Looking to buy a restaurant and not sure where to start? There are many upsides of obtaining an existing restaurant, the top one being it’s already set up. When acquiring a business the startup costs can be much less than starting from scratch. That’s why this attracts many restaurateurs looking to buy a restaurant.
So, how do you buy it? What do you look for? It’s important to ask the right questions so you can identify the right restaurant for you. In this blog post, we’re going to cover critical questions and points to consider for this.
Here are 5 questions to ask yourself before buying a restaurant:
1. Why is the restaurant for sale?
This is the first and most important question to ask. Does the owner no longer want to be in the industry? Are they retiring or facing burn-out? Did this restaurant go out of business? And was it because of the location, food, or service?
When you decide to take on the role of new ownership, that includes dealing with all past matters. The good, the bad, and the ugly. Once you’ve uncovered the reasoning for the listing, this can play into what to change and what not to change. Or, whether you should continue looking for other options.
2. How are current operations running?
Keeping a lookout and analyzing the current operations are very important. This ties into the first question as well. Is bad operations a reason why the restaurant is up for sale?
These questions are important to consider. On the flip side, if a restaurant’s current operations are working well, then you may decide to keep it the same. Either way, a good analysis of the two sides of operations will help you with your new acquisition. The good and bad will help you spark new ideas if you decide to take ownership.
A couple of areas that are a must to assess are:
- Restaurant Technology
- Equipment (BOH and FOH)
- Building Inspection
Does this restaurant currently own or rent kitchen equipment? How far along are they in any and all contracts? If looking to take over operations as they are, these questions are critical to know. When things are out of date you have to start thinking about extra money out of your pocket.
Use this technology audit to review where your restaurant can integrate solutions. This audit will help identify where technology is lacking and how you can make changes.
3. Are there any legal or tax issues?
One of the most important things to pay attention to during this process is any legal or tax issues. If you aren’t up to date with the restaurant’s regulations, it can be a big issue. Don’t let any violations hurt your new business. Any previous taxes owed or legal violations against the prior owners can stay with you.
Here’s what you can do:
You must first understand where the restaurant stands. Ask the seller to give you the most recent documents and the latest updates. Be specific. Ask them if there is any unpaid sales tax or overtime. Make sure you are aware of any health code violations. All these can negatively impact your business and put your future success at risk.
After this, you will want to do your own research and digging. There are several websites to help you stay up-to-date with inspection results. Your local health department should have compliance observations and scores available online.
4. Is the restaurant’s branding clear?
Before acquiring a restaurant it’s important to have a game plan. Before going into it decide if you are going to be rebranding, or keeping things the same.
Either way, it has to fit you and your new goals for the restaurant. You may choose to change a few color schemes, or you may want to redo everything to fit your new vision. This decision will depend on your audience and your competitors as well. That’s why it’s important to have a strategic plan beforehand. At the same time, ask seasoned restaurant owners for their opinions – it’s valuable. Carefully assess and ask your employees their opinions as well.
If you are unsure where to start, first take a look at the menu and see if you would like to keep it as is or make changes. From here you will be able to see what steps you’re going to take. After making the first steps, you can start planning out your marketing strategy.
5. What reputation does the restaurant currently have?
What were people saying about the restaurant before you bought it? This is definitely something to keep in mind.
If the reputation of the restaurant was bad, you may want to consider changing it up and starting fresh. How to find out where the restaurant stands? Start by checking online reviews and social media sites.
This will give you a good insight into what customers think about your restaurant. From here you will be able to gauge where you want to pivot. The standard sites are Yelp, Google My Business, Facebook, and Tripadvisor.
At the same time, you will have to see the community where the restaurant is. Take a look at your audience and see how they interact with the restaurant. If it’s negative, think about ways how you will change it to be positive.
Transitioning Your New Restaurant
After a thorough analysis of the questions above, it’s time to decide. Let us help you along the way. CAKE offers solutions for every dining experience. Whether you’re switching systems or starting fresh, our POS is easy to set up and use.
For more help, check out our blog, “What To Do When A Restaurant Changes Ownership.” We go over the challenges of employee retention and controlling finances. Covering recommendations for making your mark and changing your technology.
Ultimately, these questions are to help restaurateurs know exactly what to look for. Using these will allow you to find the right restaurant for you. Best of luck in your future restaurant endeavors!