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Will Upgrading My Liquor License Increase The Sales Price When I Sell My Restaurant?

Posted By: Joe Ranieri, Business Broker: LA, Orange Counties

My restaurant recently upgraded its beer with wine license to a full-service liquor license, and if I sell, how much can that increase my selling price? A Southern California restaurant broker specialist initiates this discussion and other advisors, business brokers, agents weigh in on this topic.

Tags: business valuation, liquor license, selling a business

My restaurant recently upgraded its beer with wine license to a full-service liquor license, and if I sell, how much can that increase my selling price?

This is a common question I get from restaurant owners who go from selling beer and wine on premises (#41) to being able to also sell full liquor (#47). Possibly the owner has been thinking about selling, but wanted to wait and see how much being able to sell hard alcohol and spirits have increased their monthly sales. Certain type of restaurants, such as Italian fine dining, may not see a huge demand for hard alcohol and spirits, as many people have beer and wine with their meals, so it does not increase profits that much, while other food types may, so it is a case by case basis.

A buyer will typically look at the last 2-3 years of sales, with an emphasis on the last year, so any new changes will be scrutinized, but a buyer will be looking for overall monthly sales numbers to determine a purchasing price.

A tip to a potential buyer: investigate what is the overall percentage of sales regarding beer/wine/spirits, and contact Alcoholic Beverage Control (ABC) to see if there are any restrictions on the license. With that said, selling a restaurant with a #47 in the advertisement listing may attract more eyeballs and lead to more buyers’ traffic, so it can have a benefit in getting a restaurant sold, but ultimately buyers will always look at the numbers and not "potential" in determining a price.

I would be curious how other contributors on this forum have dealt with sellers who have made upgrades to their business and wanted an increase in price based on the anticipation of future profits.



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