Well, who does not like to own a beautiful restaurant or a café in a nice, peaceful, and a neat neighborhood? Therefore, if you are looking to buy a restaurant and does not know where to begin or how to proceed then this comprehensive step-by-step guide on how to buy a restaurant will surely be a great companion for you.
As with every other kind of business, a restaurant opening – either one or a five star – requires the same amount of effort, analyzation, goals, risk management, research and so on so forth as with all other types of businesses. You cannot just go out there, select a restaurant, make your investment and Abra Ca Debra! You have a restaurant that is fine and running at full pace. But with careful planning and consideration, such a scenario is definitely possible, and that’s where this article will come to your aid.
But before we delve further into the best way for buying a restaurant, let us break down each step for you to give you a glimpse of what will be coming on your way:
- How to Buy a Restaurant: Considering Your Power of Investment
- Buying an Existing Restaurant or Opening a New Restaurant?
- The Legalities & Formalities of Buying a Restaurant
- Some Best Tips to Market Your Restaurant Business Locally
Now that you have a glimpse of the information that will be provided to facilitate your restaurant purchasing process, let’s get on with this guide without a further delay!
How to Buy a Restaurant: Considering Your Power of Investment & Risk Management
While we definitely would not want to demotivate you right at the onset of this comprehensive restaurant buying guide, but we believe focusing (with honesty) on the most important aspects from the beginning is to do full justice with you – our valuable reader.
Having said that, how much capital do you have to buy a restaurant, or altogether, start a new one from scratch? Whatever your power of expenditure is, here are some crude instructions which will help you in investing in a better restaurant with better results as well:
How To Buy A Restaurant – Location and Investment
The location of your restaurant & the amount required: This is perhaps the holy grail of the entire process of buying a restaurant. Whether you are going to buy a restaurant locally or outside of your city/country, you must first need to examine the median price values and other demographics about restaurants in the desired area.
Since we are based in the United States, readers who are in the States can refer to the official National Restaurant Association website for all kinds of restaurant pricing, research & data within the United States. If your preferred type of restaurant meshes well with your budget then it is time to get some know-how about the location of your going-to-be restaurant.
Location of a restaurant matters a lot! You may open a mega five-star 80-floor hotel tower in the middle of the nowhere, and you will most probably get to nowhere as well with your investment despite all the glitters, facilities, and the top-class service. But consider this: a small restaurant on an ideal location is poised to earn far greater than a large hotel tower just because of its precious location? That’s a 100% true statement! The Balance Small Business denotes four major points when it comes to choosing a location for your restaurant:
- Population Base
We believe defining these four basic points further would definitely be making fun of your intelligence as everyone likes to get to the nearest and most feasible food outlet, regardless of the taste it offers.
So, once you have done your homework on the amount and the location, the next thing in line is the logical study of the risks involved (or might be).
Doing thorough risk analysis & preparing for the worst: Like with each and every business, risk management & preparation in the restaurant business is again the best way to start. So, before buying a particular restaurant of your choice, let’s consider some questions you should be asking yourself:
Why this/that restaurant is on sale after all? This might sound a stupid question from the eyes of the buyer, but not at all from the eyes of a neutral observer (like us). That’s why we want you to open your eyes and first try to investigate the reasons as to why the existing owner of the restaurant is selling their business at all? This will pretty much clarify the state of that restaurant and if it is altogether worthy of making an investment at all.
Is the location lucrative or not? This had to be your second thought before buying a restaurant business. You should determine how does the location help in the accessibility and visibility of the restaurant? Does the location be helpful in bringing in the foot traffic to the restaurant? Is the location neat, clean, and in a peaceful neighborhood? The questions can keep on coming depending on your analytical skills so don’t stop just on the ones we have mentioned here.
Are you sure your purchased restaurant will be a success? Honestly, no one can guarantee you that, not even you, yourself! But with thorough financial planning and studying the risk factors (As given above and more), it might become a bit easier for you to launch your arc and guide it well in the open ocean. Studying the prospectus of area, demand, food variety, and local social/culture are just good enough to give you a vague idea of what will become of your new restaurant.
Are there any big competitors near you? This thing may sting a bit, though! So, it is better to explore the environs around the restaurant you are supposed to buy to check if no McDonalds, Nescafé, Taco Bell, or any other situated just around the corner. For a novice restaurant, it would be better if they keep themselves away from the big “chickens” of the Food Inc.
This, we believe, are the basics of the first crucial step in whenever you choose to buy or open a restaurant business. Surely, our recommendations are far from complete for this section so always keep your doors open for more analytical data, which will definitely prove more and more beneficial in your restaurant buying process. So, now that you have examined your buying power and risks involved, let’s decide whether you are buying an existing restaurant or choose to open an altogether new one.
Buying an Existing Restaurant or Opening a New One?
Well, there is quite a difference in both of these approaches. As we have disclosed much in the previous section about the initial steps for buying an existing restaurant; however, opening a new restaurant calls for a different game plan, and this is what we’ll tackle here first.
Opening a new restaurant: There are some certain considerations needs to be done before you go ahead with your very own novel addition in the world of food & beverages business. But before everything else, you must prepare yourself mentally first: restaurant business, especially in the initial stages, requires a lot of time and energy.
This means that you need give a majority of your time from daily life, even during public and family holiday occasions, to your restaurant so that it will start building credibility for its availability in the local environs. No matter the occasion, people are always out to eat something and you not only have to ensure that you are there for them – most of the times – but that your restaurant is one of the most soothing and comfortable places for food lovers.
Preparing yourself mentally for such a commitment is the first and foremost successful step towards establishing your new restaurant in town. Now, some logical parameters to address that are crucial for your new restaurant business:
The Business Plan
Create a concrete business plan before the launching: Your business plan for your new restaurant will need to address issues such as financing, legal formalities, location of your restaurant, the theme you will pursue and the cost of hiring staff. We understand that few layman folks are quite good at formulating strictly logical business plans but that should not worry you at all!
You can find many business consultants locally, even those specifically advising on the restaurant business, to help you move ahead in the important process of creating a succinct business plan for your new restaurant.
Understanding customer demographics: It would be foolishness if anyone thinks that just by opening a new restaurant in a particular area or setting guarantees that customers will start to flock in like mad right from the first day. Real-world and businesses don’t work that way.
Before opening up, you need to do hard research on the demographics of your targeted audience, the norms of food in demand over there, your competitors in the area and what makes you different to attract people going on in other restaurants near you. Only after doing your homework in this regard can you be able to attract the attention of local food goals in your area.
The Right Theme
Theme and concept of your restaurant: Always remember that the theme and concept of your restaurant must match the style of the food/culture you are offering. You wouldn’t want to end up selling a Biryani, an exotically popular subcontinental spicy delicacy, in a location where people hate oily, spicy, and fatty foods. That’s why the theme and feel of your restaurant should always be in line with the food/culture you are serving, as well as keeping in demand with the local population, too.
Study your competitors in the area: It is also a very important aspect of opening up a new restaurant business. Studying and analyzing the pros and cons of your competitors will give you a clear picture of where you can reap rewards for your food business and where you can avoid certain mishaps. The key in this kind of analyzation is to keep your personal bias completely out of focus, and you have to think as a logical business opportunist, not as a human preferring likes/dislikes on a macro-level.
Now, about buying an existing restaurant business? We have covered this topic in much details in the previous section which you can re-read again for some fresh memorizing.
The Legalities of Buying a Restaurant (IMPORTANT SECTION)
You know, all that we have guided you in every section above finally comes down to this one as the center of them all – the one which powers everything and on which everything about your restaurant business stands – the legal validity of your restaurant business. Without a comprehensive revision, work, and understanding of the legal architecture involving in buying a restaurant, or any doing any other business for that matter, chances are almost 100% that that setup is bound to be failed miserably. And no investor, big or small, can take up such a risk as this one. Therefore, before decides to buy a restaurant, make sure you follow these legal guidelines strictly for a safer and profitable investment:
Hire A Lawyer
Hiring a business attorney is crucial: Do not, we repeat, do not make any business deal, or invest in any business venture without the crucial help of a business lawyer, and that’s the case also when buying a restaurant. A business attorney helps you guide through the important legal steps in procuring an existing business or starting a new one. Some of the most important aspects of acquiring a business are copyrighting, local law compliance, trademark issues and meeting the legal requirements of the national bodies/authorities for that particular business. So, you must begin your restaurant buying procedure with a credible business lawyer right from the onset.
Getting licensed, certified, and permitted: The second important phase of buying a restaurant, after closing the deal with all purchasing legalities done, is to check for valid licensing, certifications and permits issued by the concerned government regulatory authorities in your location. Since we are catering to the public in the United States, you need to register/certify your food business with two different government institutions:
U.S. Food & Drug Administration (FDA) (https://www.fda.gov/food/food-industry/how-start-food-business)
U.S. Small Business Administration (SBA) (https://www.sba.gov/business-guide/launch-your-business/register-your-business)
In each of these applications, a business attorney will again come pretty much handy for your submissions to get accepted by the concerned authorities. Therefore, make sure you prepare your applications with the help of an able business lawyer. Oh! There’s one more daunting aspect of buying and registering your restaurant business in the USA; every U.S. state has its own specific laws pertaining to business acquiring and registration. So, local legal help and concrete documental work will again be your ultimate salvation in this complex process of buying a restaurant in the States.
Once your application is accepted, the concerned investigation teams – specifically from FDA – will pay a visit to your restaurant in person, verify if you are following the quality and standards and then give you final approval to operate your food business at its full capability. Now that you have a fully licensed and operating restaurant, it is time to learn some quick marketing tips and hacks that will provide your new restaurant a fine local coverage.
Some Best Tips to Market Your Restaurant Business Locally
After you have been through the entire heckling procedure of buying a restaurant business, and finally you are rewarded with one, now is the best time to put all your energies in marketing your new food service to the local residents effectively. And in this regard, we have some great ideas for you listed below that will definitely help your food business get good attention and traction in the eyes of local food lovers; here they are:
- Build your restaurant website
- Benefit from local SEO
- Blog on your website & third-party renowned local food bloggers
- Create your business pages on major social media sites (particularly Instagram)
- Run loyalty/gift programs to attract new and existing customers
- Publish your business on Google My Business & renowned business directories (e. g. Yelp!)
- Send out monthly email newsletters
- Share/publish your restaurant’s high-quality photos; food, staff, events, etc., on social media.
- Promote user-generated content, especially those by your customers.
- Find & partner with your local food delivery services.
- Run occasional ads on social media, business listings, and search engines
- Host small events according to local holiday calendar
Final Words …
So, we hope that this comprehensive and step-by-step guide on how to buy a restaurant will not only be helpful for you in the purchasing process, but also in successfully running and establishing your new restaurant business. While we have tried to cover almost every possible thing in the process but still, catches in some way or another might have crept in (human factor). That is why we recommend you to closely consult every information given here with a professional business consultant or lawyer so that chances are little to none of any adverse repercussions. And with that being said, we bid you farewell with best wishes and lots of good lucks for your new restaurant business (hopefully someday we may come to eat ?).