Restaurant Buyers: Tips On Buying A Second Restaurant Location


Buying A Second Restaurant Location

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
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.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

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.

Randall Barondess CBB, Business Brokerage Services - Central Coast

Experts at: Preparing Businesses For Sale, No-Cost Valuations and Lease Modifications. MaxOne Business, a REMAX ONE Company prepares small, mid-sized and large businesses for sale by confidentially packaging the business and providing guidance throughout the sales process.

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.

Mike Brewer: Liquor License Broker, ABC Consulting Service

Liquor license brokerage and consulting services. We provide: Alcohol License Transfers Application Consulting & Processing, Liquor License Purchases & Sales, City Zoning Permits & Land Use Entitlements, Public Convenience or Necessity Findings and Letters. Phone Mike Brewer direct at 800-437-1100.

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.

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.


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