ForumsStarting a Business

I'm a new member! And you who r u?

Yes. I already have my business plan but am looking for that info to complete my start up costs.
If you know the answer, thank you for letting me know!

Best!

Sometime it can be easier and cheaper to purchase an existing restaurant. No buildout cost, no zoning, opperating permit or license fees. And you most times you only have to upgrade some equipment and fixtures.

With some new leases you will have to pay a few months upfront.

For a list of startup cost you can Google it to get a general idea but get specifics from the locals.

Hope this helps.

Lee

It is definitely the least expensive to take over a failed restaurant. Build out, equipment, furniture, and fixtures will be at a greatly reduced cost compared to fitting out a new space or purchasing an existing restaurant. However, location is extremely important for retail & restaurants. If one restaurant failed, it is a red flag for the location.

Buying an existing restaurant can be a very smooth and cost effective transition. There can be a lot of negotiation and you have a chance to review several years of performance. You may consider looking at a restaurant where the owner just wants to retire. The owner may agree to assist with the financing of the business. Many times the owner will stay on payroll and consult you through your first year. This can really help with the learning curve of the establishment.

Leasing a blank slate and building from scratch can be VERY expensive. Unless you have a fair amount of restuarant management and/or ownership, this can be very daunting. Depending on the scope of your business plan, the build out and FF&E can easily top $100k. You can lease all the equipment to conserve capital but you will still need to be pretty liquid to pull it off.

Good Luck!

Elisager --

I have a couple of questions?

Are you changing the concept of the restaurant?

Have you looked over the books for the rest. and evaluated the income for the business?

Once you get your numbers for the existing business together to see your out of pocket cost, put them to the side.

Then tally the cost of starting a rest. from an empty space (lease, license, permits, FF&E, buildout, etc.)

Finally, compare the the 2 and you can make your decision from that.

Lee

Hi Rest Lee,

To answer your question:
1) yes I would change the concept of the restaurant and anyone coming to this place should for it is the very reason why it is not working.
2) yes I got the financials of the place: P&L and balance sheets and it seems they are not making enough to make any money. Plus it really seems they are not claiming all their sales and payroll to the state. Otherwise how could they come up with a payroll of 35k?
I think the place is just not well managed for the owners are never there and have no experience in the restaurant industry.

I also did my calculation between buying an existing business and taking on a new lease based on SBA spreadsheets. With the price these owners are asking it would be actually more expensive to buy this place with all the remodeling that has to be done. I would need to make an offer 100K lower in order to make it not more expensive than taking on a new lease...but again the location is great and also I would be ready to start the activity faster if buying an existing business....
I'm currently trying to make a low offer but I know they are not going to accept it for they are not realistic for the time being...I'm hoping that they will get more realistic after some time maybe...nevertheless, do you think it might be worth putting another 50k down to get their approval, meaning that it would cost more than taking on a new lease?
Let me know your thoughts! And thank you for your help!

My advise: From personal experience i share with you that be very careful with existing restaurants. I have seen several owners so desperate to get out of it that often make deceptive reports about current sales, and the real reasons why they are selling. Many are not making any money, they will make a little as soon as you buy it. Also if you decide to start fresh be extremely careful about the location, concept (meaning the type of food you are going to sell), planning, lease agreement (ask for at least three months free rent, believe me you will need the cash flow), and your investment decisions don't invest your retirement funds, or mortgage your house to pay for this, way too risky, at least that my perspective. Don't underestimate the difficulty of the restaurant business. Good Luck.