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If You Build It, Will They Come? Lessons on Why You Should Buy a Restaurant Instead of Building

Buying a restaurant in any major city has reached a new height of popularity. Would-be small business owners are meshing a love of food with a desire for business murasaki Sushi ownership to create unprecedented demand for restaurants for sale. With high failure rates on start up restaurants (nearly 60% fail by year three), well-known restaurants with a track record are hot commodities. Earning rewards in the restaurant industry comes quickly to those that buy instead of launching a new restaurant. Restaurant buyers find the advantages are immediate and the risk is minimized. It is no wonder this path to achieving the dream of owning a restaurant is coming through the purchase of a restaurant for sale rather than the start up of a new concept.

Managing the cost is the number one reason to buy over building. Restaurants can not succeed when the cost of capital exceeds the income over a sustained period of time. Lack of capital is the single biggest reason that most restaurants close after only a few months. Just because a sous chef is brilliant in the kitchen will not mean he or she is equally skilled at managing construction simply because a restaurant is being built. Restaurants built from the ground up are closer to the cable TV “flipping” shows where the costs far exceed the budget and the timeline stretches beyond the original goal.

You can shorten your time to market when you buy a restaurant for sale. Evaluate whether you want to be in business next week serving your latest special or waiting an average of six months for licensing, permitting, building and then opening your restaurant. Competition in major markets like Atlanta, Georgia or San Francisco California is fierce. You want to be the first to market with the latest ideas. There is no waiting on your restaurant to open when you buy a restaurant versus building from scratch.

Every brand new restaurant suffers as the sales volume builds. That is not the case with buying a going concern where restaurant sales are already established. Even a restaurant undergoing a change of concept has an established traffic pattern from the current location. Buying these sales in a restaurant purchase can be far less costly than developing them over time a customer at a time or a marketing campaign at a time. Growing sales from $1000 a week to $2000 a week means a 100% increase each and every week before you realize baseline volume to satisfy your costs. That can be a difficult job in a competitive restaurant market.

A significant reason for most to buy restaurants for sale is the cash flow from existing operations. Manufacturing and retail businesses often sell for many times cash flow while restaurants with good books and records can often be acquired for three times earnings or less. A restaurant owner can buy a restaurant for sale and pay off the purchase in less than three years leaving himself with a debt free earning machine. That is a very attractive financial scenario for most restaurant buyers. Brokers that specialize in restaurants for sale have access to listings and information on multiple opportunities in the marketplace. Buying that established restaurant for sale gives you clear costs, verifiable earnings and instant revenue. That is the fast path to the restaurant industry for most.