Valuable Suggestions For Buying A Truly Successful Restaurant

For the would-be entrepreneur, a food and beverage industry option can be very attractive. After all, each one of us must eat and drink to be able to survive and we have to pay much attention to the fundamentals! While this may be the case, there are many complex and interrelated issues to consider before you buy a business involving an existing restaurant and it’s important to bear in mind that less than one in 10 purchases will actually succeed. Correct valuation upfront and an adequate process of due diligence will help you to survive against these odds and prosper.

One of the key skills that you can possess when you get ready to buy restaurant business assets is the ability to communicate and to decipher information. A number of meetings will be required with the seller and don’t be frustrated if the meetings don’t reveal some of the significant information. Normally, a seller will want to be just a little protective and will want to see how enthusiastic you are or whether you are really serious before any important data may be divulged.

There are some basic facts and figures to absorb before you are able to project your own figures for the future. What style of food does the business favor and how many tables are there in the restaurant? You need to know how many meals are served per day, per week and by month and if the menu is somewhat specialized, are the supplier contracts strong enough and is the supply chain sufficient?

In any business, labor costs are significant. How do the costs breakdown in this particular business and be careful if the strength of the organization is entirely based on certain personalities, key figures, or even the master chef. Tread carefully here as the seller may well want to keep news of the potential sale away from his employees, so you might not get some of the finer details right away.

When you start to compose a check-list of questions for the owner – and you might find you have hundreds, don’t be afraid to be as specific as you need to be and insist on appropriate answers. As you are preparing your position, though, remember that this type of business will call on very long hours and is typically a seven days per week activity. You will definitely be required to be good at managing people, dealing with significant problems and you might have to be patient before you can expect to see any profit from your endeavours.

As a new owner, you will need to set up and develop new relationships with all your suppliers. Sometimes certain suppliers may view a change of ownership as their chance to amend contracts to their benefit. You must be able to deal with distraught people, who may be upset because their table is not available, even though they booked it but arrived late. Employee motivation is very important and you should be ready to deal with every situation as it arises, whether that means praise or even termination!

When you’re sure that you are cut out to buy business interests in the restaurant industry, have tabled the right questions and received the comprehensive answers, are happy with your interpretation of the financials and contracts, then you are ready to discuss the value. Experts in this field should be engaged to help you understand what you are dealing with and you should use their findings to help you solidify your thoughts. If you know what the business bottom line is, the salary take of the owner, net profits and owner benefits, then you should adjust this figure according to any capital expenditure you feel is important.

With a restaurant for sale, expect your three major costs – food, labor and rent to be no more than two thirds of your total expenses and make sure that you have a first-class marketing plan so that you can tell the world about your new baby.

Richard Parker is the author of the How to Buy a Good Business at a Great Price series. As President and founder of Diomo Corporation – The Business Buyer Resource Center, his materials, seminars and consulting have helped thousands of business buyers realize their dream to buy a business.

Tagged with: business • marketing • retail • sales • wholesale

Filed under: Work at Home

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