Buying a restaurant is a big investment with many risks and rewards but is opening one any different? There are pros and cons for each one and it’s important to consider your needs as an owner and the needs of the patrons that will visit your establishment. Buying a restaurant will offer different rewards than opening a new restaurant.
When starting a new restaurant you have to build a customer base that will add profit to your business. Building a good staff is important just as is the type of food you will serve and how you will build a market plan. You also have to find detail about your competitors and see how they are working. Some problems that may arise are:
- Running into problems when obtaining licenses
- Difficulty in attracting a desired customer base
- Depletion of capital with added expenses or low sales
- Staffing problems
Smart thinking and a good plan will help alleviate these problems but it’s always important to understand that there will be risk involved.
Good employee training is a big factor. All managers need to understand what the operating procedures are so they can pass that knowledge onto the employees. Opening and closing procedures need to be established and managers need to oversee food preparation.
When starting new, the location that is right for you will determine if you succeed or fail. Look at business around your desired location and consider how much traffic will be generated. Is it near a mall or on a busy street? Study the area and visualize the potential clientele that will be visiting your establishment.
Orders and Deliveries
There is nothing better for the demise of a restaurant than not having the supplies you need on the first day. Having a delivery schedule with experienced suppliers to ensure on time food delivery is important before your restaurant opens. Determine how often you will need these orders and set a particular day when everything will arrive.
Buying an Existing Restaurant
Some may see buying a restaurant less risky than opening a new one. Knowing why the previous owner decided to sell can determine how much risk is involved. A lot of factors can come into play especially if the business had a bad reputation and it’s up to you to rebuild that reputation. Some other risks include:
- Liability left from the previous owners like bills and taxes
- Broken equipment
- Problems with management, staff and general problems with the business
- Health code violations
- Location disadvantages
It’s not all bad news when dealing with an existing restaurant. There is cash flow from existing customers that are already established. The regular customers will come back despite the change and there is always potential for new customers as well.
A good reputation is beneficial as people will already know about it. They will know the business has been around for a while and like what they see. However, if the reputation was bad, that same awareness will hurt you.
Less time invested
A nice benefit to an already established restaurant is you will not need to put in so much time into the design of the restaurant, the menu and training staff. This will allow you to improve on the existing operations.
Buying a restaurant can be an exciting venture. Buying a restaurant definitely has its perks and so does opening a new one. Choosing which one is best for you come down to your needs and how much time and money you want to invest. Education is important to make sure you make the best decision possible.