What should a grocery buyer put in the LOI first?
Inventory count mechanics, license outs, lease assignment, scan-data access, and how earnest money is released. Price without those lines is a headline.
Mark the Buyer Underwriting Workbook, then book a confidential intro with the outs you want written before anyone asks for exclusivity. Grocery Store Business Broker — HedgeStone Business Advisors, led by Jason Taken — treats a grocery LOI as the first binding grocery document, not as a polite price note. Jason also reads grocery paper through Jaken Finance Group, which is how earnest money stays attached to clocks a lender and a landlord will actually recognize.
Reps, inventory rules, license outs, and access to scan data are the buyer-side letter. Price is the sentence everyone remembers. The grocery letter is the rest of the page. The LOI terms that matter for sellers is the other chair. Read both before you sign exclusivity.
Earnest money that is not a donation
A deposit without grocery outs is a gift. Write where the money sits, who holds it, and which events return it. License denial, landlord refusal, a recast that cannot carry debt service, and a material hole between scan and tax are grocery events. “Buyer’s dissatisfaction” is not a grocery event. Sellers will not give you a tourist out. You should not give them a silent deposit.
SBA 7(a) can finance a change of ownership; the published maximum is $5 million. If your path is 7(a), conventional, or a seller note, name the path and a drop-dead date. A letter that says “subject to financing” without a path is an argument waiting for week five. Conventional and alternative financing and buying with seller financing are the stacks. How much money you need is the cash the letter should assume you can show.
Grocery is thin. FMI’s 2.1 percent average net profit for food retailers in 2025 is a food-retailer net sample. There is not much room to discover a rent hole after you have already handed over earnest. Run the rent-as-percent-of-sales checker before you write the number. The cash-to-close estimator exists so the deposit is sized to a buyer who can still close.
Inventory rules written before anyone counts
Inventory at cost is a separate line. Retail tags are not cost. The letter should say how the count works, what is unsellable, who pays the crew, and how disputes resolve. FIFO versus a messy room is how you start a fight at 2 a.m. See how inventory is counted at closing and closing-day count procedures. The inventory value estimator is a teaching tool. The letter is where the rules become deal terms.
Turns are not one number. Center store and the perimeter do not share a clock. A letter that treats inventory as “plus stock at seller’s number” has already lost the back room. Working capital is the cash to buy the next wholesaler load. An over-advance on the wholesaler statement is debt. Write whether that debt is paid at close or assumed. DSD vendors will keep delivering after a sloppy close only if someone is paying them.
Most independents close as asset sales. Preview the APA in the letter: included assets, excluded assets, and the count that binds the price. Read asset purchase agreement essentials. APA schedules are where the real store lives. The LOI should not pretend the APA will invent those schedules later.
License outs that actually let you walk
USDA FNS: SNAP authorization does not transfer. The new owner files a new application. Write that fact into the letter as a condition and as a calendar. Budget downtime in cash and in the story you tell the landlord. A letter silent on FNS donates the deposit if the week depends on EBT. Read EBT / SNAP diligence and what happens to SNAP authorization when you sell. Print the closing and license checklist.
Alcohol is a class, a quota, or a control-state product — NABCA lists 17 control states plus local-control pockets. It is never “the liquor license” as one magical asset. Write the class, the quota problem, or the control-store reality into the out. Read state-by-state alcohol regime and liquor license due diligence. WIC is a vendor file, not a sticker on the door. Lottery contracts are often personal. Tobacco sits with tax and health agencies. Each one is a condition or it is a hope.
Tax clearance belongs in the letter’s escrow sentence. Bulk-sale or successor-liability practice can still exist after UCC Article 6 died. Read state-by-state bulk sales and tax clearance. Attorneys who have never closed a grocery file will rediscover SNAP in week six. Bring them working with attorneys and CPAs before exclusivity starts.
Scan data access during the diligence window
Due diligence clocks start when exclusivity starts. If the letter does not give you scan data, sales-tax filings, EBT deposits, and wholesaler statements, you have locked yourself out of the adult conversation. A weekly-sales spreadsheet without department mix is a rumor. Read verifying sales with scan data. Anatomy of a grocery P&L is the department read.
FMI reports $1 trillion in 2025 supermarket sales, $668,377 average weekly sales per supermarket, and $19.59 weekly sales per selling square foot. Those Speaks channel facts are not this store’s week. Your letter should demand the four trails that can prove this store’s week. A gap is mix, downtime, or fiction. Unreported cash does not survive SBA 7(a) and it does not survive a serious conventional buyer. If the seller will not open scan under NDA, do not write a large deposit.
BizBuySell grocery and supermarket businesses sold in 2025 printed a 3.38 average earnings multiple and a 1.60–3.15 interquartile range on the 2021–2025 sold sample. Those are national listing-site figures. They are not a reason to skip the recast. Recast SDE before you argue a multiple. Add-backs that repeat every year are the business. Recurring shrink is not an add-back. The valuation hub is the method. Recasting a grocery P&L is the worksheet.
Lease assignment as a written condition
Lease assignment is a landlord conversation you start before the letter, and a condition you write into the letter. Remaining term under twenty-four months without options is a price cut, not a footnote. Occupancy that eats the mid-single digits of sales needs a recast or a renegotiation. Read lease diligence for assignment, exclusive use, co-tenancy, and CAM. CAM true-ups can erase a year of “extra” SDE. A below-market related-party rent juiced the earnings and will reverse on day one.
Owned real estate is a second asset. If the building is in the deal, the letter should say so as a second price. Recast the store on market rent, then cap the building. Buying a store with real estate is two files. An oral lease is a walk. Write that.
Transition hours are a close condition. Write them. A cutter who leaves Friday and a buyer who cannot hire one by Monday is how a full-line box misses the week. Read transition and training periods. State minimum wage is a model input if you will hire the hours the seller worked for free. Union contracts and WARN clocks show up on larger headcount files. Read handling employees, union contracts, and WARN.
Exclusivity, drop-dead dates, and what you surrender
Exclusivity is what you give the seller in exchange for taking the store off the market. It should be short enough that a stalled license clock does not burn a season, and long enough that you can finish diligence. Write the drop-dead date and what happens to earnest if a third-party clock — FNS, alcohol, landlord — is the reason you are late. Grocery clocks are not real-estate clocks.
Non-competes have to be enforceable in the state and narrow enough to keep. Preview the non-compete in the letter if the seller’s next store would kill the week you just bought. Read non-competes and confidentiality. Employees learn from vendors and shoppers. Confidentiality is a process, not a speech. The NDA comes before the CIM. The LOI comes after you have seen enough to write grocery outs.
Comparing letters means cash at close, note terms, inventory treatment, and license risk — not the headline price. Read comparing offers. A pretty CIM is not a reason to skip the outs. How to read a CIM is the annotation method. Red flags that should kill a grocery deal exist so you stop writing deposits on stories.
How the LOI should preview the APA
The letter should name the deal as an asset sale unless you have a rare reason to buy stock. Asset sale versus stock sale is that choice. Preview holdbacks for shrink and successor tax. Preview purchase-price allocation as a CPA item, not as a handshake. Read escrow, holdbacks, and earn-outs. An earn-out on grocery is hard because you control mix after Monday.
Banner fees and program charges belong in the recast if you will keep the fascia. Write banner consent as a condition if the sign is part of the price. Read buying a franchise or banner store versus independent. Wholesaler consent belongs in the same paragraph.
Wholesaler consent belongs in the letter if the book is the going concern. A banner you cannot keep is a different store than the one you toured. Write the consent as a condition, the same way you write landlord assignment. Read wholesaler and banner agreements before you size earnest. An over-advance you discover after exclusivity is a re-trade you should have conditioned.
Mark the letter against the CIM the way you will mark the APA later. Every number in the teaser should have a diligence trail in the letter: weekly sales to scan, rent to the lease, licenses to the agency list, inventory to the count rules. A CIM that omits the lease abstract is a brochure. Do not write a large deposit on a brochure. How to read a CIM is the annotation method. Preparing three years of financials is what you want the seller to have already done.
Working capital and cash-to-close should appear as buyer acknowledgments, not as seller promises. The cash-to-close estimator exists so you do not surprise yourself after the letter is signed. Teaching example, labeled illustrative: equity plus inventory plus SNAP reserve is the buyer you are, not the down-payment slogan in the first paragraph of the LOI.
If you are buying the building too, the letter should say so as a second price and a second diligence path. Recast the store on market rent first. Buying a store with real estate is two files. A sale-leaseback is a structure, not a magic out. Read sale-leaseback strategy only after the store stands alone.
Start at how to buy a grocery store step by step if you have not yet decided whether you can fund and operate this format. The buyer hub is the method. How it works covers the sequence after you are under NDA. The FAQ and buyer FAQs cover the relationship. About Jason Taken is the practice.
When the outs are written, earnest is sized, and scan access is in the letter, book a confidential intro. Bring proof of funds, the capital path you intend, and the license clocks you will not donate a deposit over. That is enough to write a grocery LOI a seller can answer and a buyer can still walk from.
Worked math for LOI terms that matter for grocery buyers
Use this napkin recast on LOI terms that matter for grocery buyers when you book the call. It is labeled illustrative. BizBuySell's 2025 grocery sold-business earnings multiple averaged 3.38, with a 2021-2025 IQR of 1.60-3.15.
| Input or output | Illustrative figure |
|---|---|
| Weekly sales (illustrative) | $108,000 |
| Annual sales | $5,616,000 |
| Recast SDE | $263,952 (4.7% of sales) |
| Inventory at cost | $468,000 (~12 turns) |
| Occupancy check | $179,712 / year (3.2% of sales) |
| Low going-concern | $1,035,497 at 2.15x SDE + inventory |
| High going-concern | $1,180,670 at 2.70x SDE + inventory |
| Sketch DSCR on a note | 1.45 |
Rent at 3.2% of sales is the occupancy check. If the real lease is higher, the SDE in this table is too generous until you recast to market rent.
Bring proof of funds or a lender pre-screen, your format, and geography. Jason will tell you whether a store like this can clear SBA or seller-carry math.