Buying an existing restaurant in 2024 can be a great way to start the year. Buying a restaurant already established and built out can be a cheat code to success. Franchise Restaurant concepts are searching for existing restaurant space to convert to new concepts to save money on the initial build-out cost.
The Restaurant Broker at EATS Broker provides some tips on the buying process when it comes to restaurant resales:
Have a goal: When it’s time to consider buying a restaurant, buyers should have goals in mind that they want to achieve. The goals can vary depending on the buyer’s ambition.
– Buying Cashflow
-Continue current concept and grow sales
-Open more locations of the same concept
-Convert to a new concept and save on build-out cost
-Buy an established Franchise Restaurant for sale
-Buying an Asset Sale (Restaurant not making money) for pennies on the dollar of initial build-out cost.
Research and Market Analysis:
Potential restaurant buyers should research the restaurant physically and online. Visiting the restaurant as a customer is highly recommended to get the experience. Visiting the restaurant is a great place to start thinking about the Pros and Cons of the restaurants for sale.
Researching the restaurant’s online presence via Google or social media is an opportunity to learn more about the customers’ perception of the restaurant.
EATS Broker items to consider when doing research are:
-The Restaurant Segment you have interest
-Competition in the area
-Target market
-Potential for growth
-Google Reviews
-Specific location demographics, average household income, vehicles passing per day, street visibility
Financial Assessment of buying a restaurant:
When buying a restaurant, the most important task is understanding the financial obligations. Restaurant buyers will review the financial records of the existing restaurant, including profit and loss statements, sales tax filings, POS sales reports, balance sheets, tax returns, and cash flow statements.
Evaluate the current and past financial performance to determine the restaurant’s profitability. Buyers will assume the current agreed lease terms between the restaurant seller and landlord. The lease is usually a new buyer’s most significant financial obligation unless they get a bank loan.
Restaurant Business Broker suggestions for items to consider on the lease:
-Yearly rent increases
-Years left on year
-The number of options to extend the lease
-Lease Assignment Fee
-Assignment Clause
-Exclusive Clause
-Relocation clause
-Lease Renewal notice requirement
Buying an existing restaurant is a wise path to restaurant ownership, but buyers should educate themselves about the buying process before starting the search. An existing restaurant has already built a brand identity, which can help to establish credibility and trust with customers. Or it provides a great option to convert to a new concept.
For more information on the restaurant market and other available consulting services or a complimentary restaurant valuation, contact Restaurant Business Broker Dominique Maddox at 404-993-4448 or email at [email protected]. Visit our website at www.EATSbroker.com
