It may seem like a straightforward contract of sale, but keep in mind that there are industry specific factors that you should address when you are buying a restaurant. See below for some questions to ask when you are searching, as it is might not be a case of simply finding the ‘best’ restaurant for sale, but rather one that shows potential, is compliant and above all compliments your motivations as a restauranteur.
- What material aspects of the business does the sale entail? Beyond a brand and cuisine type, buying an established hospitality business has many dimensions that you should clarify whether they’re included or excluded before you begin your price negotiations. Confirm whether the lease will be signed over to you, how long is left on it and what, if any, options will be provided to you at its expiry. If you are staying in the premises, will furniture, installed fixtures and semi- permanent aspects of the fitout be included?
- What intangible assets will I acquire? Once you know where you operate the restaurant from, clarify if you will receive access, or assume responsibility for, elements of the business such as the customer client database, future function bookings, existing staff, social media/online presence and intellectual property rights. These, like the material aspects of the business, are best to be drafted into the sale contract to prevent any potential miscommunication surrounding your entitlements.
- Is the paperwork up to date? This one refers to paperwork in the broadest sense, but is intended to get you to audit the state of the restaurant you will be acquiring. Beyond the due diligence on the financials which you should conduct on any purchase of a business, conduct an appraisal on all the relevant licences, insurances and certifications that your restaurant is correlated with. For example is there an up to date liquor license and will you inherit it, and would you be compliant with food safety regulations if you took over management of the venue operating as is? Upgrading facilities can be expensive, so be aware what minimum standards your future restaurant has to meet.
- Who are my suppliers?Unless you have a wealth of industry experience and contacts, you may want to continue using the produce and beverage providers the restaurant currently has. However, note any contract clauses and minimum terms in the event that you wish to switch in future or start afresh as soon as you assume ownership.
- Can I have a trial prior to commitment of sale? The best way to get a sense of whether the business is right for you, and well run, is to work there yourself! See the kitchen in action and how the staff interact. Get a sense of how bookings, advertising and bookkeeping is handled. Of course, a decent amount of tasting the menu that you may be soon selling is a must!
- Ask yourself, what’s your passion? Australians love their food and are developing increasingly sophisticated palettes which in turn effects the standards of diners. Therefore, even though food and beverage is a solid performer in the consumer goods sector, the competition for good quality food, service and ambiance is strong, especially within retail hotspots across Australia.So think about what you can bring to a restaurant that will enable it to distinguish itself from similar establishments. A successful restaurant will be well run, but those which are consistently busy and enjoy good reputations offer a point of difference whether it be via cuisine, décor, service, location or a combination of all of the above. Happy searching!