Ready to Sell in 90 Days

A Practical Preparation Playbook for Retail Bakeries

by Brian Bacher

Selling a bakery is not a transactional event; it is a business strategy. Selling a bakery is not about perfect timing; it is about preparation. In 90 days, an owner can create the foundation buyers and lenders want to see: earnings that support the bakery’s overhead, the local cost of living and debt service. Owners must be able to do this while the bakery continues or improves its operations, maintains a stable team, holds a clean lease and operates with unencumbered equipment.

This is not an exhaustive list covering every detail and variation. It presents key points and helpful tips that contribute to the successful transfer of assets and goodwill.

The goal is to create a well-organized and comprehensive picture of the bakery so that prospective buyers can make an informed decision. Doing so helps build buyer trust in the information provided and positions the bakery as a better option than competing listings.

One important point: be objective. As the saying goes, look at the good, the bad and the ugly.

Below are the steps, in chronological order, from the starting point to being ready to list.

Weeks 1–2: Know the Bankable SDE (Seller’s Discretionary Earnings) and Net Proceeds

The process begins with one of the most important questions for a buyer:

“How much money will I keep after purchasing this bakery?”

If financing is involved, the buyer must also be able to afford debt service and personal living expenses.

Depending on the bakery’s location, deal structure, financing options and owner involvement, the results vary. The first step is calculating the SDE.

1. Normalize the numbers.

• Build a clear picture using the last three years of federal tax returns and P&Ls.
• Gross Sales – COGS (Cost of Goods Sold) – Expenses = Gross Net.
• Add back:
  • owner’s compensation
  • employer taxes on that compensation (if W-2)
  • depreciation
• amortization
  • interest
  • personal or non-recurring expenses (e.g., auto, retirement, medical)

• These adjustments must be reasonable and typical for bank underwriting.

2. Arrive at the SDE.

• Be conservative. Clearly note each addback and the rationale for including it.
• You should exclude personal groceries, personal phone expenses and similar items. They are difficult to defend, and buyers may feel the SDE is being overstated, which reduces trust.

3. Create a net-proceeds worksheet.

• Begin with a defensible SDE multiple.
• Many owner-operated retail bakeries sell for approximately 2.0 – 3.0 × SDE, depending on the market.
• More systems and less owner labor typically support a higher multiple.

4. Check bankability.

• Share the numbers with a few lenders to determine whether the bakery is financeable.
• If it is, you can market the business as pre-approved for SBA financing, which attracts buyers.
• If not, the seller may need to seek an all-cash buyer or offer seller financing secured by a UCC-1 filing.

5. Estimate net proceeds.

• Subtract broker fees, escrow fees, loan payoffs (EIDL/SBA/equipment) and estimated taxes (consult a CPA).
• The result is a rough estimate of potential payout.

6. Use caution.

• Do not set expectations around this early estimate. Many variables influence the final number. Professional guidance is strongly recommended.

7. Build a quick-view scorecard.

• Chart the last 24 months of monthly sales, COGS, direct labor, operating costs and net income.
• Graphing these trends helps buyers and lenders understand cycles and stability.

Weeks 3–4: Trim Complexity Without Trimming Quality

1. Focus the menu around hero SKUs.

• Pause or retire slow movers that require prep time without contributing meaningful margin.
• Identify the top 20 items by movement, gross sales, and margin, ideally with minimal outliers.

2. Standardize recipes and yields.

• Include target weights, waste assumptions and updated pricing that aligns with target COGS percentages.
• Replace old, stained recipe cards with a clean binder and protected sleeves.

3. Document core SOPs.

• Include opening/closing procedures, batch sheets, sanitation, cash handling, inventory, ordering (PAR sheets) and holiday timelines.

These efforts increase buyer confidence. Some buyers change nothing for six months after closing. Organized documentation reduces friction, accelerates training and minimizes post-closing questions.

Weeks 5–6: Stabilize the Team and Schedule

1. Map the labor structure.

• Identify key employees, openers, mixers, decorators, closers and cross-trained roles.
• Note leadership potential, initiative and other relevant traits.

2. Protect key roles.

• Consider retention bonuses tied to a post-closing timeline.
• This may be required by lenders if buyers lack direct experience.
• Document any family members on payroll, their duties and whether they intend to stay.

3. Maintain clean payroll records.

• Ensure timecards and payroll summaries are accurate and align with the financial statements.

Weeks 7–8: Lease & Equipment — Eliminate Surprises

1. Review the lease.

• Gather the base lease, amendments, options, assignment clause, assignment costs and landlord contact.
• Understand the approval process and personal guarantee requirements. (Some landlords release the guarantee at assignment; others do not.)

2. Prepare the equipment list.

• Include make, model and serial number for all included assets.
• Note all liens or leases and remaining balances. Provide lease contracts if they are assumable.

3. Verify taxes and filings.

• Confirm state sales tax (if applicable) and employment disability taxes are current.

4. Address PPP (Paycheck Protection Program) or EIDL (Economic Injury Disaster Loans) obligations. If balances remain, expect payoff demands during escrow. This ties directly to the net-proceeds calculation.

5. Ensure permits are current.

• Maintain health permits, fire/hood inspection reports, and the resale certificate in a single organized folder.

Weeks 9–10: Package the Story Buyers Want to Read

The broker will create a Confidential Information Memorandum (CIM) that includes:

1. What the bakery sells and to whom (walk-in, delivery, catering, wholesale), plus foot traffic counts, average ticket size and seasonal trends.

2. Sales, COGS, direct labor, overhead and net income for the last 24 months.

3. A one-page SDE summary, including valuation methodology and multiplier rationale.

4. Team member list with roles, pay rates and tenure (names and SSNs redacted).

5. Lease summary (base rent, CAM options).

6. Equipment list.

7. “Why we’re durable:” location drivers, supplier relationships and hero products.

8. Clean, high-resolution photos of the front of house, production area and key equipment.

9. First pages of the last three years’ tax returns and P&Ls as addendums.

Weeks 11–12: Go to Market Confidentially and Confidently

• The broker will post the listing on the major business-for-sale websites and manage all inquiries.
• Buyers typically search by industry, location and price.
• Unless instructed otherwise, the broker will keep the business name and precise location confidential.

1. Outreach.

• Pre-screen buyers under NDA (non-disclosure agreements), coordinate lender pre-qualifications, and prepare the landlord for assignment discussions.

2. Site visits and Q&A.

• Qualified buyers tour the space and begin due diligence questions.

3. Deal structure.

• Typical structure: 10% down with the balance due at closing, either cash or financed.
• When Small Business Administration (SBA) financing is used, seller notes must usually be placed on full standby. The SBA must be repaid before the seller receives payments.

Standard buyer contingencies include:

• financial review
• lease assignment or new lease approval
• financing approval, if applicable

The allocation of purchase price must be mutually agreed upon and used for tax reporting. Sellers should consult their CPA because the allocation materially affects tax outcomes for both parties.

What Buyers Really Pay For

1. An SDE that supports the buyer’s cost of living after financing

2. A simple, repeatable menu with reliable yields and hero items

3. A strong back-of-house team and a disciplined front-of-house manager with documented roles

4. An unencumbered lease with favorable terms and limited personal guarantee

5. Documented SOPs across production, sanitation, cash handling and ordering

6. Clean permits, no hidden liens and no active or threatened legal issues

Final Thought

Buyers want confidence that tomorrow will look like today. Only bigger and better. In 90 days, a bakery owner can package that confidence on paper, in operations, and within the listing itself. Sellers will see the impact in stronger offers, faster diligence and smoother lender approvals.

---

Disclaimer: This document provides general information and is not tax, legal or financial advice. Consult qualified advisors. This is not a comprehensive list and reflects only the main points in preparing to sell a bakery.

---

Brian Bacher is a business broker specializing in bakeries and cafes for Flour & Finance, Bakery Sales & Advisors. He has 27 years in the baking and café industry, including 14 as a multi-unit bakery owner.

(This article appeared in the Winter 30 issue of Pastry Arts Magazine)