Choose Where, Buy Existing Restaurants or Build Restaurants From Scratch

There are each advantages and disadvantages of buying an existing restaurant, applying for a franchise contract, or building your own restaurant from scratch. Ideally, most prospective entrepreneurs want to build their own business, but this option has its own disadvantages such as having to build a customer base, recruit staff, provide training, write financial reports, and promote business.

You must consider your goals, business experience, knowledge and skills in the culinary field. Franchises usually like to provide training and equipment to simplify work, but do not reduce the amount of work required by restaurant ownership. According to, there are risks involved in buying a franchise or independent restaurant. You can be more free to be creative if you become an independent owner, but the responsibility is greater. Meanwhile, when choosing a restaurant franchise, you must have a large financial source, but its management affairs will be arranged by the franchisor (franchisor) because it has proven its track record.

Buy an existing restaurant

By buying an existing restaurant, you no longer need to build a customer base and catapult the restaurant’s name. However, there are many restaurants out there whose reputation is not good, and changing the reputation of a restaurant is not an easy matter. Some have annoyed employees who might be worried about the change. The opening hours and culinary details may not be according to your plan. It’s quite easy to change hours and menus but doing so can cost customers and employees.

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Be Careful Before Buying Restaurants

You need to ask the reason why the restaurant is for sale. There are two main reasons why restaurant owners sell their businesses: private and business. Included in personal reasons are: health problems, wanting to retire, or other reasons such as wanting to do lighter work. While those included in business reasons are: unsatisfactory income, population movements occur so that the customer base is reduced, or are in need of fast money.

Business reasons do make you worry, but that doesn’t mean you have to cancel buying a restaurant. The first two reasons are warning signs. Ask the owner first if you can see the financial statements to find out how much gross sales, maintenance costs, salaries, and income. You must know the sales record and income: is it stable, increasing, or decreasing. If the owner does not want to show financial statements or lie about his income, you better not have to buy the restaurant. Other important things to understand are:

  • Location, sales record, and growth potential
  • In-depth analysis of your business plan and financial resources to see if it is suitable for the restaurant you want to buy
  • Mortgage considerations: are they included in the restaurant budget?
  • Finding out how stable the environment is and whether there is any massive construction
  • If you can meet the building owner and ask if he agrees to the long-term lease

You Will Lose Some Customers and Restaurant Staff

Even when they are at their peak, restaurant staff rarely show loyalty in the long run. Changes in management always result in defections from staff. In addition, some customers are already comfortable with previous restaurant owners. If the owner changes, they will not come to the restaurant again. You have to do marketing and find new staff to overcome this problem.

You might need to make important changes – such as creating a new menu or changing prices with menu engineering techniques – before taking over an existing restaurant. Ideally, people who sell restaurants are willing to work with you so you know the restaurant better and meet with regular customers. However, many restaurant owners prefer to keep their sales a secret. The owner of the restaurant may be difficult to work with, so you cannot ask for help other than what has been agreed in the contract.

Choosing a Franchise Restaurant

Many prospective restaurant owners are interested in applying for contracts with successful franchises. A well-known name, good service, delicious dishes, available ingredients, and a structured marketing program guarantees your success. If it is successful, you can more easily grow your business. Many franchisors own more than one franchise. Today, franchisees are looking for wealthy investors who can develop more than one branch. If you succeed in buying a franchise, most franchisees will help you grow your business.

The Pros and Cons of a Franchise Restaurant

The advantage of a franchise restaurant is that the name is well known and the sales have been proven. That’s why traditional investors prefer to give capital to franchises. You can verify the financial condition of the closest franchise. Many owners are willing to share information.

However, there is no such thing as an absolute guarantee. A number of franchises deliberately control the market, so you have to compete with other franchises that are not far from you. Initial investment is usually very high because all equipment must be standardized. Most franchisees are willing to provide training and support. However, the problem below can make you think twice before buying a franchise:

Must deal with local zone regulations
Difficult to retain restaurant staff because the salary is not large
Many competitors but minimal profit, and very much depend on the high number of gross sales
Franchise owner / manager working hours are one of the longest in the food industry
Lack of freedom in choosing suppliers and menus
Cannot select the desired POS system

You usually have to use a POS system (cashier) that requires tools such as terminals, monitors, and printers. Most franchises offer a service without going down, so you have to budget for funds to buy the equipment.

Before buying a franchise, it helps you first learn the financial, location, and plans for the future. If there are rivals, your customer base can be disrupted. Generally in a franchise agreement, you are guaranteed an exclusive area for yourself for several years.

Open Your Own Restaurant

If you have difficulty financing a restaurant, you can’t get enough to survive in the first few months because you don’t have regular customers. It takes time for your restaurant to be recognized by others. In addition, you will have difficulty getting capital assistance if the restaurant concept is not clear and the management team is inexperienced.

The best course of action you must take before opening a restaurant is to first examine the location and environment, calculate the cost of design and equipment, and make a solid business plan. In fact, whatever your type of restaurant is, you still need a business plan. Fortunately, you can compare prices, and choose the most affordable suppliers, contact local farmers for farm-to-table services, and choose a POS system that suits your budget and restaurant concept.

Visit other articles for consideration in starting a unique restaurant. These articles can give you valuable knowledge about running a restaurant franchise or an existing restaurant.

Marketing alone is not enough to overcome problems such as population changes or difficult access to your restaurant. Marketing can provide additional income and give your restaurant a good start. By renovating an old restaurant, you can bring a new atmosphere into the area if you can survive until your restaurant is completely stable. There are other things to consider when choosing to buy a franchise, an old restaurant, or build a new, unique restaurant from the start using your own ideas.

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