Buying Facts
Buying a Restaurant
Common documents requested:
- Copy of the Lease
- Tax Returns for 3 years
- Financial Statements for 3 years
- Complete Furniture, Fixtures & Equipment list
- Latest Health Inspector’s Report
Valuing an Existing Restaurant
Key factors that determine value:
- Current and Gross Sales and potential for sales growth
- Current Cash flow and growth potential
- The condition of the leasehold improvements and equipment.
- The length of the lease – 10 year minimum
- The net or gross lease should be in the range of 6-8% of gross sales
Lease Negotiations
A checklist:
- Have lease reviewed by an attorney
- Minimum length of the lease 10 years +
- Base rent at Industry Average
- Scope of Landlord/Tenant Improvements
- Right of Assignment
- Condition of space at delivery
- Options to extend
- Extent of Personal Guarantee
Site Acquisition Criteria (Some key points to consider)
Location
- Location curb appeal
- Demand
- Competition
- Visibility, accessibility, parking
- Appropriate rent and demographics for the concept
Facility
- Rent, lease terms & R.E. Taxes
- Availability of alcohol licenses
- Condition of the space and leasehold improvements
- Cost of renovations
- Condition of mechanical systems HVAC, plumbing, electrical
- Layout, Design