The Ins and Outs of Buying a Restaurant

Buying a restaurant can be a thrilling business move. However, it is also one of the riskiest things an aspiring business owner can do. Many buyers rush in without fully understanding the financial, operational, or legal realities. To protect yourself, here is what to know before signing any deal.

Inspect the Lease Carefully
Always review how much time is left on the lease and whether the terms are favorable. Ask if rent increases are scheduled or if you will be responsible for repairs or upgrades. A bad lease can destroy profitability.

Understand the True Value
Do not base your offer on the asking price alone. Review tax returns, profit and loss statements, and sales reports from at least two years. Look for declining trends or hidden debts that could affect your cash flow.

Plan for Renovation and Compliance Costs
Many buyers underestimate how much it costs to meet code requirements or rebrand. Check for needed permits, health inspections, and ADA compliance issues before closing the deal.

Hire an Experienced Restaurant Broker or Consultant
A professional familiar with restaurant transactions can identify red flags, assist with lease assignments, and help determine a fair market value.

Look Past Appearances
A stylish dining room does not guarantee a sound business. Inspect kitchen equipment, plumbing, and HVAC systems. Evaluate foot traffic, parking availability, and competition nearby.

Run Your Own Numbers
Forecast your first year’s performance using conservative estimates. Include rent, payroll, food costs, utilities, and insurance. Make sure there is a path to profit even during slower months.

Negotiate for Flexibility
Try to secure rent reductions during renovation or short-term renewal options. Sellers or landlords may agree if it helps close the deal.

Be Honest About Your Capacity
Running a restaurant requires long hours, constant attention, and hands-on management. Be sure you are prepared for that commitment.

Know When to Walk Away
If finances are unclear, the location struggles, or the lease is too restrictive, it’s better to wait for a better fit than gamble on uncertainty.

Questions to Ask Before Buying a Restaurant

• Why is the current owner selling?
• How long has the restaurant been in operation, and has it been profitable?
• What are the exact lease terms and renewal options?
• Are there any outstanding debts or liens on the business?
• What equipment is owned versus leased, and is it in working condition?
• What licenses and permits will transfer, and which must be reapplied for?
• What is the current customer base, and how are they being retained?
• Are key staff members willing to stay on after the sale?
• What are the busiest and slowest months for revenue?
• Who are the main competitors nearby, and what sets this business apart?
• Is the restaurant’s reputation positive?

Learn More About Business Leasing

Buying a restaurant can be exciting, but also very expensive. Do you know what you are getting into? Make the right decisions or you could lose out.

Have questions about leasing a restaurant or other type of business? A Orlando business leasing lawyer B.F. Godfrey from Godfrey Legal can address your concerns. 30 years of experience in representing both tenants and landlords. To schedule a consultation with our office, fill out the online form or call (407) 890-0023.

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