Buying A Restaurant?
Making the decision to buy a restaurant is only the first step. There are many important factors that need to be studied before entering into any kind of purchase contract.
There are good deals and bad deals. There is a constant parade of restaurant being advertised for sale. It is important that you evaluate each opportunity and dig down to find out ALL the details. The emotions that come with seeing a place that could be your dream restaurant should not guide your choice. You need to do a lot of due diligence to make sure you understand what you'e buying!
Before You Buy A Restaurant You Need To Know About The Seller
When you're considering purchasing an existing restaurant the first thing you need to know is why the current owner is selling. It may be something as small as a personal choice or as big as bankruptcy or loss of clientele. These are things you must know before you buying any restaurant. Any owner with nothing to hide should have no problem showing you the financial books. Anyone who won’t be open and forthcoming should probably be avoided.
Property evaluations can tell you plenty about the building itself and its worth on the market. In a booming economy this is a step you cannot afford to overlook if you want to avoid being taken for more than the restaurant is worth. You may also want to consider comparing a franchise purchase to a stand alone restaurant purchase. Though fees are applicable with a franchise, it’s already established and usually successful. As well, you will be familiar with the menu and the company.
The restaurants reputation can speak volumes to a potential owner. Examining the location and clientele can tell you a lot about a place. A shady neighborhood can drive customers away and greatly reduce profitability. Also, check with city hall and local planning boards to see what upcoming development is planned. Buying a restaurant only to find out there is a major traffic bypass coming in one year can be a tragedy. An awareness of takeover costs and potential liabilities are also large components when deciding to buy your new restaurant. You don't want to have any surpises after you close on the deal.
I've written another article on this website that describes the 3 reasons that restaurants are put up for sale. Here's a link to that article: (Why You Shou Buy A Restaurant)
Take your time. Make sure all the kitchen equipment is working. Check for liens and chattels and any health code violations. If this deal isn't perfect, there will be another opportunity present itself shortly. Be patient!