The Business: Are you looking to cook up a deal that'll take you away from the corporate grind? Consider this 36-year-old Maryland restaurant, which has won regional and national culinary awards by dishing up only the highest-quality seafood (as well as steaks, pasta, and chicken for landlubbers) at moderate to expensive prices. The restaurant's assets include its prime location near residential communities as well as corporate offices and hotels. On the menu: the 7,200-square-foot restaurant, housed in a one-story building, as well as a parking lot with 119 spaces, on nearly two acres of land. Also appetizing for a buyer: the chance to step into long-standing relations with the region's top seafood suppliers. The owner, who has served as both chef and business manager, is ready to hang up his toque, but his staff of 16 full-time and 29 part-time employees should stay on for the next seating.

Price: $4,500,000

Outlook: It's tasty, since a new owner could turn up the heat on this business in several ways. Two are no-brainers: serve lunch on weekends (the restaurant already attracts a big lunch crowd during the week) and stay open past 10:30 p.m. on Fridays and Saturdays (to boost bar sales, which now bring in just 20% of revenues). Also, there's room for the small take-out and catering operations to expand. Don't worry about competition from down-market chains, which have tried unsuccessfully for years to encroach upon this restaurant's turf.

Price Rationale: Now for some heartburn. Restaurant valuations have slipped in recent years for several reasons, including staffing difficulties in a tight labor market. Rule-of-thumb valuations suggest that this company is priced too high. Currently, the norm for seafood restaurants is 30% of sales ($900,000) plus the assessed value of real estate ($1.5 million); inventory ($45,000); and an estimate for fixtures, equipment, and art collection ($250,000); so a ballpark price might be $2.7 million. Another valuation method suggests 70% to 80% of sales, with real estate included in that figure, but that would lower the price to $2.1 million to $2.4 million. Since this restaurant seems better positioned for growth than much of its competition, it might make sense to rely on the higher appraisal.

Pros: Who could resist this time-tested recipe for success, the wide range of opportunities for expansion, and -- oh! -- all those Maryland crab cakes?

Cons: If you swallow a price that's too high, indigestion will be the least of your problems.

Gross Revenues Recast Earnings*
1998 $2,289,000 $390,000
1999 $2,750,000 $450,000
2000** $3,000,000 $600,000

Note: All fiscal years end on January 31.
*Before taxes.

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Al Horvath, VR Business Brokers, at 410-772-0006.

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