How to Buy a Turnaround Restaurant and Make It Profitable

Posted by Robin Gagnon on May 30, 2023 9:45:00 AM


If you're an entrepreneur with a passion for the culinary world, Buying a Turnaround Restaurant  can be an exciting opportunity to unleash your creativity and business acumen. However, transforming a struggling establishment into a profitable venture requires careful planning, strategic decision-making, and a relentless commitment to success. Here are few steps you can take to buy a restaurant and make it profitable. 

Take Inventory

Before diving into the purchase of a turnaround restaurant, conduct extensive market research to identify potential opportunities and challenges. Analyze the local restaurant landscape, understand consumer preferences, and assess the competition. This information will help you identify a suitable target restaurant and formulate a strategic plan for its revitalization.

Once you have identified a prospective restaurant, perform a comprehensive evaluation of its financials, operations, and reputation. Review financial statements, analyze sales and expenses, and identify areas of improvement. Additionally, assess the quality of the restaurant's menu, service, and customer reviews. This evaluation will provide a clear picture of the restaurant's current state and help you identify specific areas that need attention.

Relying on your restaurant staff can be a wise play when you are taking inventory of your new restaurant. If you just bought a restaurant and plan to keep the staff and manager in place, then these employees could be key players in helping you identify areas where the restaurant operations could improve. Your employees likely understand the menu, customers, and day-to-day operations better than you at this point because they have worked in the location under the previous owner. Start a dialogue with key employees to identify solutions you hadn't thought of yet. This is also a great way to build repour among your staff and increase retention, as their active role in helping you turn the business around can be rewarded with bonuses or pay raises.  

→Read also - What to Know Before Buying a Restaurant that Isn't Making Money

Develop a Turnaround Plan

Based on your assessment, develop a detailed turnaround plan that outlines your goals, strategies, and timelines. Identify the core issues affecting the restaurant's performance, such as operational inefficiencies, marketing challenges, or menu shortcomings. Develop action plans to address these issues, setting measurable targets for improvement. This plan will serve as your roadmap for the revitalization process.

Your turnaround plan should include tactics to:

  • Strengthen Operations: To make the restaurant profitable, focus on optimizing its operations. Streamline workflows, improve inventory management, and enhance staff training to ensure efficiency and consistency. Evaluate the restaurant's supply chain and negotiate favorable contracts with suppliers to reduce costs. Implement robust systems for monitoring and controlling expenses, such as food waste and labor costs.

  • Enhance Marketing and Branding: Revitalizing a restaurant requires effective marketing and branding strategies. Develop a compelling brand identity that aligns with your target market. Invest in professional photography, redesign the menu, and create a captivating online presence through a website and social media platforms. Implement targeted marketing campaigns to attract new customers and regain the trust of previous patrons. Leverage customer feedback and reviews to continuously improve the dining experience. Depending on your target audience, creating an account for your restaurant on social media platforms can be a great way to attract customers and build a loyal following. 

  • Focus on Customer Experience: Delivering an exceptional customer experience is crucial for long-term profitability. Train your staff to provide top-notch service, create a warm and inviting ambiance, and prioritize consistency in food quality. Encourage customer feedback and actively address any concerns or issues. Implement a loyalty program or special promotions to incentivize repeat visits and build a loyal customer base.

  • Monitor and Adapt: Regularly monitor the restaurant's performance against the targets outlined in your turnaround plan. Analyze financial reports, customer feedback, and industry trends to make informed decisions. Stay flexible and adapt your strategies as needed to maximize profitability. Continuously seek opportunities for improvement, experiment with new menu items, and stay ahead of evolving consumer preferences.

  • Adopt new technologies: Technology is changing the restaurant industry and can introduce new efficiencies and revenue streams to your business. Consider investing in digital loyalty programs or adding the option for online ordering. 

Buying a turnaround restaurant and transforming it into a profitable venture requires a combination of strategic planning, operational excellence, and a customer-centric approach. By conducting thorough research, developing a comprehensive turnaround plan, and implementing effective marketing and operational strategies, you can breathe new life into a struggling establishment. 

Are you in the market to buy a restaurant? Browse hundreds of restaurants for sale near you today and bring your dream of restaurant ownership to life. 

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Robin slug photoRobin Gagnon, Certified Restaurant Broker®, MBA, CBI, CFE, is the co-founder of We Sell Restaurants, a brand that has carved an unparalleled niche in the industry as the nation's leading and only business broker franchise focused on restaurants. Under Robin’s leadership, We Sell Restaurants has grown to 45 states where it dominates the restaurant for sale marketplace, including franchise resales, delivering on the founder’s vision to Sell More Restaurants Than Anyone Else. We Sell Restaurants was named one of the most influential suppliers and vendors in the country by Nation’s Restaurant News and has earned a position on INC 5000’s list of fastest growing privately held companies. Franchisees of We Sell Restaurants surveyed by Franchise Business Review placed it 25th in the nation in franchisee satisfaction.

Robin is the Chair of the Women’s Franchise Committee of IFA and is a member of the IFA Board of Directors. She is also an MBA and Certified Franchise Executive (CFE) and has her CBI (Certified Business Intermediary) designation from the International Business Brokers Association. She co-authored Appetite for Acquisition, a small business book award winner in 2012 and contributes frequently to industry press appearing in Forbes, QSR, Modern Restaurant Management, Franchise Update, and others. Entrepreneur has named her to their list of the “Top Influential Women in Franchising.”

Topics: Buying a Restaurant

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