Assuming you ve been given basic financial information about the business, the first thing to do is to verify that the information is accurate. This work usually is best performed by an accounting professional experienced in due diligence assignments.
That expert will need to review tax returns, a sample of cash register receipts and vendor invoices, payroll records, checkbook, copies of leases and other contracts the business has with vendors or with employees.
The second step, if you haven t done this already, is to check on the restaurant s reputation in the area by talking to the Better Business Bureau (any complaints?), read Yelp and other reviews of the business, and do an Internet search with the business name.
Thirdly, talk to the city s planning commission to learn if there are new restaurants going into the area, potentially posing a competition risk that will reduce the customer count of the business to be purchased. Also, walk around the neighborhood where the restaurant is located to get an idea about whether it looks prosperous or if there are abandoned houses and poorly maintained properties, suggesting the area is in decline.
The fourth step would be a hands-on review: observe the business for a few days to gauge its customer count, and operate its equipment to make sure all systems and appliances large and small--are in good working order.