Buyer Due Dilgence -- Not on the Business - On Yourself

This ten step questionnaire will help you define what you want and more importantly, what fits your lifestyle before you go on the search for the perfect restaurant. This is vital to the buying process and the step that most buyers overlook. Prepare first, since once you being to make inquiries, multiple opportunities will surface. It's also important to do your homework up front since you can't be taken seriously when you inquire about everything from $55,000 asset sales to $2.5 Million dollar waterfront properties with real estate.

1) The answer to this question lies with whether you need an immediate income (in which case only the first answer is an option for you) or whether you have the capital (and risk tolerance) to invest and building earnings over time. Consider that it will take between 18-24 months for a GOOD operator to perform a turn around or begin seeing profit from a start up so plan accordingly.
I am interested in:
a) An operating restaurant - profitable
b) A turnaround situation
c) A closed restaurant
d) Franchise Restaurants
e) New Space

2) The answer to this question lies within your financial situation. Landlords will require both good credit and a personal guarantee on the lease in most cases. If you plan to lease and don't have both, you may want to consider something with real estate so you can leverage the purchase of the real property with a lender. If you're purchasing real estate to convert, it's going to take a lot of capital
I am interested in
a) Restaurant and Real Estate
b) Restaurant Only - with Lease
c) Real Estate Only - I'll convert

3) The answer to this question may lie with your background or experience. You may also have personal values or other criteria which would stop you from looking at certain concepts.
I am interested in
a) Upscale/Fine Dining Restaurant
b) Bar-B-Que Restaurant
c) Pizza Restaurant
d) Italian Restaurant
e) Sports Bar Restaurant
f) Asian Restaurant
g) Deli/Sandwich Restaurant
h) Franchise Restaurant
I) Take Out/Delivery Only Restaurant

4) The higher the net income of a restaurant (which typically sells for 2- 2.5 times earnings, the higher the purchase price. What you can afford will drive the answer to the following question.
I am interested in
1) Earnings of under $50,000
2) Earnings of between $50,000 and $100,000
3) Earnings above $100,000

5) The answer to the following question is straightforward. It may be very relevant to an owner that may finance a portion of the purchase or landlords and lenders who may turn away candidates without background and experience.
I do have or I do not have Restaurant Experience

6) This question affects your future lifestyle and time with your family. It's a good one to discuss with other family members before you begin looking at sports bars open until 2am each night.
I prefer a restaurant that is
a) Open any hours
b) Open until early Evening (11pm)
c) Open Late Night/Early morning hours (2am)
d) Open for breakfast and lunch only

7) The highest profit margin in a restaurant is made on alcohol sales so the alcohol ratio will drive the net profit on a business up or down depending on how much is served. Local and state restrictions on the type of alcohol licenses generally dictate a ratio. The answer to this question is NO alcohol if you have a felony conviction in your background as you will not qualify for a liquor license in most states.
The most desirable alcohol ratio for me is:
a) Low to No Alcohol/High Food
b) Mid Alcohol/Mid Food
c) High Alcohol (bar levels)/Low Food
d) No Alcohol

8) This is a good place to try and take a break and articulate to yourself or another person why you are motivated to buy a restaurant. The answer may determine whether you continue on this quest or decide on another type of business.
My motivating factor to buy a restaurant is
a) Investment/Money making potential
b) Restaurant Experienced/now I want my own place
c) Seems like a good idea
d) I'm not sure

9) This question is incredibly important in major metro areas. Decide up front how far you will travel or if you will move to acquire the right restaurant. Changing your children's school is a family decision. The right business in the wrong location may not be an option for you.
When it comes to finding a restaurant, these are my criteria from my current home
a) I am willing to travel _________ miles from my current home to my business
b) I am willing to move _________ miles from my current home to my business

10) The last question to ask yourself before you go shopping is what you can afford. You wouldn't shop for a house without a pre-approval or a budget and you shouldn't start shopping for a restaurant without the same. Who's paying for the business? Will you need financing? Are you looking for owner financing?
My financing plan is:
a) I will not require financing or capital
b) I have loans or investors secured up to __________
c) I need the owner to finance ____% or $______ but I can find $__________ to put down

If you seriously consider all ten of these questions before you buy a restaurant, you will be equipped to meet sellers and brokers with a clear strategy for your own success.

Visit our listings online at

Follow We Sell Restaurants on Twitter at

Visit our online blog at

Views: 1

Tags: Atlanta, Buy, Restaurant, Specialist, a, bar, bars, broker, brokers, business, More…businesses, buy, buy/sell, by, florida, for, guide, in, online, or, owner, pubs, quiznos, restaurant, restaurants, sale, sell, selling, small, to


You need to be a member of FohBoh to add comments!

Join FohBoh




Social Wine Club for Craft Wineries


Read the latest

Read the latest food and beverage coverage by SmartBrief in SmartBrief Originals: -More

Kids LiveWell turns 3 with 42,000 participating eateries

NRA's Kids LiveWell program has grown from 19 restaurant brands to 150, with 42,000 U.S.  -More


Posting a job or finding a job starts here at FohBoh. Call us about special $50 posting packages to syndicate across all major jobs boards.

National News

Ward Whitworth Named President for On The Border Mexican Grill

On The Border Mexican Grill & Cantina, which was recently acquired by Border Holdings, LLC, an affiliate of Argonne Capital Group, today announced the appointment of Ward Whitworth as President of On The Border.

The Melting Pot Targets Houston and El Paso, Texas for Franchise Expansion

Restaurants, Inc. announced today that it is actively seeking franchisees to expand its presence throughout the Lone Star State, naming El Paso and Houston as target markets for future franchise development.

Encore Restaurants Purchases 8 Existing Five Guys Restaurants, Plans to Develop 45 More

Encore Restaurants, LLC, a subsidiary of Dallas-based Encore Enterprises, Inc., has announced the purchase of eight existing Five Guys Burgers and Fries restaurants across central California including Elk Grove, Fresno, Lodi, Natomas, Roseville, Stockton, Tracy, and West Sacramento.

Takeout Orders to Hotels Jumped 125% in Popularity in Last Three Years

For many Americans, hotel room service is considered a travel luxury; however, data from PFK Hospitality Research1 suggests that room service revenues fell 9.5 percent from 2007 to 2012, with some hotels shuttering unprofitable operations altogether.

National Restaurant Association Praises House and Senate Commerce Committee Passage of Travel Promotion Act

Yesterday the National Restaurant Association (NRA) praised the House passage and Senate Commerce Committee markup of the Travel Promotion, Enhancement and Modernization Act of 2014. The bipartisan legislation reauthorizes Brand USA, the nation’s first global marketing campaign, to promote the United States as a destination for international travelers.


If you are looking for capital to start or grow your restaurant, create the next 501c3, develop and launch the next app for the restaurant industry,or want to help your peers in some meaningful way, we want to know about it.


TED: Ze Frank: Are you human? - Ze Frank (2014)

Have you ever wondered: Am I a human being? Ze Frank suggests a series of simple questions that will determine this. Please relax and follow the prompts. Let's begin …

TED: Heather Barnett: What humans can learn from semi-intelligent slime - Heather Barnett (2014)

Inspired by biological design and self-organizing systems, artist Heather Barnett co-creates with physarum polycephalum, a eukaryotic microorganism that lives in cool, moist areas. What can people learn from the semi-intelligent slime mold? Watch this talk to find out.

TED: Shih Chieh Huang: Sculptures that’d be at home in the deep sea - Shih Chieh Huang (2014)

When he was young, artist Shih Chieh Huang loved taking toys apart and perusing the aisles of night markets in Taiwan for unexpected objects. Today, this TED Fellow creates madcap sculptures that seem to have a life of their own—with eyes that blink, tentacles that unfurl and parts that light up like bioluminescent sea creatures.

TED: Nikolai Begg: A tool to fix one of the most dangerous moments in surgery - Nikolai Begg (2013)

Surgeons are required every day to puncture human skin before procedures — with the risk of damaging what's on the other side. In a fascinating talk, find out how mechanical engineer Nikolai Begg is using physics to update an important medical device, called the trocar, and improve one of the most dangerous moments in many common surgeries.

© 2014   Created by FohBoh.

Badges  |  Report an Issue  |  Terms of Service