LOI — Letter of Intent: the largely non-binding term sheet covering price, inventory treatment, exclusivity, and conditions. In a grocery deal it should say what happens to SNAP, alcohol, the lease assignment, and inventory counted at cost. On a grocery sale the term is used the way operators and lenders use it, not a non-food textbook definition.
An LOI silent on inventory-at-close is not a grocery LOI.
Operators, lenders, and buyers do not use this word the way a generic small-business blog uses it. On an independent grocery file it shows up in the recast, the count, or the license calendar.
Why it matters on a grocery close
A CIM that name-drops LOI without tying it to SDE or inventory at cost is decorating. 2.1% average net profit for food retailers in 2025 (FMI Speaks sample) is channel context. 3.38 average earnings multiple on grocery/supermarket businesses sold on BizBuySell in 2025 is a sold-sample multiple, not a definition of LOI.
If LOI changes cash at close, write the mechanic into the LOI. If it is only vocabulary, put it in a footnote and move on.
Related terms
Read EBITDA, add-backs, shrink, turns, SNAP authorization, asset sale, and DSCR as needed. The glossary hub lists the rest.
| Topic | Grocery reading | Link |
|---|---|---|
| Earnings | Recast SDE or EBITDA | SDE |
| Stockroom | Inventory at cost | inventory |
| EBT | New owner application | SNAP |
| Debt | DSCR on the recast | DSCR |
Illustrative, not a quote. For a LOI, recast SDE of $309,174 at 1.72×–2.84× plus $232,754 inventory at cost frames a going-concern band of about $764,533 to $1,110,808. The 2.61× midpoint lands near $1,039,698. Lease remaining term and license lag can move the check more than the multiple.
Checklist: LOI
- Recast the P&L into SDE
- Separate inventory at cost
- Abstract the lease
- List SNAP, alcohol, food, WIC, tobacco
- Read the wholesaler agreement
- Write license conditions into the LOI
Illustrative, not a quote. Keep the conversation on LOI, scan data, and license clocks — not on a neighbor’s rumor multiple.
EBT deposits should reconcile to the SNAP story. A gap is either mix, downtime, or fiction. Put it in the CIM or it will show up as a re-trade.
Lease remaining term under 24 months without options is a price cut, not a footnote. See also lease diligence, liquor transfer, recasting a P&L.
Lottery contracts are often personal. Confirm before you count commission as durable.
Transition hours are a close condition. Write them. That is how a grocery file is actually read.
HFFI and state healthy-food programs change; do not quote a stale dollar cap. Put it in the CIM or it will show up as a re-trade.
Inventory night needs rules: what is unsellable, who pays the crew, how disputes resolve. See also SDE, inventory at cost, shrink, SNAP authorization.
The LOI should say how inventory is counted and how licenses are conditioned.
Scan data is the adult conversation. A weekly-sales spreadsheet without department mix is a rumor. That is how a grocery file is actually read.
Banner fees and program charges belong in the recast as continuing costs if the buyer will keep the fascia. Put it in the CIM or it will show up as a re-trade.
WIC is a vendor file, not a sticker on the door. See also turns, DSD, wholesaler, asset sale.
Add-backs that repeat every year are the business. Stop calling them one-time. That is how a grocery file is actually read.
Food-desert rhetoric does not replace a P&L.
Read lease diligence, liquor transfer, recasting a P&L. Cross-check how a sale works and the FAQ. Format pages live under sell an independent supermarket and buy an independent supermarket. Tools: valuation calculator, cash-to-close, rent checker.
A rural box can be a good living and a terrible loan. Those are different questions. See also lease diligence, liquor transfer, recasting a P&L.
DSCR is annual cash flow over annual debt service. Hope is not a ratio. Put it in the CIM or it will show up as a re-trade.
Comparing offers means cash at close, note terms, inventory treatment, and license risk — not the headline price. That is how a grocery file is actually read.
Multi-store sales need a shared recast and a shared license calendar, or they unravel store by store.
Turns are not one number. Center store and wine do not share a clock. See also SDE, inventory at cost, shrink, SNAP authorization.
A below-market related-party rent juiced the earnings and will reverse on day one. Put it in the CIM or it will show up as a re-trade.
Bulk-sale or successor-liability practice can still exist after UCC Article 6 died. That is how a grocery file is actually read.
WARN and union contracts are calendar items on larger headcount files.
Revenue multiples hide rent and labor. Use them to sanity-check, then return to SDE. See also turns, DSD, wholesaler, asset sale.
Earn-outs on grocery are hard because the buyer controls mix after Monday. Put it in the CIM or it will show up as a re-trade.
Distressed stores still have inventory and a lease. Price those, not a turnaround novel. Put it in the CIM or it will show up as a re-trade.
Department gross margin hides in a storewide blend. Meat and produce can sink a “healthy” number. See also turns, DSD, wholesaler, asset sale.
CAM true-ups can erase a year of “extra” SDE.
Alcohol is a class, a quota, or a control store — never “the liquor license” as one magical asset. That is how a grocery file is actually read.
Employees learn from vendors and shoppers. Confidentiality is a process, not a speech. Put it in the CIM or it will show up as a re-trade.
BizBuySell multiples are a listing-site sold sample, not chain M&A. See also lease diligence, liquor transfer, recasting a P&L.
Holdbacks exist because grocery has shrink and successor tax risk.
Post-close, the first 90 days are vendor trust, shrink, and not changing the mix for sport. That is how a grocery file is actually read.