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Questions Buyers Ask
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These are our answers, based on our experience and knowledge, to some of the most frequently asked questions from our customers. If you don't find the answers you need here, please call one of our offices. We are always happy to answer your questions.
Buying a restaurant is a major decision. It will not only affect you financially, but it is also, and perhaps more importantly, a lifestyle decision. How you live your life is shaped and influenced by what you do for a living. If you've decided that now may be the time to consider going into a food-service-related business for yourself, working with a restaurant broker can provide you with the professional assistance necessary for a smooth and successful transaction.
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General
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| General
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Q: Why should I go to a restaurant broker?
A: A professional restaurant broker has a large selection of different – often unique – businesses and many of these are available only through the broker. Plus, about 90% of restaurant or food-service business buyers don't buy the property that prompted the initial inquiry. Instead, they select a different property from the broker's inventory.
And, brokers can provide information about businesses and the buying process that's not readily available elsewhere. Brokers are familiar with local and national markets as well as trends and pricing. They can handle all the details of a restaurant sale and guide you through the process. If necessary, brokers can help you find other professionals to assist you in your business venture. |
Q: Why should I buy an existing restaurant instead of opening a new one?
A: Existing restaurants have track records; you can verify the need for the product or service in that particular location. Fiancial records and other information about the business are available. Most sellers will agree to train a new owner and many will provide financing. These last two considerations are important because finding someone to teach you the intricacies of running a restaurant – and is willing to finance the sale – can make the difference between success and failure. |
Q: What is the real reason people go into business for themselves?
A: Surveys report consistent answers to that question, and the answers are often in identical order. Results of a typical survey, in order of importance, are listed below:
- Live my dream
- Be my own boss
- Use my management skills and my education
- Grow a business from concept to reality
- Create wealth
Interestingly, money is seldom the prime motivator.
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Q: How are restaurants priced?
A: Prospective sellers often ask a broker to suggest a selling price, even though they may already have an asking price in mind. There's no answer to this question. A restaurant broker will first determine the fair market value before attempting to suggest a selling price. And, that involves a thorough review of all financial information, reviewing the lease, inspecting the premises, and factoring in market conditions and the seller's estimate. Once these steps are completed, the broker will suggest a recommended price range – from low to high. Higher cash demands usually bring a lower selling price; smaller cash requirements generally command a higher price. Seller financing and terms of sale are often more important in closing a sale than the actual selling price.
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Q: What should I look for?
A: Look for a business you feel comfortable in and would be proud to own and operate. More importantly, look for one you can afford. The business should give you adequate income to pay your bills – and provide a comfortable living.
You should also look for a restaurant that can be improved and made more productive and profitable. Brokers can cite many examples of restaurants that were improved and thrived under a new owner. |
Q: What does it take to be successful?
A: You must have adequate capital to buy the restaurant and to make necessary improvements. Maintaining sufficient reserves to offset a slow start is critical, as is willing-ness to work hard and put in long hours. A restarant owner must have – or develop – strong managerial skills. Owners of any small business must be doers, especially if that small business is a restarant. |
Q: What happens when I find a restaurant I want to buy?
A: Once you've seen the restaurant of your dreams, talk with your restaurant broker to get answers to your questions. When you're satisfied that this is the right property, your broker will prepare an offer. This offer, based on price and terms you specify, will probably be contingent on review of books and records to verify figures supplied by the owner. However, this may only be a starting point on the road to agreement. Of course, the offer could be immediately approved or rejected outright; more frequently the first offer will prompt a counter proposal from the ower. Then, you'll decide to accept the owner's proposal or to negotiate a counter proposal.
When you and the seller agree on price and terms and your contingencies of sale are addressed, it's time to schedule the closing and become a restaurant owner. |
Q: Do I need an attorney?
A: Our policy is to use attorneys who are experienced in all aspects of restaurant and food-service business sales for a cost-effective closing. We also recommend that you have your attorney review all documents prior to closing. Restaurant brokers do not give legal advice.
These questions are the most frequently asked by buyers. If you have additional questions, call us. We'll be happy to provide you with answers. |
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