When it comes to launching your new eatery, expanding into a new location, or buying a new restaurant, the temptation to jump at an existing commercial space already outfitted for restaurant use can be almost too much to resist.
However, a New York City restaurant attorney would urge caution. Whether assuming the lease of an existing establishment or signing a commercial lease on a space be outfitted for restaurant use, there are some important considerations.
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On the plus side, buying a restaurant or bar is like taking possession of a turn-key operation. It should be a proven, profitable enterprise. Equipment should be in place. A reputation and annual sales expectations can have value beyond business inventory and other assets. And, in the right circumstances, buying an existing restaurant can be cheaper than starting an eatery from scratch.
However, when a seller demands a large premium for such “goodwill” assets, the benefits and drawbacks must be carefully weighed. Franchise opportunities, in particular, often exact an inflated price for little more than a name and some branded paper cups and napkins.
New / Empty Restaurant Takeover
Taking over an empty restaurant space also poses challenges. For one, there may be very real reasons that location was not successful. Or a restaurant’s bad reputation may remain behind, tainting a new startup effort. You may even find unpaid bills make food and drink vendors uncertain about resuming deliveries to the location of a previously failed enterprise.
Unknown liabilities are also a consideration when assuming the lease or assuming restaurant operations. If vendors are left unpaid, you could be on the hook for thousands of dollars in additional expenses or faced with the prospect of vendors refusing delivery.
And, while you may find a landlord willing to deal to fill the space with another restaurant tenant, the condition of equipment could make refitting the premises potentially more expensive than starting from scratch.
Buying a Restaurant: Consultation
Consulting a law firm familiar with real estate, restaurant, liquor and zoning laws, can make it far more likely you will secure a great location for your new business. Considerations include:
- Proper ventilation and code compliance
- Fire and evacuation safety
- Parking and ADA compliance
- Certificate of Occupancy and zoning requirements
- Liquor license requirements, including requirements of the New York State Liquor Authority regarding distance from churches, schools, etc.
- Commercial lease issues, CAM charges etc.
- Franchise Agreements
The Wright Law Firm is a business law firm located in Midtown Manhattan. Call (212) 619-1500 for a confidential consultation.