3 Ways to Increase Restaurant Value

While there are multiple ways to evaluate the value of a business, two of the main ways are the assets in place method and the gross sales valuation method.

Assets in Place Valuation Method: Also known as asset valuation, this method of valuation is calculated by using the present value of all assets in the business. This method of valuation allows an investor to get a good idea of the present value of a restaurant if all equipment and assets were sold off and the business closed.

Improving your assets in place valuation requires you to improve your assets. Outside of purchasing all new equipment, you can improve this by properly maintaining all of your current equipment.

Gross Sales Valuation Method: The gross sales valuation method is calculated by totaling all of the sales invoices and related revenue transactions. This method of evaluation works because it tells a potential investor what kind of income is expected from the business.

To improve your gross sales valuation you need to increase sales. You can accomplish this by widening your customer base and improving your customer loyalty.

Maintain Your Equipment

To improve your valuation based on assets add preventive maintenance to your restaurant’s processes. Preventive maintenance allows you to service equipment so that they operate at peak efficiency, retaining their value better. You can accomplish this process by adding routine maintenance to your kitchen and wait staff’s side work. You can allow kitchen staff to do things like clean walk-in refrigerator condenser coils to help improve the efficiency and life span of your equipment. Most manufacturers of walk-in coolers estimate the average lifespan of a walk-in as seven to 10 years; however, with appropriate maintenance that can be extended to 15 to 20 years.

Preventive maintenance works for increasing value because rather than allowing your equipment to fall into various states of disrepair, you keep equipment in like-new condition as long as possible. If you, for example, perform all of the manufacturer’s recommended maintenance and daily clean your griddle, it will not only last twice as long but it will also allow you to avoid unnecessary and expensive repairs over the long run. Benefits of a comprehensive preventive maintenance plan are:

- Increased lifespan of equipment
- Lowered repair costs
- Improved productivity
- Increased efficiency
- Reduced energy costs
- Improved restaurant profitability
- Widen Your Customer Base

One easy way to improve the value of your restaurant is to broaden your customer base. There are a number of ways this can be accomplished; however, the simplest ways to do this are to build a website and social media presence.

This works because it allows you to reward current and future clientele with promotional items like a free appetizer or discount for continued patronage. Having specials that are advertised to customers via this method is also a way of increasing sales, as customers will likely choose you over another if they know that they will be closer to receiving a discount or freebie. This action will make it more likely that new customers will choose you over a competitor. Benefits of a customer loyalty program are:

- Increased brand recognition
- Improved promotion of events, promotions, services, and products
- Enlarged online visibility
- Expanded menu recognition
- Intensified customer appeal

Improve Your Customer Loyalty
Another way to improve gross sales is to enhance customer loyalty to your restaurant. A National Restaurant Association report stated that 50 percent of all customers say a customer loyalty or reward program would make them choose one restaurant over another. This is a relatively simple action item to implement as many modern POS systems have built-in functionality for customer tracking.

This works because it allows you to reward current and future clientele with promotional items like a free appetizer or discount for continued patronage. Having specials that are advertised to customers via this method is also a way of increasing sales, as customers will likely choose you over another if they know that they will be closer to receiving a discount or freebie. This action will make it more likely that new customers will choose you over a competitor. Benefits of a customer loyalty program are:

- Increased revenue
- Improved customer loyalty
- Multiplied customer referrals
- Boosted customer relations

While you may not currently be in the market for a buyer or investor, increasing the value of your restaurant can also help with raising debt. Raising debt can be helpful for building improvements, expanding your business, or starting a second location. Additionally, by making these simple changes, you will not only increase your restaurant’s value but you will increase sales, reduce expenses, and increase the overall profitability of your restaurant; which is something that every owner is seeking.

Unsure of which direction to go? Consult AK Success's business advisors on the best steps in troubleshooting, developing PR strategies, service flowcharts/sops and sourcing equipments for your business.

AK Success SDN BHD is also recognised as RATIONAL’s authorised dealer & service partner in Malaysia. We are certified and trained to install, service and repair the full range of RATIONAL ovens with spare parts and accessories always readily available. Our technical team undergoes in-depth training yearly with RATIONAL to ensure up-to-date knowledge on the products in order to provide efficient and reliable service to our customers.