What are the Benefits of Buying an Existing Restaurant?
The million-dollar question for buyers should be,” what are the benefits of buying an existing restaurant”? The Restaurant Industry has a high failure rate, around 60 percent of new restaurants fail within the first year. And nearly 80 percent shutter before their fifth anniversary according to CNBC.com
Knowing these tremendous odds of failure, there are precautions prospective restaurant owners can take to help their odds of being successful. The biggest precaution is to limit your exposure to unknown expenses. How do you accomplish this task? The answer is to buy an existing restaurant for sale or 2nd generation restaurant lease space.
Dominique Maddox of EATS Restaurant Brokers says, “ I have a countless number of horror stories of new restaurant owners going broke on the build-out of restaurant space. I recommend to my buyers to look for an established restaurant to keep or convert to a new concept. I have seen restaurant owners spend over $500,000 on a build-out and sell a year later for less than $100,000.”
1. Established an Open– Why wait to open a restaurant when you can buy one and be open the same day of the closing day? When you buy an established restaurant that has been open for a significant amount of time, it comes with an established customer base and goodwill.
Why wait to build up Google Reviews when you can buy a location with great reviews and an online reputation. Some restaurants come with professional websites, great social media following, and email customer marketing lists.
To a restaurant owner the sound of the POS sales system taking orders, delivery orders coming in, and pick up orders on the 1st day of ownership is a priceless feeling.
- Staff- One of the hardest tasks for new owners is to recruit, hire, and train staff members. Established restaurants usually come with a trained employee workforce, these individuals are trained on the basic skills that are necessary for performing their roles. Inheriting experienced employees can be a valuable asset.
- Existing Business Relationships– The current owner has established relationships with food vendors, suppliers, printers, insurance companies, service companies for restaurants, and banks. Some of these relationships can easily be transferred at the time of closing.
- Price and Expenses– The current seller usually has everything in place for a new buyer to take over the operations. When purchasing an established business, the buyer knows exactly what he or she is getting for the price. The buyer in most cases can review the seller’s profit and loss statements and learn from the seller’s success and failures with expense control.
- Furniture and Fixtures– One of the biggest misconceptions for restaurant owners is that they own everything in the building. Restaurant owners can spend hundreds of thousands of dollars to install a grease trap, hood system, walk-in coolers, walk-in freezers, and sinks. Only to find out once they are ready to sell all the leasehold improvements belong to the landlord (read your lease). Building a new restaurant requires you to convert an existing space into a restaurant.
Why go thru the troubles and heartburn of a build-out when you can buy an existing restaurant, that is fully equipped with restaurant equipment for pennies on the dollar.
For more information on the restaurant market and other available consulting services or restaurant valuations, contact Dominique Maddox at 404-993-4448 or by email at firstname.lastname@example.org. Visit our website at www.EATSbrokers.com