3 ways to buy a restaurant

For those looking into opening a  new restaurant, there are 3 options when buying a restaurant. Each scenario has pluses and minuses, one size does not fit all.

1.  The first is an Asset Sale:  

The asset sale option involves buying a struggling or closed restaurant to take over the space and the equipment without necessarily continuing with the same menu, service, etc.  The seller gets out from under a lease and long-term commitment.  The buyer gets equipment for a fraction of the price for new equipment, and skips the long process of building a new restaurant from scratch.

  Pros:

• Least expensive option
• Faster turnaround from purchase to open

  Cons:

• Taking over a location that has struggled in the past.  Requires changing the reputation.
• Starting with old equipment and venue that may not have been well-maintained.
• Less flexibility in the layout and design.

2.  Opening a new restaurant from scratch:

This process involves finding a location, negotiating a lease, designing a restaurant from a blank space, and going through the permitting and construction before you can open.

  Pros:

• Flexibility and creativity from day one
• You get to create your own restaurant and develop your own vision rather than assuming someone else’s ideas
• The physical space and the intangible aspects of the restaurant and its culture meld together seamlessly.

Cons:

• More expensive and takes more time than an asset sale
• Involves more risk than buying an existing successful restaurant.

3.  Buy a successful restaurant:

Similar to an asset sale, but the existing restaurant you are buying is operating with a profit.  You are buying the concept and branding as well as the equipment and space.  This scenario usually occurs when a restauranteur is looking to retire or move, and they have a profitable restaurant they won’t be able to continue to run.  The buyer gets a proven brand, with a loyal clientele, and systems that are at least profitable.  While not necessary, the buyer can then make tweaks and adjustments down the line to either improve the profit margins or make the concept more their own.

  Pros:

• Less risk in buying a proven commodity with revenue history
• Established methods and procedures to (hopefully) ensure profitability

  Cons:

• Typically the most expensive option to own a new restaurant
• Continuity in the culture and the “feel” of a successful business are not guaranteed when ownership is transferred.
• Can be difficult to make changes down the road, facing the “this is the way it’s always been done” mindset in the staff and guests.

Salt & Cayenne is ready to help you achieve your restaurant ownership dream.  Contact us  to discuss these options in more detail and decide which is right for you!