Build vs. Buy: Which is Smarter for Your Next Restaurant?
If you already own a restaurant, you understand the need for a clear business plan. It’s important to outline exactly how you plan to make money – or stay afloat – for your restaurant’s first year.
When you’re ready to open a second restaurant, you need to create another business plan, regardless of whether you want to buy an existing eatery or build a new one from the ground up. The question of which is a smarter decision comes down to what you want, what’s available and what you can afford.
What Do You Want?
An existing restaurant comes with a built-in customer base, a menu, a brand identity and, likely, kitchen equipment. In some cases, this is a great option, but it may also come with a bad reputation, faulty stoves and freezers or other issues. If you want a turnkey solution, this can work, but you need to do your homework.
Another option is to lease a former restaurant space and make it work for your restaurant concept. This is a good choice when you don’t want to sink money into building an appropriate space in a specific location. Choosing whether to buy, lease or build becomes an easier choice once you know what your goal is.
What Can You Afford?
If you’re not set on having a particular theme or concept for your next restaurant and you’re simply looking for a second business, then start shopping. Make a list of your must-haves and line up some appointments to look at empty buildings and restaurants for sale.
Be sure you already have your business plan drawn up – and that should include any small business loans you expect to get. When you speak with a restaurant owner who is selling, ask the right questions: Why are they selling; how much are they selling it for; is it a leased property or does it have a mortgage; what are the monthly and annual sales? Do your own research, too.
Go to the restaurant during its busiest times before you meet with the owner. Order a meal and study the menu. Watch the customers and the wait staff. Take notes about everything you see so you can properly assess the value of the restaurant.
Remodeling an empty restaurant could be a costly endeavor, but it may be the least expensive option compared to building from scratch. At the very least, you’ll have a space designed to be a restaurant, so you’re already halfway to the finish line.
As a restaurateur, you are at the mercy of real estate. To make sure you get the best location, you’re probably looking at spaces near retail. The empty buildings available to you are likely for lease, not for sale. This isn’t a negative, though. The benefit to leasing first is that you can consider it a trial. The restaurant business is unpredictable, so there’s no way of knowing if the location is ideal for your eatery. Lease a space for the first three years, and then consider buying it if business is good.
Whether you buy an existing restaurant, lease a turnkey restaurant space or buy, be sure you stick to your business plan as strictly as possible. There are advantages and challenges with each decision.
Image from Mangostar/Shutterstock
See full article at : business.com