Investorideas.com
Search  Follow Investorideas on Twitter  Investorideas is on Facebook  Investorideas is on Google Plus  Investorideas is on Youtube  Investorideas is on Pinterest  Investorideas is on tumblr  Investorideas is on LinkedIn  Investorideas RSS 


Investorideas podcasts on iTunes, Google Play Music and iHeart.com    Investorideas.com potcasts - cannabis news and stocks to watch plus insight from thought leaders and experts    Investorideas.com crypto corner    Play by Play – the latest sports headlines and sports stock news

 

Join Investor Ideas Members to access the Renewable Energy stocks directory, water stocks, biotech stocks, defense stocks directories and the Insiders Corner

What to consider when investing in a restaurant

 

June 21, 2018 (Investorideas.com Newswire) Over 20% of restaurants in the UK closed down in 2017, fuelled by Brexit negotiations, a weaker currency and growth of takeaway apps. Investing in the restaurant business can still be very lucrative, but investors must treat with caution and we provide some important things to consider when investing in a restaurant.

Your starting price

There is a difference between investing in a new restaurant or one that has been trading for several years. For a more established restaurant, you need to assess how much you are investing and whether you are getting the appropriate stake in the business.

For instance, in a tough market, you may be able to pitch for a higher stake given the urgent need for cash flow. Similarly, whether the company is profitable or losing money puts you in a good bargaining position to potentially ask for higher equity in the business.

Any outstanding debt?

It is essential to do due diligence on the business and its financials. Understanding whether the company is cash positive or has a lot of debt can be the difference between getting involved or not. You need to ensure that the business is not relying heavily on your injection of cash and when it might become profitable.

Any quick wins?

Is there anything that you can bring to the table that will help the company's bottom line or productivity? This could involve bringing in new chefs, new staff, new menus, new suppliers or even looking at the commercial side of the property and saving money through lease restructuring.

When a business's rent comes up for review, it is a golden opportunity to negotiate better rates with landlords, freeing up much needed capital to help run a restaurant.

Level of competition

How competitive is the surrounding area for restaurants? Is there demand for your product or not enough? Understand your target audience whether it is families, high-end or couples will help you determine whether or not the business can stand the test of time.

Potential for growth

How do you intend to achieve a return on investment? Does the restaurant only have potential to be in one location or can you roll it out across the city and the country? Are there opportunities to increase revenue through doing more takeaways or selling branded products in supermarkets? A good investor is able to see the bigger picture and have an understanding of the market's appetite.

Staff

Do you have quality staff representing the company? This includes managers, chefs and waiters. Do you need staff who have prior experience and do you have a capable manager?

Product quality and availability

Do you have access to the ingredients you need to meet the demand? KFC have notoriously closed down stores in the last year due to running out of chicken. Whilst it can be exciting to grow a restaurant and bring new items to the menu, it is not commercially viable if it is expensive to source and there is a limited supply.

Author

Daniel Tannenbaum is a marketing consultant who has worked with several loan and finance providers in the UK. He is a regular contributor to The Huffington Post, Business.com and TechRound.

Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact each company directly regarding content and press release questions. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. More disclaimer info: http://www.investorideas.com/About/Disclaimer.asp. This article is paid for published third party content and not the content of Investorideas.com . Read our article disclaimers and crypto disclaimers at http://www.investorideas.com/About/Disclaimer.asp. Learn more about posting your articles at http://www.investorideas.com/Advertise/

Please read Investorideas.com privacy policy: http://www.investorideas.com/About/Private_Policy.asp


Beverage Stocks Research - A Leading Global Website for Alternative & Food and Beverage Stocks

BeverageStocks.com - investing ideas in food and beverage stocks including wine and beer stocks

Like Beverage Stocks? View our Beverage Stocks Directory