Buying a Restaurant

Once upon a time, British food was the butt of a global joke. It conjured up images of overcooked vegetables, rubbery meat and bland, lifeless sauces.

Over the past decade the country’s cuisine has undergone something of a revolution. Thanks partly to the likes of Jamie Oliver, we have become far more demanding, and dare it be said, more continental in our approach to food.

EATING OUT IS MORE POPULAR

Establishments specialising in food from every corner of the globe, from Thailand to North Africa, have sprouted up on every corner.

Admittedly, this isn’t just because people have suddenly developed more discerning tastes. It is partly because Britain’s booming economy over the past decade has meant that eating out is a regular occurrence rather than a treat.

Also, in many relationships, both partners work – sometimes very long hours – meaning that fewer people have time to prepare a traditional family meal at home.

This may have led to a rush of new openings, but many people are now bored of chains – particularly the Italian pizza or pasta specialists – who have come to dominate so many of our High Streets and shopping centres.

The result has been that smaller restaurants and the so-called 'gastropubs' – pubs specialising in quality food – have weathered better than most. Given the right ingredients, there is still the chance to establish a new business in this sector.

As with all businesses, location is key. Town centre premises with ample parking and a proximity to pubs or cinemas are usually the most successful, although some out-of-town restaurants have become destinations in their own right.

In richer areas of the larger cities there has also been a trend towards neighbourhood restaurants or gastropubs, often replacing a dilapidated boozer or café.

If your customers have to drive to your restaurant, it could adversely affect ‘wet sales’ – and remember, wine and beer tend to make a big contribution to profit as you can get away with a larger mark-up.

Menu must suit customer

However, even the most ideal position cannot guarantee a great turnover. You will also need a menu that suits your potential customers.

Firstly, it’s vital to ensure that you don’t alienate anyone. Vegetarian options are a must, and, as people become more diet-aware, dairy-free or wheat-free choices could prevent that one veto that could lead to a large group going elsewhere.

A choice of market does need to be made, albeit vaguely. Are you going to aim at a high turnover of pizzas to young professionals, or will you seek out a more mature and discerning crowd?

A diverse and experimental menu might be appropriate in the latter case, whereas for the former a more traditional selection focusing on quality ingredients would be more suitable.

Remember that younger people will eat out more and will see it as less of a special event – although they will rarely spend in excess of £15 per head. On the other hand, it is likely that they’ll spend less time in the restaurant so fitting in more sittings is a possibility.

Older people will probably still see eating out as a treat or luxury and are likely to spend more in terms of both time and money.

These two examples are extremes, of course, and the majority of restaurants will fall somewhere between them.

If you are buying an existing business, you have to bear in mind that the current customer mix, reputation, location and capacity in terms of number of covers will all affect the price.

Typically, an established restaurant will cost around £130k, while taking over an existing lease could cost between £35k and £60k.

On top of this you will need to pay chef and waiting staff costs, which, while not huge, have increased as a result of the minimum wage.

The restaurant may need substantial redecoration or equipment may need upgrading. Items such as six-burner ranges, dishwashers and meat cabinets will cost well over £1k.

One particularly popular refurbishment is the addition of shop-height windows – showing off your diners’ enjoyment to the outside world is often the best way of catching passing trade.

Local advertising is key

While word-of-mouth is a restaurant’s lifeblood, advertising in local papers or distributing leaflets might be a necessity – especially if you are trying to turn around a flagging business.

As food becomes a national obsession, it’s hardly surprising that people are attracted to the restaurant trade. There’s no denying it’s a hard and competitive market.

We’ve all experienced that warm glow when we cook successfully for other people. Achieving this is on a larger scale must bring an even bigger sense of satisfaction.

Successfully running your own restaurant will also provide you with that warm glow, as well as some financial rewards.