Restaurants that are closed and are for sale are worth looking at. They may have closed for a wide variety of reasons. The owners may have died or retired. It may have been mismanaged. It may have had a food poisoning outbreak and the business never recovered; it may have just been a poor choice of cuisine on the part of the owners and management.
When you are researching a closed restaurant that is for sale, here are some very important things to take into consideration.
- If the restaurant closed because it was in a bad location or that is the explanation given to you by the seller or broker, don’t write it off as not being a good option. Some of the finest and busiest restaurants exist in far flung, hard to get to places because the food is outstanding, the service excellent and the experience the diners have is always wonderful.
- If the prior restaurant had a bad reputation in any way, simply changing the name and cuisine, even with all new staff, is a hard sell. There will be locals who will try it again once and they have even a slightly bad experience, they will not come back. So take into account the stigma of a bad restaurant may stay with it forever.
- A closed restaurant is almost always easier to negotiate a selling price on then on a running establishment. Odds will be that the seller wants to make the sale and move on. Ask about negotiating a price that may be less then the price advertised.
- You should research in depth why they closed. Try to find some former staff members and find out what they know. It is almost a guarantee that if the place closed for a negative reason it may have had many contributing factors. What were the factors and are they things that may have a negative influence on a new restaurant? Were they things that would be overcome if they were not repeated?
- A closed restaurant can sometimes be a gem in disguise. For example, the former owner has passed away, leaving many happy customers and an excellent reputation. You as the buyer may come on the scene shortly after the owner’s son puts it up for sale. There is a very good chance that most, if not all, of the former staff would return to work there if the place reopened. The former customers will often return and capturing that market segment is a terrific way to start off your new business.