7 Must-Ask Questions When Buying a Mexican Restaurant

Mexican cuisine is one of the most favored gastronomies in the United States making the Mexican restaurant industry an appealing investment option for entrepreneurs. However, numerous factors determine the success of a locally owned Mexican restaurant. If you’re considering buying a Mexican restaurant, Sunbelt Business Brokers has multiple resources to help you find your dream business opportunity.

Questions to Ask When Buying a Mexican Restaurant

Utilize this list of must-ask questions prior to making an offer on a Mexican restaurant.

1. What is the revenue of the Mexican restaurant?

As the popularity of Mexican cuisine continues to grow, the Mexican restaurant industry is seeing growth in revenues. In fact, from 2018 to 2023 the industry grew at a rate of 2.4 percent. According to IBISWorld, the industry will continue to see growth from 2018 to 2022. With an enormous percentage of the country’s population eating Mexican regularly, there is undoubtedly money to be made by Mexican restaurant owners.

Average revenues for a Mexican restaurant vary depending on location, square footage, population, and countless other factors. Be sure to consider the convenience of the prospective eatery and the demographics of the surrounding community. Successful Mexican joints are typically located in high traffic areas.

2. How is the Mexican restaurant different from competitors?

In a highly saturated market of fast food and independently owned restaurants, owners must contemplate how to differentiate their Mexican restaurants. When analyzing a Mexican restaurant for sale in your area, think about how it compares to chains like Chipotle and Taco Bell, as well as other local competitors. Ways a restaurant might differentiate itself include:

• Adding health-conscious features to the menu such as non-GMO, vegan and gluten-free foods;
• Using authentic Mexican recipes only;
• Implementing an online ordering system; or
• Cooking with locally grown ingredients.

Customers are increasingly drawn to local businesses and restaurants rather than chains and fast food. Ensure the restaurant you’re interested in is known for delivering an extraordinary experience.

3. Why is the current owner selling the restaurant?

One of the most imperative questions to ask during due diligence is, “Why are you selling your Mexican restaurant?” Common motives typically include retirement, sickness, poor performance, burnout, financial troubles, and new opportunities.

If the seller hints that he or she has put the restaurant on the market due to financial troubles, take it as a sign that the restaurant may not be doing well. Although it is conceivable that under new ownership the restaurant’s performance may turn around, you must do some further due diligence before signing on the dotted line.

Monetary Questions to Consider Before Buying a Mexican Restaurant

Opening a Mexican restaurant is a significant investment. To ensure you’re prepared to purchase a Mexican restaurant, you’ll need to answers these financial questions.

4. Will real estate be included in the restaurant sale?

To begin assessing the restaurant’s financials, you need to determine whether the building is owned or leased. If the owner of the restaurant also owns the restaurant space, ask if they intend to sell the real estate as well. If the restaurant is leased, it’s important to review the lease agreement as well as the parameters for transferring the lease.

5. Are the kitchen equipment and furnishings included in the sale?

Kitchen equipment, inventory, and restaurant furnishings can quickly add up. During the negotiation process, determine exactly which assets will be included in the sale of the restaurant. For example, a tortilla press can cost well over $3,500. Purchasing all new kitchen appliances and equipment could add additional expenses to an already substantial investment.

6. What are the operational costs?

The best way to understand the operating costs associated with running a Mexican restaurant is to ask the existing owner about his or her expenses. Use the information provided to you to estimate the average cost of rent, utilities, ingredients, employee compensation, maintenance, and more.

7. What is the value of the Mexican restaurant?

Another critical financial matter to inquire about is how the owner determined the value of the business and how he or she arrived at the asking price. From goodwill to revenue, there are countless value drivers that impact a restaurant’s asking price. By determining how the restaurant owner reached his or her asking price, you will have a better understanding of your bargaining power. The price is likely negotiable if the owner did not obtain a professional business valuation.

To receive the most exact valuation when purchasing an existing Mexican restaurant, consider hiring a business broker. Sunbelt Business Brokers proudly serves as an invaluable resource to buyers.

When you’re ready to start perusing Mexican restaurants for sale near you, work with a professional from Sunbelt. We have years of experience helping potential buyers successfully buy a business, so you can rely on us to help you find your ideal restaurant. Additionally, working with a business broker guarantees you have a professional advising you through every step of the buying process. Contact the Sunbelt Business Brokers office nearest you today to begin finding a Mexican restaurant that fits your desired criteria.