Is it worth buying an existing institution?

Many of those who dream of becoming a restaurateur, often think about buying an existing institution. Buying a ready-made restaurant promises many advantages-you do not need to be puzzled by the search for premises, furniture, equipment, look for suppliers, recruit staff, etc.on the other hand, if you sell a restaurant or bar with not the most brilliant reputation, even after the most radical rebranding, you may not be able to change the established opinion about the institution. Therefore, before considering such a deal, it is necessary to evaluate all the pros and cons of buying a working restaurant.

If you already have experience in the management of catering, you will probably be easier to assess all the advantages and potential risks. For those who want to try their luck in this field for the first time, I recommend initially weigh the chances that you will make a good restaurateur.

You will be a great restaurateur if:

  • love people, enjoy communication, know how to listen and adequately perceive criticism.
  • you have such a skill as multitasking. As a restaurateur you will have to conduct a lot of telephone conversations, take care of visitors, resolve conflict situations in the team, look for repairmen for suddenly broken equipment – and all this can fit in only one shift.
  • stress resistance is one of your strongest qualities. A certain level of stress is inherent in any job, but owning and managing a restaurant is a completely different level. If any little thing makes you worry a lot, then everything that happens in the restaurant will lead to stress – from skirmishes between employees to delays in deliveries. The restaurant has a full hall of guests-you worry about the quality of service, visitors a little – worry about profit. When it snows — you worry about how to attract customers, and so on to infinity. Experiences and stress always go hand in hand. And if you can not cope with their experiences, the restaurant business – most likely not for you.
  • you know how to delegate responsibilities. Many small business owners belong to the category of people who use the logic of “it will be better and faster if I do it myself”. That’s only in the management of the restaurant this attitude can do you a bad service. You will need the ability to delegate many daily tasks, the ability to teach and trust responsible work to others.

Buying a restaurant: what to look for?

By analogy with the opening of a cafe/restaurant from scratch, when buying an existing facility, you should first consider such factors as the location, compliance with the concept of the institution to the needs of the audience living nearby (if you do not plan to radically change the concept), future rental costs, utilities, staff salaries.

The first question that needs to be answered: “Why is this place for sale?”. There can be two options:

  1. The owner objectively can no longer take care of his institution: changing the type of activity, moving or for any other personal reasons (health problems, difficulties in the family, etc.) forced to sell a cafe or restaurant.
  2. The institution is unprofitable, bogged down in debt, the owner is not able to correct the situation and tries to get rid of the problem cargo.

Honestly-nothing. There is no guarantee that the establishment you have purchased will be successful in the future. But you have every opportunity to understand what it is now – a profitable and successful business or a real financial nightmare. This will have to find out the following:

Financial condition

Ask the current owner for all the financial documents to analyze the state of the enterprise.
Find out if there are any debts to suppliers, landlords, utilities.
Find out the average monthly and average annual costs of products, wages, rent and compare them with the average market.
Reporting and clear figures on the costs you will need not only to make a decision about the transaction, but also for the subsequent preparation of your own business plan, if you still decide to buy.

If the owner has no hidden thoughts, he will willingly provide all reporting requested by you. Any attempt to conceal anything should be seen as a Wake-up call.

Location

If you are familiar with the institution (worked with him or been there as a guest), to assess the location of the restaurant will be easier. Otherwise, you need to sensibly assess the popularity and patency of the place, to find out which audience most often visits it, and how it coincides with your plans and aspirations. In addition, it is necessary to look around and ask the neighbors, the presence of nearby Parking, as well as be sure to communicate with the landlord and make sure that for you the terms of the lease will not change after purchase.

Concept

Before buying, you need to decide whether you will leave the branding of the restaurant as it is or will change it. Will the name, kitchen, interior, staff remain the same? Changing the concept will entail additional, rather significant costs. And in this case, it is worth assessing whether it is advisable to buy a ready-made restaurant and “reshape” it for yourself or still create your child from scratch.

Reputation

This is a very important point. Getting rid of bad fame is sometimes very, very difficult, even if you plan to completely change the concept of the restaurant: make changes to the menu, update the interior and recruit new staff. If the institution before you was not the best reputation, people by inertia for a long time will treat it biased.

Conclusion of the sale of the restaurant

How to make a deal if you have weighed all the “pros” and “cons” and decided to buy a ready-made restaurant business?

  • Contact the owner. If you saw an ad for the sale of the restaurant business or learned from friends that the institution is for sale, you need to find the owner’s contacts and communicate with him. Perhaps the staff is not yet aware that the institution is for sale. It makes no sense to come directly to the restaurant and try to communicate on the subject of purchase and sale with the staff.
  • Specify what is included in the amount. Buying an existing cafe / restaurant with all the equipment, furniture and stock can be a very profitable deal, but only if you do not plan to change anything. If you have far-reaching plans for rebranding, it is possible that most of the existing inventory in the institution you do not need and there is no need to pay for all this.
  • Sensibly, without unnecessary emotions, evaluate the value of the business. Once you have decided what exactly you pay for, answer the question whether it is appropriate price for this offer. A person who is very excited about the idea of a new business may have difficulties with an adequate assessment of the acquired assets. On the methods of evaluation of the restaurant business will tell you below.
  • Define the sales scheme. The sale of a restaurant can be arranged in one of two ways: property, when the business is sold as a set of assets, or by selling corporate rights to the company.