Buying a restaurant? 13 things you must consider.

Across 96 different categories, sales of existing restaurants represent over 21% of all businesses sold over the last two years in Florida. I admit that often I encourage Corporate Refugees, Enterprising Veterans, and Visa Seekers to look at other types of businesses if they don’t have any restaurant experience. But requests for restaurants remain the most common request. So, I am sharing this article to support anyone seeking to fulfill their restaurant ownership dream.

Almost everybody has eaten in a restaurant. Many of us have great ideas about how certain restaurants can make more money or be more effective. However, most business buyers realize that Americans hunger for satisfying dining experiences.

2020 drastically challenged most restaurant owners. Carry-out and pizza restaurants seemed to do well. But many traditional dining restaurants suffered miserably.?

This was especially true in environments where it was tough to create outdoor seating or when the owners couldn’t develop innovative and creative ways to compensate for covid’s influence.

Quite often, restaurants have financial records that are difficult to decipher fully. Additionally, the 2020 year strangled many restaurants, and owners are eager to show that their restaurant is performing well again. Therefore, be cautious as you investigate buying a restaurant. Trust, but verify is the rule. Always seek legal and accounting advice whenever in doubt.?

Here are a few tips to aid in your restaurant acquisition.?

Trust, but verify is the rule.?Always seek legal and accounting advice whenever in doubt. Get support from professionals who understand small businesses and restaurants.?

Gross Revenues are king. Many operators minimize their taxes by applying write-offs that are not essential to the business operation. It is a lot easier to profit from a restaurant generating $1 million a year than one generating $250,000 a year in gross revenues. Carefully analyze the numbers and compare the business in question to industry averages. Confirm the standard margins for food, labor, utilities, etc.

Make sure the rent is in line?with the gross revenues. While you might be able to adjust food costs or labor costs, rent usually will be the same month after month. So be cautious when rent is higher than 10% of the gross revenues.?

Look for a restaurant with a stable staff?that has been at the location for an extended period. Having a good workforce in place is a challenge for businesses like restaurants. Despite fewer people working in the post-Covid environment, having a set of key long-term employees reflects good restaurant leadership and management. Consider acquiring a business where you can learn from the owner and take over A loyal and well-trained staff.

Don’t reinvent the business all at once!!!?This rule applies to almost every industry.?Unless you own other restaurants and want to acquire second-generation restaurants to grow your brand, buy a restaurant you can live with for a while. It’s OK to make adjustments like cleaning up the business and getting new uniforms on the staff. But hold off on totally reinventing the menu or spending a lot of money on infrastructure until you fully understand the customers, the competition, and the marketplace. Run the business just like the other owner was running out for the first six months. Really know what you’re doing before you invest a dime. I’ve seen plenty of people lose their shirts by spending a lot of upfront money before fully understanding with the customers want. It’s not about your wants. It’s about the customers that will really count and get them back.

Consider used equipment.?When you must replace equipment, consider using pre-owned equipment. There’s plenty of great stuff around. Go to a traditional, respected restaurant that specializes in used restaurant equipment. Hold onto your cash as much as possible.

Truly focus on what your customers want.?Realize more people are looking for home-delivered food choices. There’s more talk about ghost kitchens solving the needs of communities. Fast-casual seems to be still growing in demand and value.

Get educated and connected. Subscribe to magazines like Nation’s Restaurant News (https://www.nrn.com).

Join your state Hospitality Association (i.e., https://frla.org). Attend their online and in-person trade shows.?

Get to know some of the top restaurant owners?in your community outside of your community. Ask them for some time, get their thoughts, and listen to their insights. Be willing to pay them accordingly.?

Create a business plan. Even if the restaurant you are buying seems to be running perfectly well, chart your course and keep on track. You can find a great outline on the SCORE website (https://tinyurl.com/4cm4w5zd), but many other great tools exist.

Get a coach who specializes in restaurant operations. A good one will be worth investing in helping you for at least your first year. Whether you are new or experienced, having someone keep you accountable to your goals will be well worth the investment.

Compare several options.?Do not get emotionally attached to an old favorite. If you want to buy a restaurant in Florida, this YouTube video will help. https://www.youtube.com/watch?v=3rb0iyfn3E0

Remember to at least be able to confirm top-line sales. Finally, realize plenty of great opportunities but remember, “not all that glitters is gold.”?

If we can be of assistance, reach out. Visit us at BuyBizUSA.com.

Thanks, and good luck. Brian Stephens – Legacy Venture Group USA

https://www.youtube.com/watch?v=3rb0iyfn3E0

I started working in restaurants at age 15 at the Hilton Inn in Naples, FL. I tended a bar in college near UF and eventually created Miguel’s El Sombrero y Cantina north of Atlanta, GA.?