyers.

Preparing Your Coffee Shop for Sale

Now that you know your current value, you can set the wheels in motion for the sale. It’s important to get all aspects of your coffee shop in tip-top shape before you put it on the market, from sprucing up the physical appearance to buttoning up your financial and legal documents.

Find a broker (or decide to do it yourself!)

Perhaps you’re a seasoned restauranteur who buys up coffee kiosks and cafes like hotcakes. In this case, you might want to act as your own broker. But remember, you only have one shot to get it right. There are many complex moving parts to consider: brokers will hype up your business, vet and qualify prospective buyers, negotiate prices, facilitate the process of due diligence, and more. This is why even veteran restauranteurs turn to brokers. You’ll need time to focus on the following three issues, which are biggies.

Enhance curb appeal and update technology and equipment

Just like with a fixer-upper house, if the paint is chipped, the signage is broken, and the point-of-sale tech is clunky, you won’t be able to entice as many potential buyers. Likewise, outdated barista equipment and dusty décor are just plain unappetizing. Updating your equipment and implementing a technology upgrade will make your coffee shop all the more attractive to buyers. 

Organize financial and operational documentation

Are your important financial statements more confusing than that order of nonfat double blended upside-down with whipped cream Gingerbread Frappuccino? Now is the time to clean up your accounting software, prepare financial statements, resolve any outstanding liabilities, and organize any other fundamental financial metrics.

Resolve any outstanding legal or regulatory issues

If there’s one area that can sink a deal before it even gets started, it’s this. It’s best to begin reviewing documentation as soon as possible. Ensure all leases are in good order, all taxes have been paid, and there are no liens against any assets that have not been disclosed. Your financial and operational documentation should be clean and up-to-date. You may consider an independent audit of your financials to ease any worries for potential buyers.

Negotiating, Closing the Sale, and Transitioning Ownership

Create an Attractive and Engaging Listing

This is where your market research comes into play. What makes your coffee shop memorable and different from all the rest? When creating your listing, you’ll need to be savvy about what investors look for in a coffee shop, what motivates them to buy, and what kind of information they are most interested in. For inspiration, check out other coffee shops for sale on sites like BizBuySell, BizQuest, and BusinessBroker.net.

Leverage Industry Networks and Connections

That old business adage rings true: It’s all about who you know — and who knows you. Now’s the time to leverage the connections you’ve made throughout your career. Get the word out through your network (including friends and family) that you’re looking for buyers, as the right person may not be who you’d expect. Take a multi-pronged approach to networking, mixing in-person events with social media and email — and don’t dismiss the impact of picking up the phone for a good old-fashioned conversation! Building relationships with potential coffee shop buyers will not happen overnight. It might involve dinners or hanging out at your café and discussing business over lattes. It’s essential to build trust, and that requires an investment of time.

Conduct Due Diligence on Potential Buyers

Just as the buyer will do their due diligence on your business, you should also investigate potential buyers. You will want to make sure someone not only has the money to buy your coffee shop, but will also be able to run it successfully. This entails a review of all their financial documents, including credit reports, income tax returns, and liabilities such as rent on other properties and monthly expenses. Don’t be shy about running a background check on potential buyers or asking for personal and professional references. Additionally, ask to see their business plan so you can be sure they have a solid roadmap to success.

Negotiate Price, Terms, and Contingencies

If you’ve hired a broker, this is their opportunity to shine and demonstrate their value. They’ll determine a fair market value price (and hopefully spark a bidding war), finalize the terms of the agreement, and negotiate contingencies (conditions that the buyer demands be met before moving forward). 

Finalize the Sale and Transfer Ownership

It typically takes three to twelve months to close a deal, and a lot can happen during that time. It’s essential to stay focused and not spend your profits (or take off for Cabo!) until the deal is officially closed. You’ll still need to hit profitability goals and other financial metrics while in limbo. There are important loose ends to tie up, such as informing your customers, notifying employees (who will stay and who will go?), and ensuring a smooth transition for suppliers. Consider this time “business as usual” until the sale is complete.

The final step is transferring the ownership rights of your business to the buyer. There are a few options to consider. You can do an outright sale, a gradual sale (with a payment plan), or a lease agreement, where you transfer ownership through a lease. That said, many sellers prefer an outright sale to be paid in full on closing, whether in cash or through a small business loan. You’ll want to check with your state’s guidelines regarding registering the sale with tax agencies and other legal obligations.

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More than any other eating establishment, coffee shops inspire loyalty and daily repeat customers. You’re not just selling a business but a place that locals consider a home away from home. How can you possibly put a dollar amount on that? The only way to get the fair price you deserve is by doing your due diligence and taking it one step at a time.