What are factors to consider when buying a restaurant and making it a second location?
I've worked with several restaurant owners who have found themselves either considering or have added a second location to their business.
The start-up costs are typically so high to build a business from scratch that many current owners prefer to look for an existing business that isn't doing so well, and buy it for a less expensive price, because they already plan on changing the concept to meet the original location.
1. Have your finances in order and buy and operate (financially) the second location as if it’s independent from the first.
A business owner who is buying a second location will have to be to be approved with another landlord, and so they should review their credit score and assets and liabilities. A buyer should do a realistic approach on how much capital they will need to change the existing business to a suitable second location. If done correctly, the two locations should not be close enough that they don’t cannibalize each other’s business, but not too far apart that an opportunity to build name recognition isn’t lost in the community. Keep accounting of each business separate, so that you can monitor the health of each location.
2. Consider the future when buying a location.
I have worked with business owners who have created 3 different locations of a restaurant, and as they got older, they began selling them off, one by one, and finally possibly just operated the flagship location. Most future business buyers will want an agreement not to compete clause when buying a restaurant, which could be 5 miles for 5 years, and while a seller will disclose that they own other locations, one might anticipate this, and choose a location that is far enough from another location that this will not be a problem and hurt the sales price.
3. Hiring the right staff.
Anticipate and accept that you the business owner cannot be in two locations at the same time, and that you have good staff in place or will acquire them, so that you can operate between both locations. Restaurants never are run as good as when they are owner/operated, and so consider having a good management staff at either location.
4. Create a good business/marketing plan.
Running a second location will take thought and reflection on why the original location was so successful in the first place. Make sure the demographics match or do a market analysis why and how the second location can duplicate the success of the original.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Lee Petsas, Business Broker: Southern California Area
Lee Petsas has been selling businesses with UBI Business Brokers in Southern CA since 1981. In 1999 he became the Owner and Broker for UBI. He has been approved multiple times by Courts as an Expert Witness in the area of Business Valuations.
|Jack Oh, Business Broker: Southern California
Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989 Cell / Text.
|William Park, Business Broker: Southern California
Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.
|Peter Siegel MBA, BizBen Founder, ProBuy, ProSell, ProIntermediary Programs
Founder Of BizBen.com (since 1994). I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I consult daily with buyers, sellers, and brokers daily about buying and selling California small to mid-sized businesses. Call 925-785-3118.
|Rick Carlson, Business Broker - Southern California
You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.
|Ryan Clark, Business Broker: Southern California
The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan, Business Broker at 310-652-8353.
|Joe Ranieri, Business Broker: Orange, LA County Areas
Having owned retail/restaurant businesses for over 20 years, my interest turned to selling businesses rather than owning them. I specialize in LA & Orange County restaurants, fast food independents and chains, bars, & liquor stores. Call 714-292-5448 Cell/Text.
|Steve Zimmerman: Restaurant Broker Specialist, California
Steve founded Restaurant Realty in 1996. He has personally sold/leased over 1000 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker- An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|Upgrading Liquor License: An Increase In Price When I Sell My Restaurant?
My restaurant recently upgraded its beer with wine license to a full-service liquor license, and if I sell, how much can that increase my selling price? Joe Ranieri, Southern California restaurant broker specialist initiates this discussion and other advisors, business brokers, agents weigh in.
|Buying A New Restaurant: 6 Items New Restaurant Business Owners Overspend On
Nothing can be more exciting, and a little daunting for a new owner than finally being handed over the keys to their newly owned restaurant. Many buyers, especially those who have never been business owners before are much too eager to make the restaurant "their own". Overspending can take place.
|What Are Some Tips On Buying A Butcher Shop, Meat Market? Broker Gives Tips
Butcher shops, once a vestige, are increasingly becoming popular again in many metropolitan and suburban cities. In this Discussion Post on BizBen, Joe Ranieri (Orange County & LA County Business Broker) discusses various issues of buying a butcher shop and what that entails for business buyers.
|Buying A Restaurant Can Be Challenging: 3 Key Tips For Restaurant Buyers
People always need to eat; there should be plenty of business. Some restaurant buyers think there is prestige to owning a popular eating establishment. But it isn't an easy business purchase. Peter Siegel, MBA (BizBen Founder, ProBuy & ProSell Program Director at 925-785-3118) reviews this topic.
|Millennial Buyers: What Are They Seeking When Buying A Small Business?
First, we must define, who are the Millennials? The exact years are up for debate, but Millennials were born during approximately between 1981-1986, which today would be between 22 and 37 years of age. Joe Ranieri looks at what these buyers are looking for and what qualities they seek in businesses.
|What Are Some Of The Best Tips On Buying An Existing Bakery Small Business?
Bakeries service all occasions from weddings, birthdays, retirement, and a whole host of other special occasions. Many bakeries do a brisk retail business, but really make their money in catering. Joe Ranieri a Southern California Business Broker looks at the top tips when trying to sell a bakery.
|How Long Does It Take For A Small Business Restaurant To Sell In California?
This question is bound to come up from a seller to a business broker at one point in their relationship. The truth may discourage a seller who desperately needs to sell, because in all honestly, many times in can take months. All restaurants are different - Joe Ranieri, Business Broker explains.
|Is Your First Offer Received Usually The Best Offer When Selling A Business?
Should you accept that first offer when selling a business? Brokers and agents agree that the first 30 days are probably the most critical when selling a small business - but should you take that first offer? Joe Ranieri (Orange and LA County Business Broker) starts this great Discussion on BizBen.