Your friend has owned a restaurant for several years when they make a stunning revelation to you. They don’t have the time to run the place anymore and they want you to take over instead. You have prior restaurant experience, but you’ve never managed an existing restaurant before. How do you do it?

Here’s how to take over a restaurant:

• Make sure the new restaurant is financially feasible for you
• Get to know your competitors
• Introduce yourself to the restaurant vendors
• Tell your current customers about the ownership change
• Redecorate if you wish 
• Add new items to the menu 
• Consider revitalizing the staff
• Review the current restaurant marketing plan 
• Comb through financial performance data

In this article, we’ll go over each of the steps above so you’re fully prepared to own a preexisting restaurant and take it to new heights. You’re definitely going to want to keep reading!  

Taking Over a Restaurant? Make Sure You Follow These 9 Steps!

Make Sure the New Restaurant Is Financially Feasible for You

Before you say yes to anything, you need to know if managing this restaurant is something you can handle financially. You’ll have to speak to the current restaurant owner and ask to see all the numbers on the restaurant. 

How much is the rent or mortgage at current? How much did the rent or mortgage increase over the past few years? What is the projected increase? How much money is the owner paying supply chain vendors? What are they paying for marketing? How much do liquor licenses, permits, and other fees cost?

You’ll be able to use some of the restaurant’s profits to put towards these costs. Yet if the restaurant isn’t performing as expected (something we’ll talk about later), then more and more of the restaurant management costs are going to come out of your own pocket.

You don’t want to bankrupt yourself for a restaurant whether it was yours to begin with or you adopted it from someone else. Actually, you shouldn’t bankrupt yourself for any business. The long-term implications of such will make it very hard for you to ever own a business again. 

If you don’t feel comfortable taking on the financial burden of someone else’s restaurant, then be upfront and say so. Even if it’s your friend’s restaurant that you’re refusing to own, you have to be honest. Your refusal might cause some hurt feelings at first, but those will fade. The damage from bankruptcy would not.

Get to Know Your Competitors

If you accept the restaurant and become its new owner, one of the first things to do is get to know the competition. The former owner might be able to provide a list of the nearby restaurants, but we recommend you do your own research and scouting.

You want to get to know each establishment, including how long they’ve been in business, who the current owner is, what their cuisine is, and what their best-selling menu items are. You might not always be able to find this information through Internet searches. Sometimes, it’s best to visit the restaurant.

If you do have a meal there, take note of every aspect of your experience from the moment you enter the threshold. What does the restaurant look like? Maybe it’s bright and airy or dim and cozy. What kind of décor do they have? Is it consistent or random?

Keep an eye on the types of patrons the restaurant attracts and how busy the place is. When you’re seated and you look at the menu, do the prices seem fair or a little high-priced to you? 

These experiences at the restaurant will help you understand what the competition is doing. That doesn’t mean you should automatically apply these things to your restaurant though. You want to find ways to do what the competition isn’t, so be prepared to think outside of the box.

Introduce Yourself to the Restaurant Vendors

Next, it’s time to get to know the restaurant’s vendors. The former owner should put you in touch with everyone, including those you order ingredients from as well as kitchen equipment and the company that manages your point-of-sale or POS software. 

You should take the time to call or email each of these vendors and explain that you’ve taken over the restaurant. Give them your contact information and request that, going forward, when they have questions or comments about the supply chain, that they contact you.

Ask the former restaurant owner if they’ll produce contracts for each vendor. If any of those contracts are coming up for renewal, don’t feel like you have to re-sign. Take the time between now and then to gauge your working relationship with the vendor. 

If you feel like the relationship is working out, then you might decide to sign with them again. Yet if the vendor is jacking up their prices or you think that their current prices are too costly under your new financial plan, then don’t feel obligated to stay with the vendor. Exit the contract when you can. 

Now that the restaurant is yours, you can choose all the vendors going forward. You could switch them out gradually or do a massive overhaul depending on the status of the contracts. Just know that cheaper vendors are rarely better. 

You don’t want to dump a group of good vendors for cheaper ones that you’ll regret later. It can be difficult to get the old vendors back, especially if they take on new contracts!  

Tell Your Current Customers about the Ownership Change

It’s time for arguably the most difficult part of the entire process, and that’s informing your restaurant’s customers that the establishment is under new ownership. Although ownership modifications don’t always mean sweeping changes for a restaurant, they often do, and so your customers are going to feel very passionately about the news.

Most will be okay with the change, but some won’t. Others will give you a chance, but if your menu is too different from what the restaurant used to be, they might go elsewhere. You have to be ready to lose customers over this new change, as it will certainly happen.

We recommend writing a statement to your customers. In that statement, be as clear as possible about your new vision for the restaurant. Perhaps you want to maintain the current look, style, and feel of the restaurant but update it somewhat or maybe you’d prefer a full overhaul. Whatever that vision is, your customers would prefer you to be frank about it rather than make drastic changes behind their backs.

Redecorate If You Wish

Think of adopting a restaurant as moving into a house. The old owners left behind some things, and now those items belong to you. However, you’re under no obligation to keep them. 

Should the old owner have left you with refrigerators and other expensive kitchen equipment, that’s great! Those kinds of items you don’t want to get rid of unless they’re not working. Yet the curtains, benches, chairs, artwork, and lighting are all fair game to remove and replace as you see fit. 

If you do decide to get rid of these items, keep in mind that you’ll have to pay to replace the empty space. For some new restaurant owners, décor isn’t high on the priority list, so they’ll leave the place as is until they start bringing in a healthy revenue stream under their ownership. Others will want to tear the whole place down and start fresh or it won’t truly feel like theirs.

Should you be in the second camp, why not try repainting the place first? Sometimes a new coat of paint can make a dramatic difference in how the restaurant looks even if you leave the rest of the décor intact.

Add New Items to the Menu

To keep current customers appeased, you might decide not to mess much with the original menu. There’s another good reason to leave the menu alone for at least the first couple of months of new ownership. You’ll get a good chance to see what the old owner was paying for ingredients and if this is undercutting your bottom line.

Some menu items might be more expensive to procure the ingredients for, but if they’re big sellers, then the profits offset the costs. Yet if you’re spending close to $9 to get all the ingredients for one item on the menu and it’s not selling well, then you’re continuing to waste money again and again.

If you decide to start anew with the menu, you need a few staple items. Even if you largely leave the menu as it was, you should still introduce some fresh new items. These are like you putting your own stamp on the restaurant to make it more your own.

How do you decide what those new menu items will be? We recommend examining the research you’ve done to this point. You know what the competition is selling, what your restaurant used to sell when it was under different ownership, and what your customers like based on past data. You’re also aware of what you’re spending to buy ingredients.

The new staple dishes should be appealing to your current customers while being unique. The ingredients shouldn’t be too expensive either. Brainstorm with other key members of your new restaurant venture to come up with these staple dishes. 

You can always test out your new menu offerings before making them a permanent part of the lineup. On weekends, you can introduce new exclusive menu items. If they sell well between Friday and Sunday, then you might consider putting them on the menu. Yet if a dish flops, you can scrap it before you order hundreds of dollars worth of ingredients to make it.

Consider Revitalizing the Staff

Since you’re inheriting a fully operational restaurant, that means all staff roles should be hired for. Just as you decided whether the current vendor relationships were working for you, you also have to do the same for the waiters, waitresses, greeters, cooks, and other people who work at the restaurant.

If the old owner was paying a staff member too much and you’re cutting down on expenses, then you might fire a few employees. You could also choose to let some people go if their performance isn’t living up to your standards. 

It’s not easy to fire people, especially those who might have worked at the restaurant for years. If it’s something that you think needs to be done though, then so be it.  

Review the Current Restaurant Marketing Plan

Another huge part of your job as a new restaurant owner is to look at the marketing strategies the old owner was using. You can’t go without marketing your restaurant, as this is how you keep a steady stream of new customers coming through the doors. That said, some marketing tactics are certainly more expensive than others.

For example, maybe you don’t need that big billboard in the center of town anymore. You’d rather take the money you were going to spend on the billboard and put it towards pay-per-click or PPC advertising.

If the old restaurant owner had hired a digital marketing agency but you feel like their services are too costly, you could switch to a different agency. We wouldn’t suggest foregoing professional assistance altogether unless you have a marketing background yourself. 

As you introduce new marketing tactics to get your newly owned restaurant, remember that it takes time for the fruits of your labor to grow. Rather than reviewing daily or weekly metrics, you need to study monthly stats, even several months of data, and look for upward trends. 

Always be willing to adapt your marketing plan if something isn’t working. Since the profile of your customers will likely change throughout the ownership shakeup and in the immediate aftermath, it doesn’t hurt to segment your audience into new groups so you can better understand who you’re working with.  

Comb Through Financial Performance Data

You must have financial data over the lifetime of the restaurant. This data will point you in the direction of how much money the old owner earned. You can also review projections for the future based on those years of data.  

Maybe the restaurant started off strong, but its income has been sinking lower and lower as the months wear on. You don’t want to come aboard a sinking ship, as it’s hard for even the most experienced captains to right the ship and sail it to shore. 

However, if the restaurant is doing only okay but you think it can be amended with some hard work and more efficient planning, then it might be worth your while to rebuild it!

Conclusion

Before you choose to take over a restaurant, you need to know what you’re getting yourself into. Reviewing the restaurant’s financial performance will tell you whether this is a long-term venture with a future or a ship that’s sinking fast. 

Once you become the new owner, you have to learn the competition, decide which vendors and restaurant staff to keep, and let your customers know of the change. You might decide to update the restaurant’s décor and its menu to freshen things up as well. Best of luck!