The excitement of hunting for a good location for your restaurant can at times be perplexing and frustrating for a new restaurateur. Aside from the abilities of a keen eye, able to spot the next property, a sense of what makes the “right” location, the scout must also have an adventurous streak supported by the ability to do whatever it takes to acquire the space.
There are three options when looking for a place to begin building the empire.
Vacant spaces are the most common, restaurants for sale, and restaurants that are not for sale. Restaurants that are not for sale are the most fun to buy.
Vacant spaces are vacant for a reason. Before jumping into a space that has faltered, make sure you do your homework on the series of events that forced the restaurant to go dark. It is very common that the space has a reputation for disaster. You should always speak to the two previous occupants if they are available and get their side of the story. In many cases, the landlord will tell you the "food was bad, the host was mean, or the owner didn´t know about customer service". The restaurateur will give you some factual numbers that can be analyzed in your budget to see if the space makes sense.
Often in a vacant location, the owner looks for "key money" from the new tenant. That´s the fee the landlord will charge for moving into a space that has failed numerous times before. Don´t pay it. Rent is one thing. Key money should be negotiated down if the space is worthy of it. Keep in mind that when a restaurant closes in a space the location often becomes jinxed. Customers have a tendency to stay away from the location.
Restaurants that are already on the market are worth looking into. These are often available for an inflated price. Bring your accountant along for this experience. Often entrees are not the only thing owner´s in trouble cook.
However, the most enjoyable restaurants to buy are the ones that are not for sale. These are properties that are limping along, barely covering expenses, but still have the public persona of being great places. These can also be acquired for a very reasonable amount of money, frequently financed by the owner over time. It is one of the tightest secrets in the restaurant business and it often works for both parties. It takes a bit more time than usinf a broker, but it is safer than renting a space that has been closed for a while.
And, there are other benefits involved. You may not need an extensive remodel, just a cosmetic retouch may suffice. Permits can often be transferred without any problems, and you may end up with a person who can help you begin your career as an owner.
It´s a wonderful way to dive into the adventure of ownership and it could also help an owner who has had enough begin a new life. When I purchased The Wayzata Tea Room on Minnesota, it wasn’t for salebut the techniques used work for many eateries that are ready to close. Read about those tomorrow.