Should You Buy A Restaurant?

buy a restaurantAfter I published my ebook I receive a very regular stream of emails from my readers. One of the major questions I’m asked is along the lines of “Should I Buy A Restaurant Or Start From Scratch?” It’s really tough to answer that question for quite a few reasons. There is no right or wrong answer. Every situation and potential owner is different.

Let me explain my thought process when I was trying to decide whether to buy a restaurant or start fresh.

(To read the full story of how I bought a restaurant with no money down click here)

Good Reasons To Buy A Restaurant

- you’ve proven to yourself that the location is great
- you can clearly identify how you can improve the current operations and make more money
- it’s obvious the current owner is burnt out and by injecting some new life you could create more profit
- the equipment is in great working order and the decor doesn’t need major changes
- the place DOESN’T have a terrible reputation
- the location is in an area the is developing and improving
- there is a client base in place (ie. regulars)
- the owner is willing to hold some financing and be available for assistance
- you’ve checked with city hall planners and a 4 huge franchises aren’t moving in a new power center down the street in 6 months
- some of the current staff might stay on (they like working there)
- you’ve calculated that the kitchen equipment, decor and other chattels represent a major portion of the sale price
- the rent or lease is reasonable (and so is the landlord, unless you’re buying the property outright)
- the price is a great deal, all things considered, it’s cheap than starting a restaurant
- can you change things to fit your vision without losing the “regulars”

Reasons NOT To Buy A Restaurant

- the location is terrible
- you “think” you know what’s wrong with the current situation and “assume” you can fix it quickly
- the seller seems to be hiding things, has two sets of books, or gives you a “funny feeling” about his restaurant business
- most of the equipment is on loan, needs repair or the owner says, “I think it works, we just don’t use it very often”
- the decor, tables and chairs and most of the staff needs an Extreme Makeover
- the clients, neighbors, suppliers and owner needs an Extreme Makeover
- there are a majority of regulars you wish weren’t so regular
- you can’t figure out why the place isn’t MUCH busier
- there’s major renovation and development on the street in front of you planned for next summer (detours!)
- the current staff hate everyone (including themselves)
- the owner says he’s selling because of health issues, is moving out of the country, or any other reason to disappear after the sale
- the owner wants more than it’s worth or exactly what it’s worth (no real value deal)
- something in your stomach doesn’t feel right

So, Should You Buy A Restaurant?

buy a restaurantThat’s not a question that can be answered until you find a restaurant for sale and evaluate the situation thoroughly.

Starting a restaurant from scratch can cost more than buying and established one. The decision comes down to your research, gut instinct and some serious number crunching.

Make sure you have all your questions answered and double check your sources and assumptions BEFORE you make an offer to buy a restaurant.