Buying a Restaurant

Like books, a lot of people think they have a restaurant inside them. Seeing famous celebrity chefs like Gordon Ramsay and Jamie Oliver who make it look easy, does nothing to dispel the notion that running a restaurant can be rather hard work. This is why the turnover of restaurant businesses tends to be quite high.

In short, it's wise to take a good look at yourself and decide whether you have the right skills to own a restaurant business. Having a dinner party once a week is all very well, but running a restaurant up to 7 days and nights a week is a completely different kettle of fish or organic free range chicken, depending on your persuasion.

That's not to say you're not the right person for the restaurant business. If you are prepared to work hard and simply love being around food and people, then it could be right up your street. You'll need to enjoy being in charge and unless you have backing behind you, you will probably be required to take some calculated risks along the way.

Running a restaurant can be a hugely satisfying and rewarding career if approached in the right way. It can be a good way to build up your wealth but this is usually a gradual (not overnight) success. Bear in mind that for the first year at least, you'll probably have to factor in paying off any start-up or refurbishment costs.

Once you have decided to take the plunge, you'll need to think about the type of restaurant you intend to run:

• Fine dining restaurant (usually fewer potential customers but greater spend per head; you will either need to be a qualified or adept chef yourself or be able to employ a professional chef)
• Ethnic or speciality restaurant (target or niche markets but again you'll need a skilled chef or be one yourself)
• Bistro restaurant, brasserie restaurant or gastro pub (popular at the moment but competition is high from established pub chains and quality needs to be upheld)
• Cafe, coffee shop, tea shop, snack bar or sandwich bar (usually unlicensed 7am - 5pm daytime businesses which can be highly profitable depending on their location and amount of passing trade; competiton can be fierce particularly with the proliferation of established chains such as Starbucks and Costa Coffee; however providing you offer a good product and good service, there's absolutely no reason why you won't succeed)
• Fast food outlet or takeaway (little scope for creativity; you may wish to consider buying a tried and tested franchise business like Subway)

Other things to consider:

Are you looking to buy a restaurant with a freehold or leasehold property asset? If you can afford to, it often makes commercial sense to buy a freehold restaurant as at least you will also have a potential property investment behind your operating risk. However, as we all know property prices can go down as well as up. Conversely if this is your first business venture, you may wish to minimise your financial outlay by taking a restaurant with a leasehold interest. However in this case, you are likely to have to pay a premium to the seller to buy the business, fixtures and fittings as well as pay the ongoing rent to the third party landlord.  

Do you need living accommodation for yourself or for your staff? The answer to this pretty much dictates what you're looking for from the start. Some people love living above their restaurant. Others hate it. Bit like Marmite really.