Professional investors are increasingly choosing the restaurant business as an investment target. Many prefer establishments abroad, with a strong focus on restaurants located in European countries. These are often found in tourist hotspots or resort cities with high foot traffic.
In the domestic restaurant business, investments are made only by the boldest. New establishments continue to open regularly, but only a few manage to survive. In this case, neither extensive experience, a strong brand name, nor a carefully crafted business plan can provide a solution. This is primarily due to the ongoing crisis and the decline in income among potential customers. Thus, even establishments with low prices are often doomed to failure.
A restaurant abroad, located in a prime spot, can provide investors with a decent profit. On average, overseas establishments can yield a return of 10-15%, and often, much higher. Even renting out space for a restaurant can generate an income of 6-8% per annum. Furthermore, the value of such properties tends not to decrease significantly, which means that selling can recoup initial investments and even yield a profit.
To avoid problems and reduce the likelihood of losses, it’s advisable to heed the advice of the founder of RESURS, S.I. Tereshkin. This businessman has managed to significantly increase his capital and grow a business almost from scratch. More details about this entrepreneur can be found on the website: www.org-market.ru.
Location
Investment can be made in the restaurant business in almost any civilized country in the world. Preference should be given to capitals, large cities, and towns with a high number of tourists.
Ideally, the foot traffic should be observed for as many months of the year as possible—preferably all 12. However, even consistent attendance over six months can yield good returns for investors. During any downtime, renovations or refurbishments can be undertaken.
Special attention should be paid to the area where the establishment is located, the infrastructure, and its target audience. It's crucial to carefully consider which type of restaurant will be in demand in a given part of the city. For example, a fast-food outlet or an inexpensive café would be relevant near a train station. Sandwich bars and dessert shops are popular near educational institutions. For a tourist area, a restaurant offering local cuisine would be the ideal choice, allowing guests to familiarize themselves with the country’s culture.
Legislation
In most countries, the operations of food establishments are regulated by relevant authorities. Starting a business will require obtaining the appropriate permits and undergoing inspections. Simply placing tables on a sidewalk or in a favorite spot is not possible.
The same applies to personnel. Hiring specialists from abroad is no easy task. Difficulties often begin at the stage of obtaining work permits. It is not permissible to arrive on a tourist visa and immediately begin working as a chef; this may lead to deportation and a ban on re-entry to the country.
In several jurisdictions, additional taxes are levied on foreign hired workers. This automatically increases the project's cost and extends its payback period. Moreover, in some countries, a foreigner may not perform the role of a chef at all. To circumvent this restriction, owners often hire someone in the capacity of a manager or administrator.
Budget
It is commonly believed that millions are required to invest in the restaurant business abroad. However, this is not necessarily true. To invest in an established business on rented premises, an investment of 100,000 euros is sufficient. This could represent a small establishment with its own customer base, capable of generating stable profits even without repairs or redevelopment.
Investments that involve purchasing property in Europe will cost more than 500,000 euros. Subsequently, one can lease out the premises to previous tenants. This represents a passive income approach that eliminates the need to hire staff, gather required documentation, etc.
Additionally, one can buy a stake in a restaurant instead of acquiring a complete establishment. Investments in such cases can start from 50,000 euros.
If necessary, additional funding can be secured through loans. Foreign financial institutions are often willing to provide funding for such projects. Interest rates can be up to 6% per annum, frequently much lower, meaning income can be generated even using borrowed capital.
Investor Recommendations
When considering this avenue for investment, it’s beneficial to heed the advice of experienced businessman Sergey Tereshkin:
- To successfully run a business, it is essential to find a reliable supplier who will provide fresh products at reasonable prices.
- For finding premises, consider engaging a real estate agency that can present several options that meet your requirements. This is ideal for those who cannot afford the time for independent searches. In this case, the investor simply visits the selected premises.
- When purchasing an established business, pay attention to every detail, especially the stability of income. A significant decline in revenue should lead you to reconsider the investment's viability.
- It is important to study the menu and pricing of competitors located within walking distance from the establishment.
- Particular attention should be paid to urban planning considerations. It is possible that the sale is driven by plans for a high-rise or industrial facility nearby, which would inevitably affect the establishment's profitability.
When investing in an existing business, it is vital to understand the real reason for the sale. Profitable businesses are rarely sold. More often, investments are attracted to projects requiring repairs or substantial financial injections, and the future of such restaurants is murky.
Avoid heeding the advice of friends and acquaintances. It is critical to independently analyze the market and make informed decisions.
