Closing a Restaurant: A Checklist for Equipment, Inventory, Leases and Accounts

A step-by-step checklist for permanently closing a restaurant: lease, staff, taxes, licenses, food inventory and equipment liquidation.

By Food Service SurplusPublished 10 min read
Seller guideEquipment

This is a checklist for permanently closing a restaurant: winding down the lease, the staff, the accounts, and the food and equipment inside. It is not a nightly closing-shift checklist for cleaning and cashing out. If you are shutting the doors for good, the order matters. Work out who owns what before you sell anything, give staff and agencies the notice they are owed, and leave enough time to sell equipment and inventory, or you will be forced to take whatever buyer is available on the last day.

The timeline assumes roughly 60 to 90 days. If you have less, do the same steps in the same order, faster.

This guide is general information, not legal, tax or accounting advice. Closing rules vary by state, city, entity type and contract. Confirm your obligations with an attorney and an accountant before you act.

60–90 days out: find out what you actually own and owe

Start with paperwork, not the kitchen. Many closing mistakes involve selling something that was never the owner's to sell.

Lease and landlord

  • Read the lease for early-termination terms, notice requirements, restoration obligations and what happens to fixtures and improvements at the end.
  • Identify landlord-owned items. Hoods, walk-ins, grease traps and other built-in fixtures may belong to the landlord or have to stay with the space, even if you think of them as your equipment.
  • Talk to the landlord early. Depending on the lease, options may include a negotiated surrender, an assignment, or selling equipment in place to the next tenant.

Equipment you may not be free to sell

  • Pull every equipment lease, rental and financing agreement. Leased or rented equipment, such as some dish machines, ice machines and beverage systems, usually goes back to the vendor.
  • Check whether a lender holds a security interest in your equipment or inventory, which may be recorded as a UCC filing with your state. Financed equipment typically cannot be sold free and clear until the lender is paid or consents.
  • Have an attorney review leases, loan documents and personal guarantees before you commit to a sale or closing date.

Build the master equipment list now. For each piece, record make, model, serial number, approximate age, condition, whether it works, utility type (gas, voltage and phase, water, drain), dimensions and who owns it. Photograph the whole unit, the nameplate and any damage. This one list feeds your sale, your accountant's asset records and your landlord conversation.

30 days out: staff, taxes, licenses and accounts

Staff

  • Check whether the federal WARN Act applies. It generally covers employers with 100 or more employees, not counting those who have worked less than six months in the last 12 months or who average less than 20 hours a week. Covered employers must give at least 60 calendar days' written notice of a plant closing or mass layoff affecting 50 or more employees at a single site. Multi-unit operators should count carefully.
  • Check state law. Some states have their own closure-notice laws, and WARN does not preempt other federal, state or local requirements.
  • Confirm final paycheck timing. Federal law does not require immediate payment of a final paycheck, but some states do. Ask your payroll provider or attorney about your state's deadline, accrued vacation and tips.

Taxes and registrations

  • Meet your accountant. The IRS closing checklist includes filing a final return for your entity type with the "final return" box checked, filing Form 941 or 944 for the quarter you pay final wages, filing a final Form 940, and giving each employee a Form W-2.
  • Corporations that adopt a resolution or plan to dissolve must file Form 966, according to the IRS. Asset sales may also need Form 4797 or Form 8594.
  • Notify your state tax agency, file final sales tax returns and close your sales-tax permit.
  • File dissolution documents in every state where your LLC or corporation is registered. The SBA warns that skipping this can leave you exposed to continued taxes and filing requirements.

Licenses, vendors and accounts

  • Ask your local liquor authority how to surrender or transfer a liquor license. Rules vary widely by state and municipality.
  • Close your health permit and other local licenses according to local rules.
  • Give notice to distributors, linen, pest control, waste and grease haulers, and check each contract's termination terms.
  • Schedule utility shutoffs for after the space is empty, not closing day. You will need power, water and gas for buyer demos, cleanup and disconnection.
  • Keep POS and merchant accounts open long enough to settle final batches and handle chargebacks, then cancel them along with online ordering and reservation platforms.
  • Keep property and liability insurance in force until the keys are returned, and ask your agent about vacancy coverage.
  • Decide how to handle gift cards, catering deposits and event bookings. Gift card and unclaimed-property rules are state law, so ask your attorney.

Final two weeks: sell down food and supplies

Stop reordering and cook down perishables. Anything left after the last service becomes a disposal problem.

Inventory type Options to consider Watch out for
Perishable food Use it on the menu, return it to the vendor, sell it to another operator, or donate it Temperature history and date labels; never sell or donate food you cannot vouch for
Frozen and shelf-stable food Sell sealed cases or list them as a lot Buyers want counts, dates, lot codes and a pickup window
Packaging and disposables Sell full cases of containers, cups and bags Branded or printed packaging has few buyers
Cleaning chemicals Sell sealed product, or dispose of it under local hazardous-waste rules Never pour concentrates down a drain to clear shelves
Smallwares Sell as mixed lots Low value individually, so bundle them

Donating food. The Bill Emerson Good Samaritan Food Donation Act protects donors, explicitly including restaurants and caterers, from civil and criminal liability for apparently wholesome food donated in good faith to a nonprofit for distribution to needy individuals. It does not cover gross negligence or intentional misconduct. Amendments in January 2023 extended protection to "qualified direct donors", including restaurants and caterers, who donate directly to needy individuals, and to distribution at a "good Samaritan reduced price". The IRS also describes an enhanced deduction for business contributions of food inventory for the care of the ill, needy or infants, usually capped at 15 percent of net income. Eligibility depends on your entity and records, so confirm with your accountant.

For documenting and pricing food lots, see how to sell surplus food inventory. List food on the surplus food inventory page and packaging or chemicals on the surplus restaurant supplies page. The inventory carrying cost calculator shows what holding stock another week costs.

How do you liquidate restaurant equipment?

Restaurant equipment liquidation usually takes longer than owners expect and rarely goes to a single buyer. Start listing once the ownership check is done, and keep using the equipment until the last service.

Sort the list into buckets

  • Likely resale: working refrigeration, recognizable-brand cooking equipment, stainless tables and shelving, and ice or dish machines you own.
  • Maybe: older working units, specialty equipment with a narrow buyer pool, and very heavy or hard-to-move pieces.
  • Scrap or recycle: non-working units with scarce parts, or equipment not worth repairing.

Value depends on age, condition, brand, local demand and how fast it has to go. Be wary of "percent of new" rules of thumb. Price against comparable regional listings and adjust as interest shows up, or doesn't.

Choose channels. Dealers, consignment, auctions, marketplace listings, classifieds, and donation or scrap each trade off speed, control, fees and price certainty, and most closing kitchens use more than one. For a side-by-side comparison, read where to sell used restaurant equipment. Food Service Surplus is one option for reaching buyers directly. You list the equipment, set the price and arrange pickup or freight with the buyer. The platform does not buy, appraise, auction or remove equipment, and it does not guarantee a sale. Start from sell used restaurant equipment or create a listing.

Plan removal properly

  • State the removal deadline, access limits (stairs, doorways, dock, elevator) and who handles disconnection in every listing and buyer conversation.
  • Use a licensed plumber or gas fitter to disconnect and cap gas lines, and a licensed electrician for hardwired equipment. Check local permit rules.
  • Use a Section 608-certified technician for refrigerant work. EPA rules prohibit intentionally venting refrigerant when disposing of refrigeration equipment, and technicians who remove refrigerant from appliances must be certified.
  • Confirm with the landlord which items stay, and who patches, caps or cleans after removal.

How long does restaurant equipment last, and how is it depreciated?

Physical life depends on the equipment type, how hard it was run and how well it was maintained. EPA's ENERGY STAR program says most commercial kitchen equipment lasts eight years or more. That is a floor, not a forecast for any one unit.

Tax depreciation is a separate question. IRS Publication 946 gives asset class 57.0 (Distributive Trades and Services, covering assets used in wholesale and retail trade and in personal and professional services) a 9-year class life and a 5-year GDS recovery period under MACRS. The IRS Cost Segregation Audit Techniques Guide, which reproduces the IRS restaurant industry directive, puts restaurant food storage and preparation equipment in class 57.0 as 5-year property. Selling depreciated equipment can create taxable gain, so give your accountant the equipment list and sale prices.

Closing day and after

  • On closing day, run a final inventory count and photograph the empty space and any landlord-owned fixtures.
  • Collect keys, alarm codes and access cards. Settle the final POS batch and pull final sales reports.
  • Confirm utilities are shut off or transferred, with final bills going to a forwarding address.
  • Cancel remaining subscriptions and online listings, and update your hours so customers know you have closed.
  • File final payroll and tax returns. The IRS says to keep employment tax records for at least four years. The SBA suggests keeping tax and employment records for three to seven years.
  • Once all returns are filed, close your EIN. The IRS closing checklist explains how to request this by letter.
  • Relist unsold equipment at a lower price or move it to a faster channel.

Sources

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