The Business Buyer’s Guide for Buying a Chinese Restaurant

With more restaurant-goers flocking to ethnic food joints, it’s more important than ever to make sure your restaurant stands out in the crowd. If you’re interested in capitalizing on this shift in cuisine preferences, be sure to do your research first. Follow Sunbelt’s guide below for tips on buying a Chinese restaurant.

Must-Ask Questions for Buying a Chinese Restaurant

According to the National Restaurant Association, 66 percent of consumers eat a wider variety of ethnic cuisine now than compared to five years ago. With Chinese food ranking as one of the top three ethnic cuisines most American’s reach for, now may be the perfect time to buy a Chinese restaurant.

How profitable is the Chinese restaurant industry?

With relatively low operating costs and a positive estimated growth rate, Chinese restaurants have the potential to bring in a significant amount of revenue. While analyzing financial statements is the best way to determine how profitable a business is, a good place to start is assessing the existing restaurant’s location. By nature, businesses in high-traffic areas rake in more customers than those in poorly-placed locations. If the Chinese restaurant you’re interested in is in a great spot, consider moving forward with your research.

How will the Chinese restaurant stand out among the competition?

Because most fast-service Chinese restaurants offer similar menu options, it’s crucial you find ways to make the eatery stand out. To help you assess the restaurant, consider how it compares to big-name chains such as P.F. Chang’s or Panda Express. If you feel your restaurant is falling short in comparison, consider the following ways to help differentiate your store:

• Offering menu options for different dietary needs;
• Specializing in delivery services;
• Partnering with local sources for fresh ingredients; or
• Adding a unique flair to traditional plates.

Though many Chinese and other Asian restaurants typically offer similar dining experiences, you should strive to develop a clientele of regular diners. In fact, studies show that restaurant “regulars” spend as much as 67 percent more than new customers.

Why is the Chinese restaurant for sale?

Before buying a Chinese restaurant, you should always ask the current owner why they’re listing it for sale. While you can expect a multitude of answers, generally reasons including retirement, burnout, illness, or new opportunities aren’t red flags.

However, proceed with caution if the owner blames financial or performance issues. While these reasons may not be enough to sour the deal alone, they can be indicators that there are deeper issues with the business.

Does the listing include real estate?

If the business checks out so far, you should also ask the owner about the real estate. Find out whether the building is leased or owned so you can be on the lookout for additional hidden costs. If the restaurant owner owns the building, be sure to ask if his or her asking price includes the structure as well. If the building is leased, take the time to read over the current lease and inquire about transferring the contract.

How much will you need to invest in restaurant equipment?

There are lots of supplies and equipment needed to run a restaurant successfully. To get the best idea of how much money you’ll need to invest in equipment, ask the owner if the deal includes any kitchen equipment. To help envision the potential costs, a commercial grade deep fryer can cost upwards of $2,000 depending on the size.

How much are the current expenses?

If you’re still interested in moving forward with the Chinese restaurant, you should ask the owner for more details on the restaurant’s current expenses. Requesting general numbers for the operational costs can help you estimate how much money you’ll need to set aside for bills, materials, employee compensation, building and equipment maintenance, and more.

What determined the asking price?

Before beginning negotiations, you should determine how the Chinese restaurant seller arrived at the asking price. If the owner utilized a professional to help determine their price, be aware the cost may be firm.

While asking all of the above questions is a great place to start, keep in mind the benefits of using a professional business broker. To help you understand every step of the deal and make an informed purchase, consider connecting with your local Sunbelt business broker.

Ready to begin the process of buying a Chinese restaurant? Begin searching for Chinese restaurants for sale with Sunbelt Business Brokers. Our brokers are ready to help you find the perfect business and lead you through a successful deal. To begin your path to business ownership, locate your nearest Sunbelt office here.