In order to buy a restaurant, savvy buyers should perform their due diligence on everything from the financial aspects of the deal to a restaurant's popularity and menu and everything in between, including the local competition. When investigating the competition, most entrepreneurs looks for competitor restaurants in the same price range, those that offer the same style of food, have similar atmospheres, or cater to a similar demographic.
All of those types of restaurants are part of the competition and need to be considered when deciding to buy a restaurant. The latest Census reports that there are approximately 62,000 restaurants in California alone, so there will always be plenty of opportunity and competition.
Don't Get Blindsided By This Competitor When You Buy A Restaurant
There are some competitors to a restaurant business that an entrepreneur might not see beforehand when they buy a restaurant. Not every competitor is another food service establishment down the road with a bright neon sign advertising the same food that you want to sell.
What would happen if, three months after you buy a restaurant, the main road in front of your facility is shut down for long term construction? Now your restaurant is inconvenient to find and get to, which will severely hurt your business. Did the previous owner know that the road work was scheduled and that is why they sold? That doesn't matter; what does matter is that a little bit of research is required to prevent a catastrophe like this from happening when you buy a restaurant.
Thankfully, you can check on this contingency before you buy a restaurant. Look up the local and state transportation agencies in the phone book or online. They will list upcoming road closings and construction online and via phone if you call. This is a vital step during due diligence when you want to buy a restaurant.
Get A Non-Compete From The Previous Owner When You Buy A Restaurant
That's right -- the seller that just sold you their business could end up being a potential competitor. Without a non-compete agreement, there is nothing stopping the previous owner from opening a new business and competing with you. Worse yet, they can entice former customers into the new restaurant and hire old staff to work in their new restaurant.
When creating a non-compete agreement, it is always best to consult with a legal representative. A non-compete agreement must be clearly written with discreet terms in order to be legally valid. Typical terms might include a restriction on the previous owner from opening a competing restaurant in the surrounding area for at least two years.
When it comes time to perform your due diligence and buy a restaurant, be careful of these 'hidden' competitors that can drain your business.
Looking to buy a restaurant business? See all restaurant businesses for sale in California - or sell a restaurant business and reach thousands of restaurant buyers. Also keep up to speed on the California restaurant market (with industry business brokers & experts) with upcoming BizBen Online Talk Shows & Webinars.
About The Author: Peter Siegel, MBA is the Founder of www.BizBen.com (established 1994 - 7000+ California businesses for sale, 200 new listings daily) and the Director of the BizBen Network (16,000 business buyers, 4,000 small business owners, 1,800 California business brokers & agents). Peter Siegel can be reached direct at 866-270-6278 to discuss getting resources for selling a restaurant, financing a restaurant purchase, or buying a California restaurant.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Matt Sadati, Business Broker, SF Bay Area, Northern CA
I have Engineering and Law, JD degree, with over 30 years of experience in all phases of entrepreneurship. During the past 15 years my concentration has been in business of mergers and consulting. I have owned and operated over 33 businesses each having one to 30 branches.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 800-864-0420.
|Prabhjot Randhawa, Broker: SF Bay Area, Northern Central Valley
I'm a Business Advisor at Liberty Business Advisors of San Fransisco. I have over 20 years of experience in all phases of entrepreneurship. During the past 15 years my concentration has been in business of mergers and consulting. I have owned and operated over 10 businesses.
|Harry Sidhu, CBB, Broker - SF Bay Area, Central Valley, SAC Region
Assisting both sellers and buyers of businesses - dealing mainly with Liquor Stores, Grocery Markets, Gas Stations, Smoke Shops, Restaurant Related, Retail Related, Service Related. Serving SF Bay Area, North Bay, Sacramento area. Call Harry Sidhu, CBB for assistance at 510-366-6130.
|Christina Lazuric, CBI, Business Broker - Orange County
California Business Brokers, one of Orange Counties top selling business brokerage. I sell successful businesses in the Orange County area. Professional Business Broker, both a Certified Business Broker & a Certified Business Intermediary. Call me for a free confidential evaluation - 949-257-7823.
|Bob Hughes: Business Broker, Palm Springs Area
Bob Hughes is a business broker & is President of Hughes Properties. Hughes has a wide variety of entrepreneurial experience with the personal ownership & sale of numerous businesses, and has sold over 200 small & mid-sized businesses in the Riverside County marketplace. Call Bob at 760-323-8311.
|Jeff Back, Broker: Restaurant Specialist - SF Bay Area
J. Back & Associates Restaurant Real Estate was founded in 1988 as the first bay area real estate company to specialize exclusively in restaurant real estate. I am the past President of Charley Browns restaurants and have been involved in the restaurant business for over 35 years. 925-736-8200.
|Brad Steinberg, Broker - Laundromat Specialists
Laundry specialists - founded in 1968 by three laundry professionals, PWS is a family-owned corporation. Through the years it has grown to become the largest vended laundry equipment distributor in the United States. Call Brad Steinberg at 323-721-8832 to sell or buy a coin or card laundromat.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|Restaurant And Fast Food Franchises - Successful Tips From Franchise Buyers
Restaurant franchise offerings are among the most popular of the business types potential business buyers seek. What many would-be owners don't realize is that there are specific tips for buying fast food or restaurant franchises that don't necessarily apply to independent restaurants for sale.
|Financing The Purchase Of A Frozen Self-Serv Yogurt Shop - Tips For Buyers
Financing a frozen self-serv yogurt shop for can be challenging. Here, you'll learn the real scoop behind financing a yogurt shop purchase to help it be profitable from the start. Peter Siegel at BizBen.com
|Selling Your California Deli Restaurant - 5 Key Tips For Restaurant Owners
The key to successfully selling your deli or any other business for that matter is preparation. Being prepared to sell your deli restaurant could mean the difference between closing a deal and not. With BizBen offering many deli sales, here are 5 tips to help you get prepared to sell your deli.
|Buying A Bar - 4 Tips Worth Reading About Before You Buy Your Bar Or Lounge
Four factors to consider when buying a bar. Peter Siegel, MBA (BizBen ProBuy, ProSell Programs) with BizBen discusses: The advantages and disadvantages of a bar that serves food as well as liquor. Staffing, inventory control and owner involvement as they relate to a good business are summarized.
|Buying A Pizza Restaurant, Pizzeria Tips: What Pizzeria Buyers Need To Know
Peter Siegel, MBA discusses buying pizza restaurant for sale tips and what to watch out for. Topics: Owner involvement in the business as pizzerias are most successful when the owner is onsite.
|Buying A Restaurant Can Be Challenging: 3 Key Tips For Restaurant Buyers
People always need to eat; there should be plenty of business. Some buyers think there is prestige to owning a popular eating establishment. But it isn't an easy purchase. Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program at 866-270-6278) reviews this topic.
|Don't Buy A Restaurant Without Checking The Competition - Key Buying Tips
Looking to buy a restaurant business? Check out these tips first to avoid getting blindsided when you buy any type of small or mid-sized California restaurant. Peter Siegel, MBA (BizBen's ProBuy & ProSell Programs & Restaurant Purchase Financing Expert) at 866-270-6278 covers this topic for buyers.
|Financing A Business Purchase With Limited Or No Real Estate Collateral
In my experience working with the "right banks and financial institutions" repayment ability sometimes overrules collateral pledged by someone needing financing for a business purchase or a down payment. Peter Siegel, MBA (Business Purchase Financing Expert) at 866-270-6278 shares his experience.
|See All News, Tips And Events|