FAQs – Restaurants

Buyers purchase restaurants for many reasons: 

  • The right concept, executed well, can be very financially rewarding. 
  • Everybody is your customer! People eat three meals a day, are short on time, and often don’t like to (or can’t) cook. 
  • Take advantage of multiple ways to generate revenue from your location, such as serving alcohol, providing catering and meal prep, and hosting events. 
  • Successful concepts can expand to multiple locations and are even candidates for franchising! 
  • Professional chefs or entrepreneurs who enjoy hospitality often find restaurants deeply satisfying. Plus, you have greater income potential plying these skills as an owner than as an employee. 
  • Restaurants are popular choices for E-2 visa business purchases. 

Before buying any restaurant, carefully consider these key factors: 

  • Location: Look for space with visibility, good signage, and exposure in a well-trafficked center. 
  • Competition: Evaluate the local competition in your niche, and make sure you have a competitive advantage. 
  • Demographics: Confirm that enough of your target audience live or work within convenient driving distance. 
  • Terms of the Lease: Evaluating a lease is a complex task, but in short, make sure the rent, terms, and options are market comparable or better. A good Broker can assist a great deal here. 
  • Parking: You’ll need sufficient parking to handle the mealtime rush. 
  • Clear menu and concept: The menu should be easy to understand, popular with your demographic, and the price point should match your concept.

Each approach has advantages. Asset sale advantages include: 

  • The space is already built, so you save substantial money (typically $50k - $300k+) on construction costs! Spend your cash instead on marketing, advertising, and working capital. 
  • Good locations, currently occupied by ineffective operators or the wrong concepts, become available often. Expand to an existing space rather than being restricted to new construction! 
  • Start with a health department approved kitchen that largely meets city construction codes. Only minimal improvements are typically required. 
  • Acquire a client base: introduce your food and brand to an existing audience. 
  • Save months of time: open your doors and start generating revenue way ahead of schedule. 

 Building from scratch also has advantages: 

  • Greater flexibility to tailor the location to your concept, as you’re not restricted by the prior buildout. 
  • Fresh buildouts have better odds at negotiating tenant improvement money or rent credits from landlords. 

New restaurant Buyers commonly make the following mistakes: 

  • Underestimating the startup costs to renovate (or build) and open a location. 
  • Signing a lease with unfavorable terms. 
  • Poorly matching their concept to the location and target demographic. 
  • Attempting to run a concept 100% absentee that is not suitable for absentee operation. 
  • Signing contracts with vendors (linen, credit card processing) on unfavorable terms. 
  • Expanding too rapidly, before the concept is ready and before the original location is well-managed and solidly profitable. 
  • Keeping poor books and records. Owners who are unable to analyze their performance and improve margins leave profits on the table! 

Successful restaurateurs: 

  • Keep their concepts fresh and forward-looking.  
  • Know their costs of doing business and strive to keep them under control.  
  • You're only as good as your employees. Reward them with fair wages and perks (free food!). 
  • Always have a fresh take to draw in customers: seasonal menus, specials, and promotions. 
  • Create (and enforce) standard operating procedures. Everyone must be on the same page. 
  • Touch tables. As the proprietor, give each customer a moment of your time, even if only to ask if their meal met their expectations. This little touch makes a big impression. 
  • Integrate yourself into the community. Support local organizations such as schools, police, fire, and businesses. Host local events, and work with your neighbors to bring more people to your center. 
  • Execute good advertising and marketing. Remember to prioritize a strong social media and web presence!! 
  • Work ON the business instead of IN the business. Spend your time improving and driving the business.
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