A Gastronomical Investment: A Quick Guide to Buying Hotel Business

An investment in the food and restaurant sector is always considered to be highly promising. Common parlance is full rags-to-riches stories of street-side vendors making it big, establishing restaurants and hotels of repute. Good food is always in demand. The sector is dynamic owing to the varied culinary experience it offers, the influence it has on people’s lifestyle and most importantly the cultural gap it fills-in globally. In spite of a massive change in the culinary tastes of people, the opportunities in this business never seem to end for entrepreneurs and investors.

Now you may have an idea of buying or investing in the food/restaurant business but a vague idea on how to plan on executing one. This is where you need specialized assistance to get you a reasonable proposition on the deal are looking out for. The eight steps outlined here will hold you good in your journey to become a food entrepreneur.  

1. Assess your personal know-how and potential

You love food and that’s fine. Also, you love people and may think the restaurant business is the perfect choice for investment. But first, understand how thoroughly you are well-versed with the industry. You cannot take the plunge blindfolded. A passing interest in the prospects of food business will not do. Being a foodie and watching culinary shows on TV may not count as good qualifications but merely as good indicators of your potential. Touch your nerve and ask yourself hard questions on whether you are cut out for this industry.

2. Finding the right location

Now that you have decided to dive into the industry, the next decision is the choice of location. Remember, “location” can be the make or break factor in the success of the food business. Shortlist hotels in locations that pull the crowd, keep them engaged, are easily accessible, and have the potential for growth like availability of new space, the growth of nearby businesses etc. Prepare a table of properties and locations and map it against the budget you have. If you don’t have enough time bandwidth to do this on your own, you can always take the help of validated commercial brokers listed on They can zero in on the right location much faster with their network of right contacts.

3. Getting familiar with the market trends

If you are buying an existing restaurant/ franchise, perform SWOT analysis of its food category to get a fair idea about the overall position of the hotel you are about to buy. Research on market trends surrounding the cuisines served in the restaurant and how they are welcomed by the customers. Pay close attention to the context of taste, price, quality and service time. This study will help you analyze the future prospects of that hotel business and the particular category in which it is operating. You can also do this is by hiring business consultants and advisors from Their vertical-specific consultants can help you read the food market right.

4. Determining the fair price of the restaurant

Planning the finances is the most critical decision to make while buying the restaurant. You will be required to draw an outline of the finances for your restaurant business. Also look into the existing monetary structure of the business. Run through every possible cost associated with the restaurant from the property rent, cost of procurement, popular dishes sold to footfalls and annual revenues. It is necessary to have a complete picture of the financial health of the restaurant.

5. Know and assess the Staff/Personnel who will work with you

People are the bloodline of the restaurant business. An efficient staff and management help perform productively. If the restaurant is popular because of a famous chef, it may be useful to know whether he/she will continue even after the change of ownership.

6. Making an offer and negotiating

Once you decide to buy, the most important factor to consider is the price you are willing to pay. Seek the assistance of financial advisors from before making an investment. It is important to have patience at this stage as negotiations can often take months. It is better to entrust advisors with the task of preparing you and also your seller for the deal.

7. Understand the franchise potential of the Hotel as a brand

You are about to purchase a restaurant. Depending on the category and the appeal of the brand, you can always assess whether the brand has the potential to roll out franchises. It is needless to say; such businesses will be more expensive to buy than stand-alone restaurants.

8. Take care in drafting agreements and other documentation

As you know God is in the details, but so is the Devil. Take expert legal help while drafting disclosure, non-disclosure, vendor-related, copyright, and other agreements. Legal advisors listed on Tobuz can help you read the fine print properly and ensure the deal is as intended.

Buying a new restaurant business is a challenge considering the changing food preferences and the rise in expectations of people. But with the right help from people in the food and restaurant industry, you can definitely hope to land a great deal.

17 comments on “A Gastronomical Investment: A Quick Guide to Buying Hotel Business”

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