Our specialists have conducted a huge number of transactions for the sale of public catering outlets around the world and have developed recommendations for future buyers, which we have tried to set out in this article.

Together with the restaurant, you buy its image, its history, and the consumer habits of its regular customers.

Speaking of history, it may not always be positive. The same can be said about the image and other nuances of a particular institution. Before buying a restaurant or cafe, you need to check very carefully what kind of customer you are acquiring together with the business and whether you are ready to continue working for them further. Sometimes it is better to change the name and concept than to continue with an incorrectly configured model.

If students usually go to the restaurant they buy because of the low price of the menu, then changing the concept and raising prices will definitely lead to the loss of a large part of the clientele and may not be compensated by the influx of another one – It is possible that the people living near the restaurant have an impression of the institution as an inexpensive institution, and without rebranding, attract new visitors (customers with new names). consumer habits) will be almost impossible. And rebranding is almost a new restaurant.

The restaurant business is one of the most complex types of business. Most of all, this type of business opens, as well as closes, which is natural. More than 90% of new restaurants in large cities of millions close during the first year of operation, 5% - during the next, and only the remaining 5% continue to operate further.

Often, when selling a restaurant business, the owners (or owner) of the business refers to the lack of time for development, moving to a permanent place of residence, disagreements with a partner or partners, etc. But it does not matter what real reasons the seller has for selling the business, it is important which institution you can buy and earn more than the previous owner.

The main factors when buying a restaurant business

The restaurant is mainly based on the following factors (in terms of business importance):

1. Location availability. A good place with a lot of traffic can bring more benefits than delicious food. This is a proven fact. But this should not be abused. The food should still be delicious.

Various studies in the restaurant business have shown that most often visit a restaurant that catches your eye. The place is so important that it should not be underestimated at all. Some people are ready to meet with a friend in any institution, regardless of other factors. Friends who meet by chance will go to the first place they see, and a person who is waiting for a late friend is unlikely to look for a good place for a cup of coffee while waiting for a friend.

Studies have also shown that all other things being equal, people are more likely to choose restaurants on the 1st floor, less often-on the 2nd and in the basement, and go to restaurants underground only if they are well known about them. This is due to the fact that restaurants on the first floor sell themselves with their large display windows or not very large, but still available windows: without entering the institution through the windows, you can evaluate the atmosphere, interior and even the food delivery. In restaurants on the 2nd floor and basement, this is a little more difficult to do, and in a basement without windows, it is completely impossible. At the same time, it is obvious that if a basement restaurant is located closer to the working cluster, public transport stop, etc.than establishments on the 1st and 2nd floors, it can significantly benefit only due to this factor.

Some entrepreneurs attribute this factor of locality to ordinary human laziness. And many people believe that the whole business (and not just restaurant) is built around human laziness.

2. Visibility of the establishment. A good location can be overshadowed by the obscurity of the restaurant itself. You can rent an expensive room near Red Square in Moscow for a huge rent, but go to a terrible loss just because your institution is not seen, and it takes a lot of effort and money to attract customers for advertising. Buy an inconspicuous institution in a good location should be very careful: such an institution must be well promoted or have attractive rental conditions.

Research by our specialists has shown that the same location can bring multiple times the number of visitors and, accordingly, revenue only because of the visibility factor. If one restaurant with large display windows looks directly at passers-by, and another is located in the same building just around the corner, more than 85% of new visitors will take the first place.

3. Atmosphere. The comfort and warmth of the establishment is one of the factors that visitors are willing to pay for. Otherwise, it would be easier to eat at home or order delivery. The attitude of the service personnel also applies to the atmosphere issues. A smile on the waiter's face is an important part of the atmosphere. At the same time, the atmosphere should correspond to the contingent that lives or works in the place of the institution. Due to the atmosphere, you can attract customers from remote areas of the city, and sometimes the country!

If a lot of money has been invested in an institution to create a certain concept, sacrificing a good location, then you need to understand what the growth potential of visitors is with proper advertising of the institution. Perhaps potential customers live on the other side of the city and are ready to come to a restaurant where dishes are served not by waiters, but by robots or even by drones. Or maybe it is important for someone to be able to listen to good music, and someone is ready to watch an unusual show of waiters, having come a long way.

4. Price. If the place that was chosen for the restaurant implies an average contingent (not the richest), then you should still include medium-price dishes in the menu. It is always easier to make money on mass sales than on the cost of a dish (marginality). But it doesn't always work that way. You need to understand the competitive workload in the location of this particular segment of the restaurant. If there are a lot of medium-priced establishments in the location, then it may be better to try a different price level – higher than the average or, conversely, lower. It all depends on the specific case. This factor needs to be carefully checked before buying a restaurant or cafe.

?. Food. Of course, food is definitely one of the decisive values. Everyone wants to eat delicious and satisfying. But where this factor stands in a particular location and for a particular institution always depends on many other components: someone is in a hurry and it is much more important for him to eat faster, and for someone it is important to eat in a cozy atmosphere slowly. Someone wants to eat delicious food, but they will definitely not tolerate an uncomfortable place. Yes, and you can always bring cooking in an institution to a certain standard. But it is pointless to give advice on how to cook to a businessman: after all, cooking is not a matter of business, but of cooking. It is important that the cook is a person who loves his job.

Other factors. In addition to the above factors, the cost and attractiveness of the establishment may also be influenced by other, in some cases more important factors. These factors may include:

lease term: it is possible that the end of the long-term lease is approaching, and the owner of the premises does not want to renew it on the same terms, or even sells the premises. Then the new owner of the restaurant will have big problems with the relocation of the restaurant, but most often the business is simply closed;

clientele specifics: cafes are often sold for specific customers in a particular business center for its employees. This just means that the growth potential of such an institution is most often limited by the possibility of expanding the range, but not by changing the concept or rebranding;

customer dependence on a local college: it happens when the restaurant's visitors are students of a certain university, whose hostel is located near the place. Perhaps in the future, this hostel will be renovated and no one will live in it for some time, which will significantly affect the clientele. At the same time, no one canceled rent, employee compensation, or other expenses;

worn-out equipment and premises: very often, when evaluating new capital investments in equipment (worn-out furnaces, repairs are too stale, etc.), business sellers decide to sell the establishment, since the cost of the corresponding equipment and repairs may equal the opening of a new establishment. This is not always a bad factor, but at least it should be the subject of bargaining and analysis by the buyer.

Before buying a restaurant business, you need to answer the most important question: what kind of visitors do you get and are you ready to continue working for them? The most painful thing for the restaurant business is the change of concept. If the restaurateur does not guess correctly with the change of concept, the establishment will most likely have to be closed.

Autonomy of the restaurant business

The restaurant business is one of the most dependent on managers. Achieving the autonomy of a single institution is an extremely difficult task. It is much easier to automate the process of a network than a single institution: taking into account the complexity of recruitment, replacing employees in one restaurant is approximately similar in labor costs to the same work in a network of 10 restaurants.

Conclusions

Before buying a restaurant, you need to carefully consider what exactly you are buying: an institution with delicious food (and possible dependence on chefs and food suppliers), an institution with a convenient location (and, accordingly, good self-promotion), a restaurant with an interesting concept (and, accordingly, its accustomed contingent), affordable public catering (low price and average quality – also a good investment option, but it requires a lot of personal involvement due to staff turnover and low business margins), or you may be acquiring a not very well-known network that has a great potential for growth (so you need to use this potential). Or maybe it was all the hidden factors of the restaurant that the old owner didn't even know about.

Many entrepreneurs think that by buying a restaurant from the chef-owner who sells it, they will be able to continue the business with the same dignity, and they are mistaken. Some people think that a fresh renovation after buying a restaurant will bring additional customers and burn out. Some people rely only on reviews on the Internet and this is the most stupid assessment of the business. And some people think that if you buy an old restaurant that has existed for many years, it will definitely be profitable and then why would the old owner sell it? One of the most common mistakes of restaurant buyers is the calculation of autonomy: I will buy a restaurant, put a manager and only collect money; this does not happen. But always any institution can sparkle with new colors and attract new customers, because often the old owner no longer sees prospects in view of his blurry eye experience, and a new look can give new ideas. The most important thing is to understand what can be brought in new or how the consumer and their habits have changed over time.

Therefore, in summary, before buying, you need to understand whether you can squeeze out all the potential from a particular institution, having previously evaluated this potential, and find additional opportunities to attract new visitors while preserving the old ones. Relying only on old luggage is a clear mistake that can lead to serious problems.

If you want professionals to evaluate the prospects of the restaurant you are purchasing, please contact our company. We will definitely analyze both the legal, financial, and marketing components.

11.03.2024