What are the Benefits of Buying an Existing Restaurant
If you are considering a restaurant or bar business, there are generally two options available to you: buy an existing one or start one from scratch. In a lot of instances, buying an existing restaurant comes with a lot of additional advantages.
Existing Restaurant EquipmentThe first benefit is the existing restaurant equipment. Building a new restaurant requires you to convert an existing space into a restaurant. This is quite capital intensive as you would need to get new equipment and machinery to turn the existing space into a restaurant.
Some of these equipment and machinery include an HVAC system, a fire prevention system, and a ventilation system. You will need to know if the restaurant is properly zoned. You also need to get permits from the various existing government agencies before operating a restaurant.
When you buy an existing restaurant, most of these things are in place, and you can easily get down to business.
When you are dealing with an existing restaurant's equipment, there are some questions you need to ask yourself. The first question is what conditions are the equipment in? The second question is whether the equipment were owned by the previous restaurant or they were leased. If they were leased, are the conditions favorable enough for you to assume liability under it?
I strongly advise that you thoroughly check out the various equipment before making a purchase. A lot of buyers are usually so excited to get started that they don't do their due diligence. Then, after the deal has been completed, they are usually shocked to find the equipment in a sorry state.
Existing Restaurant Operating LicenseThe next benefit are the operating licenses of the existing restaurant. One of the most important of these licenses is the liquor license. By getting the existing license of the restaurant you purchase, you can get a temporary permit while your own application is still pending.
However, I advise that you make sure you look through the requirement of the temporary license. By doing so, you will be able to determine if the license is a transferrable one.
The Existing Restaurant LeaseIt can also be ideal for you to buy a restaurant and take advantage of its existing lease. In a lot of instances, existing leases sell for below their market value. This is better than buying a new lease where the landlord can reset the lease to its market value.
However, you should make sure you do your due diligence before accepting an existing lease. Be sure that there is enough time left on the lease to recover your expenses. Make sure that there are enough safeguards to protect you from unexpected liabilities.