Beginners' Guide to Buying a Restaurant

How to buy a restaurant for sale

Beginner's Guide to Buying a Restaurant
Beginner's Guide to Buying a Restaurant. Pexels via Pixabay

So you want to own your own restaurant? And there happens to be a restaurant for sale nearby. How do you know if it is worth the price? Would it be better to open a new restaurant instead? Buying a restaurant offers some good benefits, including a turnkey operation. You don’t have to create a new menu, design the dining room or hire staff. That stuff has already been done. On the other hand, buying a restaurant comes with that restaurant’s reputation (good or bad), staff (good or bad), and menu (good or bad).

  Make sure you are considering buying a restaurant for the right reasons. If any of your reasons include fixing things like the menu, staff or building, you may want to reconsider.

Why is The Restaurant for Sale?

This should be the biggest question on your mind.  Is it for sale because the owners have been in business for thirty years and are longing to retire to Florida? Good. That’s a good reason to put a restaurant on the market.  Is the restaurant for sale because the owners have been in business for five years are just plain exhausted and want to go back to their cushy 9-5 cubicle? Okay.  Fair enough. Is the restaurant for sale because the owners of 1 year are struggling to pay their bills and have to choose between the electricity payment and payroll every month? Red flag! Red flag! Abort mission.  You may never get an honest answer to this question – after all, who is going to admit their business is in ruins and they want out before the bank takes their house as well?

Reading between the lines – how long have they been in business, what is their reputation as business owners in the community, how is the restaurant’s reputation – can help you piece together the real reason the restaurant is for sale.

If it Ain’t Broke, Don’t Fix it. If it is Broke, Don’t Buy It.

My first restaurant (I’m pretty sure I’ve told this story before) was the laughing stock of town before we bought it.

It had a horrible reputation for bad food and even worse service.  Me, being 22 years old and more confident that with a little creativity and elbow grease we could turn it around, went ahead signed on the dotted line. We did turn the restaurant around to a degree, but you know what would have been a lot easier and a lot cheaper? Opening our own restaurant from scratch. We wouldn’t have had to spend a good deal of time advertising New Owners! New Menu! Come Check Us Out! Pleaaaaseeee! We wouldn’t have had to deal with difficult staff (though most of them quit within the first two weeks). 

At the opposite end of the open/buy spectrum is a great restaurant with a great reputation and great menu.  If everything is working well, do. not. go. in. with. guns. blazing.  Just leave it alone. If customers like the menu, and the menu is making money, leave. it. alone. You will have plenty of time to make your own mark on your new restaurant, just do it small and incrementally, lest you scare the customers that new management is changing everything they love about their favorite restaurant.

What’s Included in the Final Price?

Are you looking to buy the physical space the restaurant is housed in or just the equipment and business name?

Because that will definitely affect the final price.  IMHO buying a restaurant that doesn’t include the physical space doesn’t make much sense unless you are in a place where real estate is astronomical, such as New York City or Boston. If you do choose to buy just the restaurant name and equipment, be sure that the current space will be available for a future lease. 

Sometimes buying a restaurant makes sense, other times opening a new restaurant is the better option. Finding out why a restaurant is for sale, and what’s included will help buyers to make an informed decision.