Despite the challenges that restaurant business owners have faced over the last few years, this industry has a market size of approximately £19 billion. Growth and success in the hospitality industry are achievable goals if you plan, prepare, and remain dedicated and disciplined.
Restaurant businesses vary in description, customer experience, and size. From quaint cafes to sophisticated fine dining, your personality, finances, and objectives will define the type of restaurant you acquire.
While being a business owner in the restaurant industry requires strength, devotion and passion, there are multiple reasons why buying this type of business is a safe decision.
Here are some of our top reasons why buying a restaurant can be more feasible than starting one from the ground up.
Starting a restaurant from scratch means you’ll need to strategise, fund, and execute several elements of the business, which requires time you may not have. Time is often the most significant advantage to buying any business – especially a restaurant. You’ll save time on preparations, planning, renovations, operations, and generating a customer base.
Buying an existing restaurant means you gain access to an established premises, trained staff, and functioning equipment. However, it is crucial that you conduct extensive research on the property you’re interested in. Is it in a busy area and does it generate foot traffic?
During your due diligence, you should scrutinise elements of the restaurant, identifying risks, and any areas where potential value could be unlocked.
You’ll also have a team of staff that have already been trained – reducing recruitment and training time.
Any restaurant would not survive without customers. Without a customer base, it would be impossible to generate a cash flow. Existing restaurants already have a customer base and have worked on their brand reputation. You’ll just need to ensure you retain these customers and continue working on a brand strategy that strengthens its reputation.
Likewise, executing a marketing strategy is not a straightforward task. Some existing restaurants may not have the most effective marketing practices but optimising and improving an existing one may be more manageable than building one.
Usually, an existing restaurant will have a proven track record, cash flow and a space in the industry. Because the restaurant will have a financial history, lenders will likely offer you better financing options. It may also become easier to apply for loans.
While these reasons to buy a business are authentic, acquiring a business does have its own risks and challenges. Before you begin your purchasing journey, it is essential that you have access to capital and that you are aware of the liabilities you will be taking on as the new owner. Of course, there are economic conditions – both expected and unforeseen – that you’ll need to prepare for.
Most importantly, you need to evaluate why the restaurant is for sale. Is it due to retirement plans, or are there more complex issues related to financial, tax or legal implications?
Buying a business does require extensive research, so make sure you understand the intricacies of it.
Nonetheless, investing in the restaurant industry is an exciting pursuit that we encourage. Your creative and competitive streak can manifest itself in unique selling propositions, and there are multiple ways to acquire new customer segments through food and drink.
After all, people love to eat good food!
