Restaurants are sweeping the nation. Did you know that there are over 200,000 fast-food restaurants in the U.S.? These fast-food type restaurants are considered limited-service restaurants (LSR), which is a booming sector on its own. However, during COVID-19, all restaurants, big and small, experienced a huge decline. But, it was the fast-food restaurants that managed to stay afloat during the crisis.
Why are fast-food restaurants so successful, even during a global outbreak? Because they appeal to consumers’ demands for fast, affordable, clean, and convenient. All things diners are looking for in a post-pandemic world.
If you’re a hungry entrepreneur looking for your next business venture, then keep reading. Below we share tips on how to buy an established fast-food restaurant.
What to look for in a Business
There are many ways to buy a fast-food restaurant, the most popular option being to buy a franchise. However, this article will focus on buying a pre-established fast-food business, which has a different sales process from franchising. In this scenario, you will be visiting several independent restaurants; so, it’s important that you can differentiate a business with a promising future versus one that’s failing. Below we highlight three key considerations to keep in mind during your visits.
The first thing to consider when shopping for restaurants is the type of cuisine offered. From the get-go, you should decide which style of food you wish to serve and only look at businesses that already offer that cuisine. If not, then you will have to think about rebranding the business and remodeling the interior.
Next, it’s crucial to confirm that this style restaurant is, in fact, in demand in the area. This can be done by conducting some research to assess the local market and get a feel for the locals’ appetite.
Finally, you want to scope out the competition and identify all the other fast-food restaurants serving the same style of cuisine. Keep in mind that heavy competition can be a good sign that you’re in the right spot, but be ready to compete — especially against the large fast-food chains.
Take time to study the menu — especially the prices. It’s important to understand how current owners are pricing their items. And to understand price, you need to understand costs. Ask to see the business’ financial statements so that you can inspect key factors, including income, operating costs, and profit margins. This will give you a good idea of the financial health of the business as well as a better understanding of its pricing strategy. Remember, they probably experienced a hit to their bottom line since COVID-19, so take a look at the numbers pre-pandemic as well.
Not only do you have to understand why they’re charging those prices, but you need to be sure consumers are willing to pay that amount. Referring back to the market research you conducted, take a look at demographics and average household income. You want to check that the menu is affordable, especially given the fact that it’s a fast-food restaurant and consumers are more cost-conscious in the New Normal.
Consumers expect consistency when it comes to dining out. Between the taste of the food, the friendless of staff, and the level of cleanliness, your customers should have the same experience time after time.
Offering this consistent experience starts with the quality of your equipment and attitude of your staff. When visiting each business for sale, take time to sit down with employees to assess their customer service skills and level of experience. At the same time, do a thorough walk-through to evaluate the condition of the physical property, including kitchen equipment, HVAC systems, dining furniture, etc.
Finally, you want to find out what the current reputation of the business is in terms of the quality of food and service. Thanks to the Internet, doing a quick search of the business’s name will give you all the information you need. And after reading any online reviews and customer ratings, you can better judge the current standing of the business and any areas it needs improvement.
Build Your Team of Experts
When buying a business on your own, it is a smart idea to turn to trusted advisors to help in areas you’re not as familiar with. A business broker, for example, is a great partner to have during the sales process. They are responsible for scheduling visits, negotiating the terms of the sale, and helping fill out paperwork.
An accountant is another handy expert since they can help manage your funds and secure loans for the down payment. Not all entrepreneurs are comfortable or familiar with fiscal matters, so having this resource can be a great help.
Do you want to buy your own fast-food business with no franchising strings attached? If so, let your research begin here at businessesforsale.com. Offering a one-stop-shop for aspiring entrepreneurs to search, find, and close their next business deal. Browse through our extensive marketplace of businesses for sale, and purchase your very own fast-food restaurant.