Growing a restaurant chain through acquisition

by Jun 8, 2022Running a business

We’re used to mergers and acquisitions in the world of big business, so there’s no reason small restaurant chains can’t grow with the same approach.

There’s a lot to consider before you begin the process of an acquisition or merge – it’s more than just picking your ideal location and defining a budget.

Do you know how to identify the best business for you to acquire? And is this the right time for your business to begin this process?

Once you’ve read this blog, you’ll have more information to help you make a better decision.

Benefits of acquiring a business

If you want to grow your own restaurant chain, a merger or acquisition is a great place to start, for several reasons.

An acquisition would give you the opportunity to expand into new markets, both geographically and demographically.

You could essentially unlock this instantly, without having to go through all the extreme hard work of finding a suitable building in a good location.

If you acquire the assets, you won’t have to worry about getting new equipment. You can even acquire the old business’s staff, retaining all their knowledge, perspective, and experience.

You can quickly and efficiently scale up your business to a level that can effectively compete with larger rivals.

You’ll also have the security of knowledge that your new second location will be able to stand on its own two feet with its capital and assets still intact.

Things to watch out for during an acquisition

The benefits of a merger or acquisition are great, but you need to be wary of some of the traps businesses find themselves in, so you don’t make the same mistake.

For instance, you need to take your supplier into consideration. Will they be able to provide you with the additional service, supplies and materials that your new restaurant chain needs? Making sure is just one part of ensuring a smooth transition.

Beware of duplicating roles, too. This shouldn’t be too much of a problem for restaurant chains, which need to have the same staff in each location (chefs, managers, servers). However, you might still end up duplicating roles in marketing, finance and senior management.

You may have to make redundancies as a result, and this is unavoidable in some cases. But just be aware that this could damage how your new employees and wider market perceive you and your brand.

Lastly, make sure that your business and the one you want to acquire are well matched and have similar objectives, to make sure the move works long term.

How to acquire a business

If you want to acquire another business, make sure you have the right motive behind the decision. Do it if strategic growth is your goal and keep a level head – don’t let perceived fantasies influence your decision making. You need to get it right the first time around.

Create search criteria and research potential businesses that fulfil them. There are dozens of online databases out there where business owners and their bankers list businesses for sale.

Before you contact a potential seller, you should get in contact with a financial adviser or even a lawyer, to help you with what will come after – your offer and due diligence processes.

Contact us to talk about your restaurant chain.

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