Ghost Kitchen LOI Template & Negotiation Guide

Parties and Transaction Overview

Identifies the buyer, seller, and the specific business entity or assets being acquired. In ghost kitchen deals, clarity is critical about whether you are buying the legal entity (stock or membership interest purchase) or the underlying assets — platform accounts, brand IP, recipes, customer data, and equipment. Most ghost kitchen acquisitions are structured as asset purchases to avoid inheriting platform account disputes or hidden liabilities.

💡 Sellers often prefer an entity purchase to simplify platform account transitions, since delivery platform merchant accounts are technically non-transferable under most terms of service. Buyers should push for an asset purchase structure but include a specific transition services period during which the seller operates the platform accounts under their credentials while transferring brand control. Address this explicitly in the LOI to avoid disputes during due diligence.

Purchase Price and Valuation Basis

Establishes the proposed total consideration and the financial basis on which it was derived. Ghost kitchen valuations typically range from 2.5x to 4.5x EBITDA, with premium multiples reserved for operations with diversified platform revenue, strong brand ratings, and documented direct-order channels. The LOI should specify the trailing twelve-month EBITDA figure used and confirm that the final price is subject to financial verification during due diligence.

💡 Ghost kitchen sellers frequently present top-line platform revenue without netting out delivery commissions, refunds, and chargebacks. Insist that the EBITDA figure in the LOI reflects net revenue after all platform fees. A business reporting $1.2M in gross platform sales may net only $840,000 after 20–30% commissions — a distinction that dramatically changes the valuation. Build this clarification into the LOI language before you spend time on due diligence.

Earnout Structure

Defines contingent payments tied to post-closing business performance, which are especially common in ghost kitchen deals due to uncertainty about whether brand loyalty and order volume will transfer to a new operator. Earnouts protect buyers against revenue erosion while giving sellers upside if the business performs as represented.

💡 Sellers will push back on earnouts that are within the buyer's operational control post-closing — and rightly so. If the buyer changes the menu, raises prices, or reduces marketing spend, they could suppress earnout performance unfairly. Include a mutual covenant that the buyer will operate the Business in a commercially reasonable manner consistent with pre-closing operations during the earnout period. Tie at least one earnout metric to an objective, third-party-verifiable figure like platform revenue dashboards rather than buyer-reported financials.

Deposit and Exclusivity

Establishes the good faith deposit amount and the period during which the seller agrees not to solicit or accept competing offers. Exclusivity is critical in ghost kitchen deals where strong-performing concepts can attract multiple inquiries from roll-up platforms.

💡 Sixty days is the standard exclusivity window for ghost kitchen deals of this size, but it is often tight given the complexity of verifying platform account histories and negotiating facility lease assignments with third-party operators like CloudKitchens or Kitchen United. Request a 15-day automatic extension option tied to active due diligence progress. Sellers should resist open-ended exclusivity without a defined deposit — it creates leverage imbalance.

Due Diligence Contingencies

Specifies the buyer's right to terminate the LOI without penalty based on material findings during due diligence. Ghost kitchen-specific contingencies should address platform revenue verification, facility lease transferability, key person dependency, and brand rating authenticity.

💡 Sellers are often unprepared for the granularity of platform-level due diligence. Require sellers to provide platform payout statements — not just bank deposits — to verify net revenue after commissions. CloudKitchens and Kitchen United facility leases frequently include clauses prohibiting assignment without landlord consent, which can kill a deal late in the process. Address lease transferability as an explicit go/no-go contingency upfront rather than discovering it during legal review.

Financing Structure and SBA Contingency

Outlines the proposed financing for the transaction, including any SBA loan component, seller note, and equity injection. Ghost kitchens are SBA 7(a) eligible as operating businesses, but lenders require careful attention to asset documentation and business continuity given the intangible-heavy nature of these acquisitions.

💡 SBA lenders underwriting ghost kitchen acquisitions often struggle with collateral coverage given the limited tangible assets. Expect lenders to require personal guarantees and to scrutinize platform revenue concentration heavily. If more than 60% of revenue comes from a single platform, some lenders will discount that revenue or require additional collateral. Build enough buffer in your purchase price allocation to account for an appraisal of intangible assets including brand value and platform account goodwill, which many SBA lenders will want formally documented.

Seller Representations and Transition Obligations

Defines the seller's commitments regarding the accuracy of business information and their obligations to facilitate a successful operational transition post-closing. Ghost kitchen transitions are uniquely dependent on the seller's cooperation in transferring platform relationships, training kitchen staff, and maintaining brand quality during the handoff period.

💡 A 60-day transition period is the minimum for most ghost kitchen deals. If the seller's personal brand — their name, face, or social media presence — is embedded in the concept, negotiate a longer non-compete and a social media transition plan. Sellers who are burned out often underestimate how much institutional knowledge lives in their heads rather than in documented SOPs. Use the due diligence process to stress-test the SOPs before closing rather than discovering gaps during a chaotic transition.

Non-Compete and Non-Solicitation

Restricts the seller from launching competing delivery-only concepts or soliciting platform customers within a defined geography and timeframe post-closing. Given the low barrier to launching new ghost kitchen concepts, aggressive non-compete terms are especially important in this industry.

💡 Three years and fifty miles is aggressive but justifiable in ghost kitchen deals given how easily a former operator can relaunch a competing brand on DoorDash within weeks using a new LLC and the same recipes. Sellers will often accept a broader non-compete in exchange for a higher seller note or earnout. If the seller is transitioning into a completely different cuisine vertical, you may negotiate a carve-out, but maintain the restriction on the exact cuisine type and the specific delivery zones where the business has established ratings.

Confidentiality

Binds both parties to maintain the confidentiality of all business information shared during the LOI and due diligence process, including platform revenue data, customer databases, recipes, and supplier pricing.

💡 Ghost kitchen sellers are particularly sensitive about recipe confidentiality — their menu is often their only defensible asset. Consider a separate standalone NDA executed prior to sharing any detailed financial or operational data, and reference that NDA in the LOI rather than relying solely on this section. Buyers should also protect their acquisition strategy if they are executing a roll-up, as disclosing target criteria can affect pricing in subsequent deals.

Binding and Non-Binding Provisions

Specifies which sections of the LOI are legally binding and which are expressions of intent only. This protects both parties while preserving flexibility during due diligence and negotiation of the definitive agreement.

💡 Never sign an LOI where the purchase price or deal structure is presented as binding before due diligence. In ghost kitchen deals, the gap between seller-represented revenue and verified net platform revenue after commissions is often significant enough to materially change the valuation. Keep the price non-binding with a clear mechanism for adjustment based on due diligence findings, and make sure both your attorney and the seller's attorney confirm which provisions are enforceable under applicable state law.