Succession in a family restaurant business can be resolved in several ways: a handover within the family, a full or partial sale, bringing in a financial or trade partner, or a combination of these. The right decision depends on what the family wants, on whether there is someone ready to lead and on what the business is worth without its founder. The earlier the question is raised, the more options stay open.
Why succession weighs so heavily in hospitality
Many restaurant groups grew out of a first site and were built around one person. The founder knows the suppliers, the regulars and every member of the team. That closeness is part of the success, and it is also the main risk when the time comes to step back.
In other sectors, knowledge is spread more widely across systems and departments. In hospitality, much of it lives in the memory of whoever has spent years at the pass or behind the bar. If succession is not prepared, that knowledge leaves with the founder and the value of the business suffers.
Then there is the family dimension. Some children work in the business and others do not, expectations about how things will be shared out differ, and some conversations have been put off for years. Getting the business side in order makes the family conversation easier.
The handover options in a restaurant group
There is no single way out. The most common options are these:
- Family handover. One or more members of the next generation take over management and ownership. It works when there is the vocation, the preparation and a clear agreement among siblings about who decides.
- Full sale. The family transfers the business to a buyer, which may be a group from the sector, a financial investor or the management team itself. It allows the founder to close a chapter with liquidity.
- Partial sale or bringing in a partner. A financial or trade partner acquires part of the equity. The family keeps a stake and gains an ally to professionalise management or finance growth.
- Professional management with family ownership. The family keeps the equity and delegates management to an external team.
These options can be combined and staged. Bringing in a partner today can pave the way for a full sale later, or buy time for the next generation to train inside the business.
When to start preparing the succession
The short answer is before it becomes necessary. A succession planned calmly lets you choose the moment, the form and the counterparty. One forced by ill health, a family dispute or the founder’s exhaustion usually ends in a negotiation with less room for manoeuvre.
Preparing the succession does not mean deciding anything yet. It means putting the business in a position where any of the options is viable: well-organised financial information, documented processes, a team that works without the founder present and a realistic idea of what the company is worth.
Separating the founder from the business
This is the work that creates most value before a succession, and the work most often postponed. It means making the business depend less on one person and more on its brand, its team and its processes.
In practice that means delegating purchasing and supplier relationships, training site managers with real autonomy and writing down what is currently passed on by word of mouth: recipes, costings, opening and closing procedures. It also pays to check that the trademarks, domain names and leases are in the company’s name and not the founder’s.
A buyer or a partner will value a group that runs without its owner far more highly than one that needs them every day. And if the succession stays in the family, the successor inherits a business they can run without having to rebuild it.
What the family business is worth
Valuation is the starting point for any decision, even when the business is not being sold outside the family. It serves to divide fairly among heirs, to negotiate the entry of a partner or to know whether an offer is reasonable.
In hospitality, value goes beyond EBITDA. Brand strength, site quality, cost structure, management team and the ability to replicate the model all come into play. In a family business the management-team factor weighs especially heavily: the more management depends on the founder, the more a buyer will discount.
The tax treatment of the transfer and the corporate structure have their own particularities in family businesses. They should be reviewed early with legal and tax advisers, because they determine which option is most efficient for the family.
Common mistakes in hospitality business succession
- Waiting for a buyer to appear or for a child to ask for the handover, instead of preparing the business in advance.
- Assuming the next generation wants to lead, without having discussed it openly.
- Valuing the business by what it cost or by what it means to the family, when a buyer will judge it by other criteria.
- Keeping key assets in the founder’s personal name: the brand, the premises or the main contracts.
- Negotiating only with the first interested party, without testing alternatives.
- Treating succession as a purely family matter, without bringing in legal, tax and financial advisers from the start.
How we support a family succession
Succession in family businesses is one of the transaction types we work on within our hospitality and F&B M&A service. We value the company and its brands, review the alternatives with the family and, if the choice is a sale or bringing in a partner, we prepare the information memorandum, identify qualified counterparties and coordinate the advisers through to closing.
If your family is thinking about the handover, a first conversation with a Link Capital partner can help you organise the options. All information is treated in the strictest confidence and we will reply within two working days.