Buying a restaurant can be a dream acquisition for many. With the multitude of cookery shows on television and celebrity chefs constantly publishing new books, many people see themselves as budding restauranteurs. Starting a restaurant business can be a very exciting venture. However, with the economic climate being so unsettled, you really need to go into this enterprise with your eyes wide open. In this article on how to negotiate buying a restaurant, we will look at what you need to consider during the negotiating process and also some of the important steps to take.
Free Initial Telephone Discussion
For a free initial discussion on how we can help you negotiate to buy a restaurant, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help you avoid making mistakes, saving you money and also avoiding the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.
What Are The Key Things To Consider?
Create a business plan: This should include the following points:
- Who is your target audience?
- Establish the likely fixed and variable costs of the restaurant.
- How are you different from the competition? What is your unique selling point (USP)?
- Try and forecast your sales targets and how you will meet them.
- Forecast your profit margin.
- Forecast how long it will take to break even.
- Create a marketing report to include web site and social media creation.
Source Funding: How do you intend to fund the purchase of the restaurant? If the money comes from your savings then this will put you in a strong position to negotiate a purchase price. If you need to borrow money from a bank, a strong and detailed business plan will prove to be invaluable.
Carry out due diligence: When you have found a restaurant that ticks most of the boxes and you are sure you want to buy/invest, you’ll need to carry out a detailed investigation to ensure that it really does meet your and your funder’s requirements and expectations.
How To Negotiate the actual purchase
If you are trying to start a new concept or franchise in a new location, it can be advantageous to buy an existing restaurant property. More often than not, the existing owner will be looking to exit with as little stress as possible so find out as much about their circumstances as you can as this will put you in a strong negotiating position. Assuming the restaurant is largely suitable for your new concept, this is hugely advantageous as equipping a new building with all the fixtures you will need can be very expensive.
If this is the situation you find yourself in, location is absolutely vital. Find the best location and look for a restaurant that is available. Don’t compromise on location otherwise you may live to regret it.
When entering negotiations there are several things that need to be considered:
- What are the terms of the lease?
- Determine exactly what forms part of the sale.
- Establish if any of the fixtures have been leased or financed.
- What is the rent and what are the rates?
If you intend to buy a restaurant and continue to trade in its current format, there are various things to consider. Thoroughly check all financial documents regarding the business that should be available at Companies House. As you are purchasing a restaurant with, hopefully, existing customers and consequently cashflow, any forecasts you draw up should be based on actual numbers. Check the lease carefully and make sure the property is in a good state of repair.
The key to negotiating is to find out as much about the restaurant and its trading history before you enter negotiations. In this way, any problems should come to light before you commit to your new venture.
When buying an existing restaurant that you intend to keep operating, there are a number of things to consider at the beginning of negotiations. In addition to the points mentioned above you should consider:
- Who are the vendors and are they current?
- How many employees have been on the payroll for more than 6 months?
- Look closely at the trend in sales.
- Look closely at the trend in profits.
- Check the area very carefully. Is it up and coming, established or run down?
How we can help
We have a proven track record of helping clients purchasing restaurants of all sizes-We will guide you through all the necessary legal due diligence in a comprehensive and timely manner and support and advise you with all the negotiations. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Corporate Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of saving you money and ensuring you achieve a positive outcome.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445 , or allow a member of the team to get back to you by filling in our online contact form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
Leave a Reply
You must be logged in to post a comment.