Owning a restaurant is a dream for many people, and not just those working in the catering industry. Read on to find out everything you need to know about how to buy a restaurant, from starting your search through to signing the contract.
1. Decide on a Budget
The first thing to consider when buying a restaurant is how much money you have to spend. Do you have a lump sum, or will you need financing? Will you want a handover period where the owner works with you, or will you want to take over and run the restaurant straight away? Working out the intricacies of your budget, and what you expect to get for it, will help you in your search.
2. Think About the Restaurant You Want to Own
The restaurant market is incredibly diverse, with many different types of restaurant available. Do you want to run a themed restaurant, a bustling city-centre affair, or a seaside venue? Each will have its own pros and cons, and each a unique set of circumstances to consider.
3. Search for Restaurants for Sale
There are thousands of restaurants for lease and sale up and down the UK, and picking just a handful to enquire about can be tough. At this stage, it’s important to keep a couple of businesses in mind and keep your options open.
4. Visit the Restaurant
If you’d like to see what the restaurant is like before arranging a viewing with the owner, you could visit the business as a diner and get a feel for what it’s like. Going to eat at the restaurant before enquiring further about a viewing will give you an insight into how the staff are, what the business is like for a customer and whether there’s anything that could potentially put people off. Alternatively, you could arrange a viewing with the owner straight away, and they’ll be able to show you the property and answer any questions you might have.
5. Perform Due Diligence
If you’ve visited the restaurant and are still interested in buying, the next step is to perform due diligence. This is an essential part of buying a business, and one of the most important parts.
Due diligence is taking the time to understand exactly what you’re buying and doing your homework when it comes to inventory, assets, lease, permits, staff and other official documentation that is an important part of the buying process.
This can seem like a daunting process, however, it can save you a lot of time and money later down the line, especially if any one of the above is not correct. You can read our full guide on restaurant due diligence here.
6. Value the Restaurant
If you have little or no experience in the restaurant industry, it can be difficult to figure out how much you should be paying. You’ll want to make an offer that you can afford, but not one that vastly over or underestimates the value of the restaurant. So how do you get it right?
Bizdaq offers an online valuation tool that you can use to value the restaurant, or you can look at the cash flow and assets. You can find more information on restaurant valuation in our due diligence guide.
7. Make an Offer
If you’ve decided that the restaurant offers a good opportunity and is one you’d like to own, the next step is to put in an offer. Make sure you account for stock in your offer – some owners will expect you to pay SAV (Stock At Valuation) on top of your offer, whilst others will be happy to include stock in the sale of the business.
8. Agree on a Deal
Unless you’ve offered the asking price, it’s likely the owner will have a counter offer. Be prepared to negotiate with the seller before you both reach a deal you’re happy with. This isn’t always a quick process, as both parties try to get the best deal for them, so be sure to remain patient through the negotiations.
9. Complete the Sale of the Business
Once you’ve both agreed on an offer, you’ll need to create and sign a heads of terms document. This sets out the terms of the offer and is an agreement in principle between the buyer and seller. It’s also a good idea to involve a solicitor at this point, as they will be able to create contracts and assist in the legal side of the deal.
10. Enjoy Your New Business!
After the contracts are signed, all that is left is to enjoy your new restaurant!