Are you planning to buy a restaurant in Dubai? Then your plan is right; move forward with your decision. Like all other major cities, the restaurant business is booming in Dubai. While other businesses may be experiencing slow growth, the restaurant industry is booming and growing considerably, making buying a restaurant an appealing prospect. If you don’t have a background in food service or any ownership experience, a better option may be to buy an existing restaurant. If you are planning to buy a pre-existing restaurant in Dubai, then follow this article. In this article, we have mentioned ten essential things to consider while purchasing a restaurant in Dubai. The check-list information about the financial, legal, structural, operational health and VAT registration of the business
- 10 Things to Look for Before Buying a Restaurant in Dubai
Here is some thing you should keep in mind before buying restaurant in Dubai.
1. Identify your Market
Your initial step should be deciding what kind of eatery you would like to run. You should first decide whether to buy a family-friendly restaurant or a romantic dinner restaurant. You must ensure that your restaurant appeals right to the right clients in terms of location and must meet the income levels in that region.
2. Analyse the Location
The next step is analysing the location of your restaurant. All you need in that location is a good number of pedestrians, enough parking space, and pleasant surroundings.
3. Competitor Analysis
The next step you should look for is analysing your competitors. You should evaluate the fame or popularity of your competitors in the neighbourhood. You should also analyse the atmosphere and the type of entertainment they provide to their customers.
4. Investigate the restaurant’s reputation
Before buying a pre-existing restaurant in Dubai, try to gather information about the reputation of that restaurant. If the reputation of the restaurant is right, then you can move forward without making any changes in your decision. If it has not a good reputation, then you can make some changes by changing its name and the menu card.
5. Financial and employee records
You should look at all the financial documents of the restaurant. Try to gather information about the business history and cash flow of the restaurant. Also, examine the employee records to get knowledge about their skills, experience, salaries, schedules, and benefit plans.
6. Find out why the owner is selling
Figure out the reason behind selling of the restaurant, whether the seller is retiring, relocating or scaling up or down. Most importantly, you must know about the cash flow and profitability of the restaurant. If the restaurant’s progress is not well, then you have to crunch the numbers and calculate whether it is profitable for you or not.
Also Read: The Best POS System for Your New Restaurant
7. What assets will be included?
You must find what equipment along with the furniture and fixtures will be included. You also need to evaluate what intellectual property will be covered. You must ensure that the name of that restaurant is trademarked and the recipes are protected.
8. Will the sellers’ lease be transferred to you?
You will need the landlord’s approval to get the lease assigned to you. You can also try to get an existing liquor license transferred to you. Getting a new liquor license is time taking and costly.
9. What about Liabilities?
When you buy the restaurant, don’t forget to check out unpaid taxes, outstanding bills, any pending lawsuits, or health code violations. If some severe liabilities remain uncovered, then you should cancel the purchase right away.
10. Draw up a due diligence check-list
This will provide accurate information about the financial, legal, structural, and operational health and VAT registration of the business. Inspect the physical building, equipment, and plumbing to ensure proper maintenance of the restaurant has been done. A commercial real estate lawyer can assist you in negotiating a contract and with due diligence. Your lawyer will draft the purchase agreement. The purchase agreement is a legal document which states your legal rights and responsibilities. This agreement should also contain a non-compete cause saying that the previous owner of the restaurant will not compete with you for a specified period.