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Buying a Restaurant or Buying A Café

Buying a Restaurant and Buying a Café, like buying in any industry, has its own hurdles to overcome to finding the right establishment for you.

In short though, what you are looking for is a stable business that will enable you to both make a profit and pay off your investment within one to three years- and it is in this that we believe we can help you.

Through working with countless cafes and restaurants for sale, Xcllusive have learned to identify which businesses are going to be the most attractive to buyers in the current market, and more importantly, established a pricing method designed specifically to cater to the demands of the current market.

When we select and value a café or restaurant, we combine the financials, an analysis of the risks, and take into account comparative sales of similar businesses in the current market. Because of this, you can know that a café for sale or a restaurant for sale with Xcllusive is at the upper end of quality, and at a fair and good market price.

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Though we are not buyer’s agents, we’d love to talk to you about how we can help you find the right restaurant for sale, and how to overcome the hurdles involved in finding the right business for you. To speak to an Xcllusive representative fill out the contact form at the bottom of this page or simply call us on (808) 620-2433.

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    How to overcome some of the common hurdles with buying a café or buying a restaurant:

    Financials, and what to do when there aren’t any:

    No doubt that if you are buying in this market then you are somewhat familiar with its fast-paced nature. As a by-product of this, it is true that up-to-date and accurate financial records are often not available or incomplete in the hospitality industry.

    Having incomplete or missing financials in any industry makes it difficult to make a purchasing decision, but in the hospitality industry, the good news is that there are ways around this. Incomplete financials are often the biggest hurdle to overcome,
    but it’s not impossible, and certainly not worth missing a good deal over.

    Three ways to conduct Due Diligence when there is missing financial information:

    1. Observe

    When there is incomplete or only rough financials available, often verifying a vendor’s reported figures can be as easy as watching. Pick a few busy days and observe the turnover of customers. It will become clear very quickly if their true financials have been accurately represented.

    (Hot Tip: Make sure to visit a few times in different weather conditions, after all, every business has their bad days, and one bad day is not worth missing a good deal over)

    2. Trial

    When there are no good financials to work off, sometimes the only way to really conduct good due diligence is to request a trial with the owner. A trial involves sitting in the business and literally trialling its performance. Conducted over a period of a few weeks, you run a trial in which a benchmark revenue is tested, usually within 5% of reported revenue.

    (Hot Tip: You will always need to have made an offer based on reported profits and placed a deposit prior to running a trial. Also, don’t take a vendor’s resistance to allow you to undertake a trial as if they are hiding something. A trial means that the vendor needs to inform their staff, it means that they are opening up the inner workings of their business to someone and it also means that they essentially have to take their business off the market for an period of time. There are many good reasons for them to not want to run a trial- bare that in mind before you assume anything close to deception)

    3. Verify

    When there is financial information available, but they are in the form of Z tapes and hand written spreadsheets (or something similar) it may be worth having them sent to your accountant to reconstruct the true financials. It may cost some accounting fees, but it’ll be worth it if the business turns out to be the right one for you.

    (Hot Tip: These documents are sensitive and often irreplaceable if lost. You will definitely need to have made an offer before the vendor will feel comfortable parting with them)

    A well loved business owner: what if everyone leaves with them?

    Another common concern when buying a restaurant for sale or café for sale is that if the current vendor is well known, clients and staff will leave when the business owner leaves. This concern, though fair, can be very easily overcome through requesting a good handover period designed to alleviate this concern.

    If you are unfamiliar with this concept, the ‘handover’ is the period of time (usually several weeks for restaurants and cafes) after the exchange of contracts where the previous owner stays in the business for training and to introduce you to existing customers, the staff, and the operation of the business. This way, by the time the handover period ends, you’ll be the well-loved business owner.

    (Hot Tip: The handover period should be written into the contract of sale and don’t expect the previous owner to work for free. If you’re concerned with paying them, consider that they are easily the most qualified person who works there, and a few weeks extra pay for them may be one of the most worthwhile investments you’ll make in purchasing your business)