Thinking of buying an existing gourmet burger restaurant

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riverbadger
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2014/03/23 11:32:21 (permalink)

Thinking of buying an existing gourmet burger restaurant

I am looking into a small gourmet burger restaurant in my area that is for sale.  It looks fairly profitable, they have great food and friendly service.  I can afford to buy it and have met with the owners who say that the staff is well established and can do most of the running of it.  I have not owned a restaurant or any business as complicated as this before.  I am most concerned about the amount of time I would need to do the business side of the restaurant.  I am a single mom and going to college for a business degree right now which I don't want to give up on.  It was hard to get an idea from the current owners about how much time they actually spend running it.  Can any experienced owners give me an idea how much time they spend on the business end of their restaurant?  This place has been going for about 3 years and is about 1500 sq ft. total space so it's pretty small.  Any advice would be appreciated.  Thanks
#1

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    lleechef
    Sirloin
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/23 11:41:02 (permalink)
    You need to be there during all operating hours.......and then some.  There are always issues like snow removal, walk-ins breaking down, hot water heaters not working, etc.  You can't rely on the "well established staff" to do these things.  If you are the owner, you are the BOSS and need to oversee your investment.
    #2
    jman
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/23 11:50:48 (permalink)
    riverbadger

    I am looking into a small gourmet burger restaurant in my area that is for sale.  It looks fairly profitable, they have great food and friendly service.  I can afford to buy it and have met with the owners who say that the staff is well established and can do most of the running of it.  I have not owned a restaurant or any business as complicated as this before.  I am most concerned about the amount of time I would need to do the business side of the restaurant.  I am a single mom and going to college for a business degree right now which I don't want to give up on.  It was hard to get an idea from the current owners about how much time they actually spend running it.  Can any experienced owners give me an idea how much time they spend on the business end of their restaurant?  This place has been going for about 3 years and is about 1500 sq ft. total space so it's pretty small.  Any advice would be appreciated.  Thanks

     
    Run away, fast. Unless you have full access to their financials for the time they've been in business and a good understanding of why they want to sell a "successful" business and have at least 12 hours per day to invest in your venture, don't even consider it.  JMHO
     
    Another option would be to fire up your bbq grill and take whatever money you are ready to invest in this venture and place directly on the grill. Walk away, knowing that at least you won't feel the heartache of losing your money on a venture that will negatively affect your life and your kid's lives.
    post edited by jman - 2014/03/23 11:56:10
    #3
    Midnights
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/23 12:47:59 (permalink)
    From what I've seen/heard, the average work week for an owner of such a restaurant is 50-80 hours for an established restaurant.
    #4
    riverbadger
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/23 12:55:16 (permalink)
    They have given me all tax returns, balance sheets, and profit and loss statements.  The current owners are getting up there in years and have health issues and looking to retire.  They are open 11 am to 7 pm and M-TH and until 8 Fri and Sat.  Closed Sunday.  Right now I could not be there for all those hours but I am thinking I could be there about 40 hours per week and they tell me that even though they are there all the time that they are not always working on the business when in the office.  I don't know whether or not to believe that because of course they want to sell.  They also offered to carry 40% of the sale price for 2 years, which means they will want it to be a success so they get all their $.
    #5
    riverbadger
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/23 12:57:25 (permalink)
    Snow is very uncommon here and when it snows businesses close down.  Nobody knows how to drive in snow here!
    #6
    pnwchef
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/23 14:02:19 (permalink)
    Hi Riverbadger, Welcome to Roadfood. I would ask how their Food and labor costs are. What is the lease or rent agreement, is it coming up for review. Your also getting into Obamacare health ins issues. How many employees, There will also be upcoming min wage increases soon. what is the liability ins cost. what is the bottom line % and how many hrs did the TWO owners have to work in order to get that % of profit. The way to make money is to be an on site owner. No one will care about your business more than you do............pnwc......P.S....I'm from Wa also........The best of luck..............
    #7
    lleechef
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/23 14:10:41 (permalink)
    riverbadger

    Snow is very uncommon here and when it snows businesses close down.  Nobody knows how to drive in snow here!

    It doesn't matter if it's snow, rain, wind or whatever.  You will be on call 24/7.  Not trying to discourage you, but a 40-hour work week just doesn't happen in this business. 

    #8
    Foodbme
    Porterhouse
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/23 18:32:18 (permalink)
    Get a GOOD CPA who has worked with Restaurants to review the Financials. Sometimes Un-audited Financials can be "Cooked" a little bit to make the business look inviting (Pun Intended.)
    "I am a single mom and going to college for a business degree right now which I don't want to give up on."
    Wow! you're already carrying a big load. Don't see how you can carry the burden of running a business, managing those people and raising kids despite what you think you can do. You MUST be present in the business or you will loose your shirt. Employees don't have the same investment as you do and if they don't like you and go into collusion, you'll be robbed blind faster than the Roadrunner!
    #9
    roadkillgrill
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/24 00:26:34 (permalink)
    Ask your Business Professor what he thinks..... 
     
    Anything is possible with MONEY!!!
     
    It would be do-able, but there are things you will need. 1)a full surveillance system outside/inside 2) one camera synced to the cash register where register data is integrated within the camera's video, 3) instructions/training that all change is to be counted out over the counter, if not disciplinary actions will be given. It would be nice to be able to view live feed on your phone. Also a pos system that has a recipe feature, which is for ordering supplies, but in your case you can compare food sold to food used to have control over shrinkage. You will spend hours looking at video on top of your other responsibilities. 
     
    You are spending money to buy an existing operation that seems to have a good reputation. It would be horrible to lose what you spent on a reputation, only to have to rebuild the reputation again, which can take years, sometimes never.
     
    Good luck on whatever you decide.
    #10
    JayL
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    Re:Thinking of buying an existing gourmet burger restaurant 2014/03/24 01:12:53 (permalink)
    You are going to be robbed blind.
     
    You have their financials...are they making a profit?  Is that profit more or less than 15-20% of the sale price?  If it's less, then walk away & invest your money in mutual funds.  If more, then buy it and work in it.  You need to be there.
     
    Do you know what their food cost & labor percentage is (as someone already suggested)?  Do you know what they SHOULD be?
     
    Most restaurants aren't "set it & forget it" ventures.  Going into this with that perception is a recipe for disaster. 
    #11
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