Can You Sell a Restaurant That's Losing Money? A Complete Guide to Your Options

Your restaurant is losing money. Maybe it's been losing for months, or perhaps it's been a struggle for years. You're tired, stressed, and ready to move on. But you're wondering: can you even sell a restaurant that's losing money?

The short answer is yes, but it's complicated. After working with hundreds of restaurant owners over the years, I've seen owners successfully sell losing restaurants. I've also seen owners who couldn't find buyers or had to close and walk away with nothing.

The difference comes down to understanding your options, being realistic about value, and finding the right buyer. A restaurant losing money isn't worthless, but it's worth less than a profitable one. Buyers exist for struggling restaurants, but they're looking for different things than buyers of profitable businesses.

In this guide, I'll walk you through everything you need to know about selling a restaurant that's losing money. We'll cover your options for selling a losing restaurant, what buyers are looking for, how to value a losing restaurant, and strategies to maximize what you can get. By the end, you'll understand whether selling a losing restaurant makes sense and how to approach it.

Yes, You Can Sell a Losing Restaurant

The first thing to understand is that losing restaurants do sell. They don't sell for as much as profitable restaurants, and they take longer to sell, but buyers exist.

I've seen restaurants losing $50,000 a year sell for $75,000 to $150,000. I've seen restaurants losing $200,000 a year sell for $100,000 to $300,000. The sale price depends on assets, location, equipment value, and what a buyer thinks they can do with it.

Buyers of losing restaurants fall into a few categories:

• Operators who believe they can turn it around
• Investors looking for real estate deals
• Competitors wanting the location or equipment
• First time buyers who see opportunity others don't

These buyers exist, but you need to find them and present your restaurant in a way that shows value beyond current profitability.

Why Your Restaurant Is Losing Money: Understanding the Causes

Before you can sell a losing restaurant, you need to understand why it's losing money. Buyers will ask, and you need honest answers. The reason for losses affects both whether you can sell and what you can get.

Common Reasons Restaurants Lose Money

Poor Location Location problems are hard to fix. If foot traffic is low, visibility is poor, or the area is declining, buyers will discount heavily. Location issues often mean selling for asset value only.

High Operating Costs If your rent is too high, labor costs are out of control, or food costs are excessive, these are fixable problems. Buyers who can reduce costs see opportunity and may pay more.

Weak Management Operational problems, poor systems, or lack of experience can cause losses. Buyers with restaurant experience see these as fixable and may value the business higher.

Market Changes If the neighborhood changed, competition increased, or customer preferences shifted, these are external factors. Buyers will evaluate whether they can adapt or if the market is permanently damaged.

Under Capitalization Sometimes restaurants lose money because they don't have enough working capital to operate properly. This is actually attractive to buyers with capital who can fund operations correctly.

Concept Mismatch The concept might not fit the market. A fine dining restaurant in a casual area, or a family restaurant in a business district, can struggle. Buyers might see value in changing the concept.

Understanding your specific situation helps you position the sale and find the right buyers. Be honest about problems, but also identify what's fixable versus what's not.

Your Options When Selling a Losing Restaurant

You have several options when selling a restaurant that's losing money. Each has pros and cons, and the right choice depends on your situation.

Option 1: Sell as a Going Concern

Selling as a going concern means selling the business as an operating restaurant, even if it's losing money. This is the most common approach and typically gets the highest price.

Pros:

• Highest potential sale price
• Buyers can see the operation
• Equipment and systems are in place
• Employees can potentially stay
• Brand and customer base have value

Cons:

• Takes longer to find buyers
• Requires maintaining operations during sale
• Buyers will heavily discount for losses
• May need to continue losing money while selling

This option works if you have time and can afford to keep operating while finding a buyer. The key is finding buyers who see potential to turn it around.

Option 2: Sell Assets Only

Selling assets means selling equipment, furniture, fixtures, and possibly the lease, but not the business entity itself. This is faster and simpler but typically gets less money.

Pros:

• Faster sale process
• Simpler transaction
• No need to maintain operations
• Can close immediately after sale
• Less due diligence required

Cons:

• Lower sale price
• No value for brand or customer base
• Employees lose jobs immediately
• May need to handle business closure separately

This option works if you need to exit quickly or can't afford to keep operating. You'll get less money, but you can move on faster.

Option 3: Lease Assignment

If you have a favorable lease, you might be able to assign it to a buyer who wants the location. This can be valuable if the location is good but your concept wasn't working.

Pros:

• Location value can be significant
• Buyer gets ready to operate space
• You may get lease assignment fee
• Faster than full business sale

Cons:

• Only works if lease is assignable
• Requires landlord approval
• Less money than full sale
• Buyer may not want your equipment

This option works if your location is valuable but your business concept wasn't right for it. Buyers who want to change concepts often pay well for good locations.

Option 4: Close and Liquidate

Closing the restaurant and liquidating assets is the last resort. You'll get the least money, but you can exit immediately.

Pros:

• Immediate exit
• No ongoing losses
• No need to find business buyer
• Can sell equipment piecemeal

Cons:

• Lowest return
• May owe lease obligations
• Employees lose jobs
• No value for brand or goodwill

This option works if you can't find a buyer and can't afford to keep operating. It's better than continuing to lose money indefinitely.

Not sure which option makes sense for your situation? Contact us for a free consultation. We can help you evaluate your options and determine the best approach for your specific circumstances.

What Buyers Look for in Losing Restaurants

Buyers of losing restaurants aren't looking for the same things as buyers of profitable restaurants. Understanding what they value helps you position your sale and find the right buyers.

Strong Location

Even if your restaurant is losing money, a strong location has value. Buyers who believe they can change the concept or operations often pay well for good locations.

What makes a location strong:

• High foot traffic
• Good visibility
• Parking availability
• Growing area
• Demographics match restaurant type
• Favorable lease terms

If your location is good, emphasize it. Location value can be significant even when the business isn't profitable.

Valuable Equipment

Commercial kitchen equipment, furniture, and fixtures have value. Buyers who need equipment often pay well for it, especially if it's in good condition and modern.

Equipment buyers look for:

• Modern, well maintained equipment
• Complete kitchen setup
• Furniture and fixtures in good condition
• Equipment that fits their concept
• Fair market value pricing

If your equipment is valuable, consider selling assets separately if you can't find a business buyer. Equipment sales can sometimes generate more than selling the business.

Favorable Lease Terms

A good lease with reasonable rent and favorable terms is valuable. Buyers who want the location but plan to change the concept often pay well for lease assignments.

Lease factors buyers value:

• Below market rent
• Long lease term remaining
• Renewal options
• Assignment rights
• Reasonable terms and conditions

If your lease is favorable, highlight it. Lease value can be significant, especially in desirable locations.

Fixable Problems

Buyers pay more for restaurants with problems they can fix. If losses are due to operational issues, poor management, or fixable cost problems, buyers see opportunity.

Fixable problems buyers value:

• High food costs that can be reduced
• Labor inefficiencies that can be improved
• Poor marketing that can be fixed
• Operational systems that can be upgraded
• Management issues that can be resolved

Identify what's fixable and present it clearly. Buyers who see clear paths to profitability pay more than buyers who see permanent problems.

Real Estate Value

If you own the real estate, that changes everything. Real estate value can be significant even if the restaurant business is losing money.

Real estate factors:

• Property value independent of business
• Development potential
• Location value
• Zoning and use restrictions
• Market conditions

If you own the property, consider selling real estate and business separately or together. Real estate value often exceeds business value for losing restaurants.

How to Value a Losing Restaurant: Valuation Methods

Valuing a losing restaurant is different from valuing a profitable one. You can't use earnings multiples when there are no earnings. Here are the methods that work.

Asset Based Valuation

For losing restaurants, asset value is often the starting point. This includes equipment, furniture, fixtures, and possibly lease value.

Typical asset values:

• Kitchen equipment: $50,000 to $200,000 depending on size and quality
• Furniture and fixtures: $10,000 to $50,000
• Lease value: $0 to $100,000+ depending on terms
• Inventory: Current value at cost
• Other assets: Appraised value

Add up your assets to get a baseline value. This is often what you can expect for a losing restaurant.

Location Value

If your location is valuable, that adds to the price. Location value depends on market conditions, lease terms, and buyer interest.

Location value factors:

• Lease terms and remaining term
• Market rent versus your rent
• Location desirability
• Assignment rights
• Buyer demand for location

A great location with a favorable lease can add $50,000 to $200,000 or more to the sale price, even for a losing restaurant.

Turnaround Potential Value

Some buyers pay a premium if they see clear turnaround potential. This is hard to quantify but can add 20% to 50% to asset value.

Turnaround value factors:

• How fixable the problems are
• Buyer's experience and confidence
• Market opportunity
• Time to profitability
• Required investment

If you can show clear paths to profitability, some buyers will pay more. This requires good presentation and finding buyers with restaurant experience.

Real Estate Value

If you own the property, real estate value dominates. Property value is independent of business performance and can be significant.

Real estate valuation:

• Get professional property appraisal
• Consider development potential
• Evaluate market conditions
• Factor in business value separately
• Consider selling separately or together

For property owners, real estate value often exceeds business value. Consider your options carefully.

Want to understand what your losing restaurant might be worth? Use our free business valuation calculator to get an estimate. While it's designed for profitable businesses, it can help you understand asset values and see what similar restaurants might be worth.

Strategies to Maximize Sale Value When Selling a Losing Restaurant

Even when your restaurant is losing money, there are strategies to maximize what you can get. Focus on what has value and present it effectively.

Clean Up Before Selling

Take time to clean up operations, even if you're losing money. Clean restaurants, organized records, and maintained equipment all increase value.

Cleanup steps:

• Deep clean the restaurant
• Organize all records and documentation
• Maintain and repair equipment
• Update financial records
• Address any obvious problems

A clean, well maintained restaurant sells for more than a messy, neglected one, even when both are losing money.

Fix What You Can

If there are fixable problems causing losses, fix them before selling. Buyers pay more for restaurants that are closer to profitability.

Fixable improvements:

• Reduce food costs through better purchasing
• Improve labor efficiency
• Update marketing and promotions
• Fix operational problems
• Improve customer service

Even small improvements can increase sale value. If you can reduce losses from $100,000 to $50,000, that's significant value to buyers.

Highlight Assets and Location

Emphasize what has value: equipment, location, lease terms, and real estate. These assets have value independent of profitability.

Asset presentation:

• List all equipment with values
• Highlight location advantages
• Detail favorable lease terms
• Showcase property value if applicable
• Document asset condition

Buyers need to see what they're getting. Clear asset documentation increases confidence and sale prices.

Be Honest About Problems

Don't hide problems. Buyers will discover them during due diligence, and hiding issues destroys trust and kills deals.

Honest presentation:

• Explain why you're losing money
• Identify what's fixable versus permanent
• Show financial records clearly
• Address problems proactively
• Provide realistic assessments

Buyers respect honesty and are more willing to work with sellers who are transparent. Honesty actually increases sale prices by building trust.

Find the Right Buyers

Not all buyers are right for losing restaurants. Focus on finding buyers who see value and opportunity.

Right buyer types:

• Experienced restaurant operators
• Investors with capital
• Competitors wanting location
• First time buyers with energy
• Real estate investors

Work with a broker who understands losing restaurants and can find the right buyers. The right buyer pays more than the wrong buyer.

Consider Seller Financing

Offering seller financing can increase sale price and make your restaurant more attractive. Buyers who can't get traditional financing may pay more if you finance.

Seller financing benefits:

• Higher sale prices
• Faster sales
• Larger buyer pool
• Ongoing income
• Tax advantages

If you can afford it, seller financing can significantly increase what you get for a losing restaurant.

Need help maximizing the value of your losing restaurant? Contact us for guidance. We can help you identify what has value, find the right buyers, and structure a sale that works for your situation.

Common Mistakes to Avoid

I've seen restaurant owners make the same mistakes when selling losing restaurants. Avoid these to maximize your outcome.

Waiting Too Long

Don't wait until you're completely out of money. The longer you wait, the less you can get, and the harder it becomes to find buyers.

Sell while you still have:

• Some cash reserves
• Ability to maintain operations
• Time to find the right buyer
• Options to negotiate

Waiting until you're desperate reduces your negotiating power and sale price. Start the process early.

Unrealistic Expectations

Don't expect to get what a profitable restaurant would sell for. Losing restaurants sell for less, often much less. Be realistic about value.

Common unrealistic expectations:

• Expecting earnings multiples
• Ignoring losses in valuation
• Overvaluing assets
• Not accounting for market conditions
• Comparing to profitable restaurants

Get professional valuations and be realistic. Unrealistic expectations kill deals and waste time.

Hiding Problems

Don't try to hide losses or problems. Buyers will discover everything during due diligence, and hiding issues destroys trust.

Problems to address honestly:

• Financial losses and trends
• Operational problems
• Legal or compliance issues
• Lease problems
• Market challenges

Be transparent from the start. Honesty builds trust and actually increases sale prices.

Poor Presentation

Don't present a messy, unorganized restaurant. Poor presentation reduces value and scares away buyers.

Presentation problems:

• Dirty or unmaintained restaurant
• Disorganized records
• Missing documentation
• Poor marketing materials
• Unprofessional approach

Take time to present your restaurant professionally. Good presentation increases value and buyer interest.

Not Understanding Options

Don't assume selling as a going concern is your only option. Consider all options and choose what works best.

Explore:

• Going concern sale
• Asset sale
• Lease assignment
• Real estate sale
• Liquidation

Understanding all options helps you make the best decision and maximize value.

Going It Alone

Don't try to sell a losing restaurant without help. The process is complex, and professional guidance increases value and success rates.

Get help with:

• Valuation
• Buyer finding
• Negotiation
• Due diligence
• Closing

Professional help pays for itself through higher sale prices and smoother transactions.

What To Do Next

If you have a restaurant that's losing money and want to sell, here's what to do right now.

Step 1: Assess Your Situation

Take an honest look at your situation:

• How much are you losing monthly?
• How long can you afford to keep operating?
• What are your assets worth?
• What's causing the losses?
• What's fixable versus permanent?

Understanding where you stand helps you make good decisions and set realistic expectations.

Step 2: Get Professional Valuation

Work with a professional to understand what your restaurant might be worth:

• Get asset appraisals
• Understand location value
• Evaluate lease value
• Consider real estate value
• Get realistic market assessments

Professional valuations help you set asking prices and understand what to expect.

Step 3: Decide on Your Approach

Choose how you want to sell:

• Going concern sale if you have time
• Asset sale if you need to exit quickly
• Lease assignment if location is valuable
• Real estate sale if you own property
• Liquidation as last resort

The right approach depends on your situation, timeline, and goals.

Step 4: Prepare for Sale

Get your restaurant ready:

• Clean and maintain everything
• Organize all records
• Fix what you can
• Document assets clearly
• Address obvious problems

Preparation increases value and makes sales easier and faster.

Step 5: Find the Right Buyers

Work to find buyers who see value:

• Use business brokers experienced with restaurants
• List on restaurant specific marketplaces
• Network with restaurant operators
• Contact competitors
• Reach out to investors

The right buyers pay more and close faster. Finding them requires effort and often professional help.

Step 6: Be Patient and Realistic

Selling a losing restaurant takes time. Be patient, be realistic about value, and be willing to negotiate.

Expect:

• Longer marketing time than profitable restaurants
• Lower offers than you might hope
• More negotiation required
• Buyers who need time to evaluate

Patience and realism help you get the best outcome possible.

Ready to explore selling your losing restaurant? Contact us for a free consultation. We can help you understand your options, get realistic valuations, and find the right approach for your situation.

Conclusion

Yes, you can sell a restaurant that's losing money. It's not easy, and you won't get what a profitable restaurant would sell for, but buyers exist and deals happen.

The key is understanding your options, being realistic about value, and finding the right buyers. Focus on what has value: assets, location, lease terms, and real estate. Be honest about problems, fix what you can, and present your restaurant professionally.

Selling a losing restaurant takes time and patience. Start early, get professional help, and be realistic about expectations. The right buyer will see value and opportunity, even in a losing restaurant.

Your restaurant may be losing money, but it's not worthless. With the right approach, you can exit and move on to your next opportunity. Don't wait until you're completely out of options. Start the process now, understand your situation, and take action.

The buyers are out there. The deals happen. With proper preparation and the right approach, you can sell your losing restaurant and move forward.

Ready to sell your losing restaurant? Contact us for a free consultation. We can help you understand your options, get realistic valuations, and guide you through the entire sale process.

Want to understand what your restaurant assets might be worth? While our business valuation calculator is designed for profitable businesses, it can help you understand asset values and see what similar restaurants might be worth.

Need help finding buyers for your losing restaurant? We work with buyers who specialize in turnaround opportunities and can help you find the right match for your situation. Contact us to get started.