 Hey friends, my name is Wilson today We're gonna be diving into the pros and the cons of buying a restaurant buying a cash cow that can generate Tons of wealth for you and short cutting your time to get there A lot of people have been waiting months to build out their own restaurant Well, it might not necessarily be the case which is reason why we're doing this video for you today Make sure you guys subscribe along this channel so then that way you get a lot more small business tricks Food and beverage tricks and strategies for you. Now without further ado, let's dive right in The number one reason to buy an existing restaurant is the track record. What does the track record mean? It means the fundamental base of customer whether it be a $10,000 or $20,000 or $30,000 per month revenue that's coming in It is something that has already been generated and you can count on it month after month Versus building up your own new restaurant You need months if not years to build a solid recurring base of customers that would come in to purchase from you Now buying a track record allows you to have the time to make improvements to either the renovations or Your food offering to improve that and to generate even more revenue And that's the reason why you would want to consider buying a restaurant as an example My friend Richard just recently purchased a pokey shop, which is generating $30,000 in cash every single month This gave him a padding right from the get-go although he had to pay a premium on it He was able to generate cash flow right from the get-go, and he's in the profits right from the get-go In addition to that he was able to turn his business around and increase sales by over at a hundred percent to $60,000 because he was able to create create new menu offering to increase the prices and the different range of items Which in turn increases customer demand for his restaurant That's the reason why you would consider buying a restaurant The second benefit of buying a restaurant is time I would say out of everything this is perhaps the most Important reason why you would consider buying a restaurant because it saves you so much time It is something that you can't buy back with time You can actually save a ton of time through renovations. You can save a ton of time through planning You can save a ton of time through dealing with the city permits and whatnot and actually building that customer base of yours And this really easily shaves off two to three years of your building process And that's the reason why a lot of people that are going to the restaurant game May want to consider buying an existing restaurant because it saves you time Which is something that you can not literally buy, but in this case you are actually buying time The third reason in buying a restaurant is because of financing buying a restaurant allows you to actually get better Financing terms and on top of that a lot of banks actually have a lot more appetite in Existing restaurants. Now. Why is that the case? It is because they already have a proven track record They know the banks know that you know what consistently they have been $10,000 coming in every month or $20,000 coming in every month and they can really bank on that as something that as a basis of Them calculating their risk that you know what even if they don't do anything They can still bank on the existing track record Whereas if you're starting a business from scratch if you're building from scratch it is a lot more difficult to get financing because Banks know that businesses especially the food business 80% of them fail within the first year and that's the reason why if you're Wanting had to have good financing term you want to leverage off-debt Buying an existing restaurant would give you much better financing options out there fourth pro in buying a restaurant is Market Intel this is the fastest way for you someone That's not in the industry to get in the industry to get into the market know-how of running a restaurant Whether it be that poke shop or a burger joint once you're able to buy a restaurant that an existing Tenants the existing owners would be able to show you the ropes they would be able to show you the suppliers They would be able to show you What are some of the math that makes sense and the unit economics and everything within this industry? Which shortcuts your way to success just like how in our ice cream shop if someone were to buy our ice cream shop? We will actually teach them everything we show them exactly which machine to buy we show them where to buy them We show them the recipes we show them what are some of the major pitfalls within our industry and thus? It is super super beneficial that if you guys have the funding you may really want to consider Buying a restaurant so then that way it shortcuts yourself to success and it shaves off years of R&D for you if you guys find any value whatsoever make sure you smash like button so then that way I know this is a type of content you're looking for now Let's get back to regular programming now that we covered all the pros We're going to be covering all the cons the first con is finding the right fit finding the right fit is super super difficult With running a restaurant. Why is that the case? It is because if the current existing restaurant no matter how great the Economics are if the values don't make sense if the goals don't align with your personal goals Then it's not going to work. Why is that the case? Let's go into an example if the current existing business that you buy the numbers work out super profitable And you really like the location, but yet they're known for being a restaurant that doesn't provide quality They're known for being a restaurant that doesn't give you good food Then that is very very contradicting to you who loves giving out good food who wants to not cut corners and in turn There's a big clash in values and the goals and when you are to buy this restaurant Things are not going to match up. You're not going to like how things are done You're not going to like what is being offered and you're going to change everything and when you change everything You're basically changing the track record You're changing your customer base and in turn it would take you more time more resources and more money To make it fit for your needs Which is the reason why finding a restaurant an existing restaurant that you're buying that fits into your values is so so So important in your success the second con in buying a restaurant and difficulty is integration challenges What does that really mean? It means that if you guys don't have the right culture if the operations are completely different You have your own way of doing things and the existing business has their own way of running things And their manager is not really helping you their team is not helping you and you have your own ways It really creates a clash which is the reason why a lot of times you need to be having an open mind When you are considering buying a restaurant You need to be able to open up your mind to understand the nuances of how this business runs So integration is often a challenge and often takes a lot more time Especially if you are coming into their team and if you want to retain the existing team That is a really really big problem when it comes to buying a business an Example of this is my friend Richard for him to go into the poke shop He was able to integrate very very well because he already met the team right from the get go He worked with the team a long time ago and they were having great Relationships and that's the reason why he decided to buy that business on vice versa If he does not know the team if he does not work well with the team then Integration would be a huge challenge because you're banking on your team to help you operate this business And if your team does not like you if you don't have the right values And if you guys don't have the same vision aligned then it becomes like a Diversion in the vision and it's like rolling left right and center and basically you're not going to get anywhere Now on the same note of integration challenges. We're talking about old baggages Old baggages whether it be offering whether it be your team old Baggages is something that is often taking a lot of time to work out So how can you even solve that problem? You can potentially fire the existing team or change up the whole team, which you may risk Changing up the track record because Your customer does not like the fact that they have a new team The culture has changed the management has changed which in turn risks you having a big follow-up for this business At the end of the day understanding the different baggages that are in place the different Culture that is already in place would allow you to actually make good of buying this business An example of this is Myself for us We were integrating with the new buyers of the arts game shop Some of our baggages that we have was dealing with our suppliers Some of the baggage would also include with our franchisees Because the person that acquired our business He was able to understand that and we were able to be apparent and transparent right from the get-go He was able to identify these different baggages and was able to attend to them right from the get-go and in turn Allows us to have a really smooth transition So understanding and identifying the different packages that you may have is also crucial in Purchasing an existing restaurant the fourth con in buying an existing restaurant is the higher investment Now if you're buying someone's track record if you're buying a stream of revenue that is already happening Then you need to pay a premium for that and a lot of people might not Consider wanting to buy it at a premium because they feel like that. Hey, you know what? I can build this customer base myself. Why am I paying times to the multiple? Why am I paying additional premium for a track record that I don't really care about I don't care about the time Well at the end of the day if you don't care about all those then you may want to consider building your own But if you want to cut time if you want to buy a track record then unfortunately It does come with a higher investment and at the same time just because you're buying this does not mean Success it does not mean that the projected income would be the same Because of the change of management So there does come with a risk of buying an existing business as well because you never know Your customers might really have a great connection with the previous owner and once you take over They may not want to come to you anymore So this definitely poses a risk in higher investment dollars and higher risk of putting your money up front with no guaranteed return So therefore you would definitely need to make sure you do all your due diligence to consider all your risk and benefits In order for you to see whether this is right for you So there you go the pros and the cons of buying in an existing restaurant Whether you are thinking about building up your own restaurant or buying one You would want to consider whether it has a good track record Whether it is going to be able to save you time or whether integration might be a problem Having all these things to consider would definitely pose you in a much better position to win better position To actually build a thriving business That's going to be able to bring you a ton of cash flow If you want to be able to understand the fundamentals of how do you basically build a restaurant from a to z From talking about rentals to getting free rents to creating your own menu To actually getting it to thrive and get it acquired then definitely consider the resources that i'm presenting you in the comment section below Otherwise, make sure you guys stay tuned and subscribe along the journey because i'm going to be sharing a lot more Of these strategies with you in the future. I'll see you guys in the next video