What you should know about buying a restaurant

Buying a Restaurant
Common documents requested:
  • Copy of the Lease
  • Tax Returns for 3 years
  • Financial Statements for 3 years
  • Complete Furniture, Fixtures & Equipment list
  • Latest Health Inspector’s Report
Valuing an Existing Restaurant
Key factors that determine value:
  • Current and Gross Sales and potential for sales growth
  • Current Cash flow and growth potential
  • The condition of the leasehold improvements and equipment.
  • The length of the lease – 10 year minimum
  • The net or gross lease should be in the range of 6-8% of gross sales
Lease Negotiations
A checklist:
  • Have lease reviewed by an attorney
  • Minimum length of the lease 10 years +
  • Base rent at Industry Average
  • Scope of Landlord/Tenant Improvements
  • Right of Assignment
  • Condition of space at delivery
  • Options to extend
  • Extent of Personal Guarantee

Site Acquisition Criteria (Some key points to consider)

Location
  • Location curb appeal
  • Demand
  • Competition
  • Visibility, accessibility, parking
  • Appropriate rent and demographics for the concept
Facility
  • Rent, lease terms & R.E. Taxes
  • Availability of alcohol licenses
  • Condition of the space and leasehold improvements
  • Cost of renovations
  • Condition of mechanical systems HVAC, plumbing, electrical
  • Layout, Design

Click here to contact us to learn more.

Featured Listing