There are several ways to make and invest money in the commercial real estate industry. From retail, land, office properties and more, the opportunities are endless. One way to invest in commercial real estate is to buy a restaurant business. There are many factors to consider and understand fully before you buy a restaurant. Our friends at SVN SouthLand Commercial Real Estate recently published a blog post on how to buy a restaurant business. We encourage you to read the excerpt from the article below, then click the green button at the bottom to read the rest.
Most people dream of being their own boss, and being the captain of their future. One way to achieve that dream is to buy or start a business. There are literally thousands of business categories to choose from and people tend to gravitate towards what they know, enjoy or believe would be fulfilling. Who doesn’t love places people gather, celebrate and socialize?
If you want to start a restaurant from scratch, that will be in a different blog. This blog will focus on buying a “going concern.” By purchasing a restaurant that is already open and operational, this reduces several risk factors:
- Construction Risk: How many job sites have you ever known that were under budget or even met their budget?
- Time Risk: When starting any business, especially one that involves construction or remodeling, time is always a factor. Many projects run significantly past the projected opening date. This can tremendously affect the Proforma P&L due to no revenue coming in as expected. Extra time typically mean change orders and cost overruns (ouch-double negative).
- Concept Risk: The new restaurant idea in your head may not translate to sales and profitability.
- Menu Risk: The special food that grandma made may not be well received by the paying public.
Now that you’ve reduced the risk by buying an existing restaurant, below are some significant advantages to buying a restaurant that has been open for a period of time:
- Brand Awareness: The restaurant has been open and operational so there’s already customers familiar with the concept
- Systems and Procedures: No need to reinvent the wheel when buying an existing restaurant, because they already have their business operational…