Buying an Existing Restaurant: Verify What You Are Buying

Buying equipment, acquiring business assets and buying a company are different transactions. Clarify the structure and responsibilities with your legal and accounting advisers before comparing headline prices.

Reconcile the financial story

Request enough history to see seasonality and changes, normally at least a full available year. Compare POS reports, accounts, relevant tax filings, bank deposits and platform statements. Reconcile tax, tips, refunds, discounts, cash sales and commissions. A screenshot of one busy month does not establish sustainable earnings.

Replace the owner’s labor in the numbers

Suppose the seller shows $60,000 sales and $50,000 costs, leaving $10,000. If they work full time without a replacement cost and you need $6,000/month to cover that role, only $4,000 remains before other adjustments. A $2,000 debt payment leaves $2,000 of cash before any further omitted items.

Review claimed one-time costs. A machine requiring repeated repairs is not irrelevant just because each invoice has a different date. Distinguish accounting profit, owner compensation and spendable cash.

Examine the rights and obligations

List included assets, serial numbers, inventory, brands and agreements. Verify ownership and encumbrances. Check landlord consent, lease term, increases, assignment and intended use. Clarify licenses, staff arrangements, gift cards, deposits, customer commitments and supplier obligations with the people advising the transaction.

Rebuild the plan for your operation

If you change the menu or brand, test the new demand instead of carrying over every sale. Include downtime, retraining, repairs, professional fees, inventory and working capital. Compare the acquisition with a suitable lease/build alternative over the same period.

The SBA business-planning resources include buying an existing business. Use the financing tool, due-diligence worksheet and cash workbook to organize questions; they do not value the business or establish that title, liabilities and licenses are clear.