Investing in restaurants almost always takes place during the start up phase of a new venture, when the need for capital is high in order to set up the business from the ground up. Most restaurant investors know that it is a risky venture, with many businesses closing within the first year. But what is investing if not a risky gamble every time? When seeking to invest in a restaurant, whether it is a fast food franchise, a casual dining venture or a gourmet dining experience type restaurant, the investors first must consider several important parts of the business plan.
Is there a comprehensive business plan in place? In any investment venture such as investing in restaurants, there should be a detailed business plan that clearly defines absolutely every aspect of the venture
Research- know the area and what kind of restaurant will work best given the local competition and the desires of the local market.
Location, location, location- it is critical for the designated location of the business to be an ideal setup for reaching the desired demographics being sought for the restaurant. If the investment is a fast food franchise, it would be ideally situated near a college campus or areas where families with young children live or frequent. A gourmet dining experience might be best served to be located where the population is upscale and suitable for such a place.
Funds- upon a restaurant’s opening, there should be enough liquid cash in the bank to cover at least four to six months of the business expenses. It takes time for a fledgling business to turn a profit. With a solid cushion in place, money worries do not have to factor in amid the startup worries.
Hire a competent attorney and accountant- the money spent to retain a good lawyer and a good CPA is easily returned in the amount of money and headaches that both can save the new business venture.
Remember that seeing returns on investments such as restaurants can take some time, for what profits do come about in short order must be immediately funneled back into the business until things are steadily profitable. The true return when investing in restaurants is to see the business successful and thriving, then the financial gains are not only rewarding but will be consistent and even grow more profitable when the business is solid. For more information on investing in investment opportunities usually or normally not found in the marketplace, click here!
Sean L Johnson