Buying A Restaurant Building

With more than a decade of hospitality experience, Mary has worked in some of the most celebrated restaurants in the world. Her expertise is featured across Fit Small Business in restaurant, retail, and starting a business content.

buying a restaurant building

When you are in the process of starting a restaurant, buying an existing business can save you time and money. An existing restaurant already has the necessary operating permits and licenses. Specialized equipment like kitchen hoods and grease traps are already properly installed. Building and health inspections have already been done. If you plan to keep the whole concept from furniture to menus, you will also inherit vendor relationships and employees.

Before you visit restaurant locations, it is important to know what sort of restaurant you want to purchase. You can buy the entire business, including the existing business entity, in a bulk purchase of the whole operation. Alternatively, you can form your own business entity and only purchase certain assets of the restaurant.

If you intend to keep the restaurant running as is, you want to pursue a bulk purchase. A bulk purchase includes all of the assets listed above. If you plan to rebrand the business or dramatically renovate the space, purchasing only the relevant assets is a better option.

Try to visit each restaurant you are considering anonymously as a customer first. Experiencing the space from a customer perspective allows you to recognize the strengths and weaknesses of each restaurant. When dining, pay attention to general features like the ambiance and overall cleanliness of the space.

You should also note the flow of service. Are employees able to work around customers efficiently? Is there enough room at the bar, in the entryway, and the guest restrooms? Several other questions can help you determine if a restaurant space is the right fit for you:

If a restaurant business seems to fit your criteria, your next step is to contact the owner. Take care to reach the owner directly via email, phone, or in person. Avoid identifying yourself as a potential buyer to restaurant employees; they may not know that the business is on the market.

When you revisit the restaurant as a potential buyer, pay special attention to the non-public areas of the space. If you are not an expert in kitchen equipment, try to bring along someone familiar with those systems who can assess the quality of the equipment.

Once you decide to purchase a restaurant, you must secure a business attorney. Buying a business, particularly a restaurant, requires much legal paperwork so find a lawyer with restaurant expertise if you can. If you are purchasing the entire business entity, you inherit relationships with state and federal tax authorities. You will need to be doubly sure that your interests are protected.

The appraisal is where you place an actual value on the business assets and the business itself. There are many different methods to determine a fair price for the sale of a restaurant business but most restaurants are evaluated by profit. A standard guideline for determining a ballpark restaurant value is to calculate three times the annual profit. For example, it would not be unusual to see a business that earns $150,000 in yearly profit listed for an asking price of $450,000.

To get favorable financing, you should have a personal credit score above 680, letters of recommendation, and a convincing business plan. Restaurant business loans can be tricky to obtain because lenders consider the restaurant industry as especially turbulent. Loans backed by the Small Business Administration (SBA) can make lenders more comfortable issuing credit to buy a restaurant.

You want to understand precisely what you are getting for your money. The seller will want to keep track of what assets he or she may still have to present to other buyers. For example, you want to purchase a restaurant that has an active liquor license that you do not intend to use. The seller can then sell that license to another buyer.

Ideally, nothing surprising pops up during your due diligence analysis. If something does, though, it is customary to adjust your proposed purchase price or add stipulations to the purchase agreement. For example, if due diligence reveals that the restaurant is late on a sales tax payment, your attorney will likely stipulate that those taxes are paid before you move forward.

Before you choose a closing date, meet with the seller to discuss the details of transitioning the business. Typically, a restaurant closing date is scheduled at least two months after all parties agree to the sale. The time between reaching an agreement and closing on the deal is the time when you and the seller should transition all the restaurant systems. The transition can involve administrative tasks like updating permits and vendor accounts with your contact information and formally meeting employees.

In some cases, the seller may offer to train you for a couple of weeks. He or she may want to show you the ins and outs of the payroll systems, purchasing arrangements, and how to use the point of sale system. This training can be particularly helpful if you are buying a long-standing restaurant that has a loyal customer base. You will want the seller to introduce you to your regular customers personally.

Buying a fully operational, existing restaurant is a great way to get started in the restaurant business. Do your research and your due diligence to ensure that you know the strengths and weaknesses of each prospective restaurant before you make a decision. A good business attorney is necessary to assess documents like leases and insurance policies, and to write a purchase agreement that works for you.

Mary King is an expert retail and restaurant contributor at Fit Small Business. With more than a decade of hospitality experience, Mary has worked with some of the best restaurants in the world, and some of the most forward-thinking hospitality programs in the country.

While other industries may be experiencing slow growth, the restaurant industry is booming and growing considerably, making buying a restaurant an appealing prospect. One way that you can get into the foodservice industry is to start your own restaurant, which is an excellent option for those with lots of restaurant experience. But, if you don't have a background in foodservice or any ownership experience, a better option may be to buy an existing restaurant. In this article we'll cover how much it costs to buy a restaurant and the steps you need to take to purchase a restaurant.

Buying a restaurant can be significantly less expensive than buying a business in a different industry, which, coupled with the growth in the industry, makes it a worthwhile investment. But, before you consider buying a restaurant, you should know roughly how much you can expect to pay.

You should also note that the numbers listed above are averages, so it's possible to find restaurants for sale for significantly below these prices. When considering how much a restaurant might cost in your area, you should also think about your location. For example, it will be more expensive to buy a restaurant in an urban area than in the suburbs or a rural location.

The process to buy an existing restaurant can be convoluted and confusing, especially if you're unfamiliar with the restaurant industry. But, we boiled the procedure down to 7 simple steps to help guide you through the process.

The first step in purchasing a restaurant is to check the market and see what's available in your area. Restaurant listings will have a lot of useful information, such as the sale price, size, zoning description, information about when the building was built, and any other features and specifics about the building.

But, there is some important information that you should research yourself when looking at a restaurant listing that you're interested in. Here are some things that you should research when looking at restaurant listings:

After establishing your credit and lining up your funding, you can begin negotiations with the owner to buy the restaurant. This stage is where you will also want to inquire about all of the assets and liabilities of the restaurant and what specifically will be included in the sale. Here are some questions to ask the owner when negotiating the restaurant sale:

Asking questions during the negotiation process can help you assess more in-depth if this is a good deal or not. Plus, depending on the restaurant owner's answers, you may have some leverage in the negotiating process to drive down the asking price or make some other concessions.

A due diligence checklist is a process you undertake when purchasing an existing business. A due diligence checklist should cover the financial, legal, structural, and operational side of the business in detail. To do a due diligence checklist, you should ask for detailed information from the restaurant owner. Here is a list of things that should be on your buying a restaurant checklist:

After you officially buy a restaurant and all the papers are signed, you can begin to plan the transition. There are two main areas of the business that need transition plans: the staff and the business itself.

You will also need to create a transition plan for the business itself. This can include things like renovations, creating a new menu, or replacing old equipment. Your transition plan should be comprehensive and also include completion dates to keep your new restaurant on track. During this step, you can also begin marketing the new restaurant and putting out notifications on social media that the business is under new ownership to create interest.

In addition to online advertising and marketing, your restaurant should also use outdoor and physical marketing, such as hanging open signs, adding the date of your grand opening to the business's sign, or handing out flyers. Additionally, depending on the size of your establishment and your community, you can also reach out to your local newspaper, radio station, or news affiliate for coverage. 041b061a72