The food and beverage industry has always been one of the most attractive for the would-be entrepreneur. After all, each one of us must eat and drink to be able to survive and we have to pay much attention to the fundamentals! While this may be the case, there are many complex and interrelated issues to consider before you buy a business involving an existing restaurant and it’s important to bear in mind that less than one in 10 purchases will actually succeed. It is very important to value the business correctly upfront and if you go about your due diligence correctly you will have a good chance of surviving against these awful odds.

One of the key skills that you can possess when you get ready to buy restaurant business assets is the ability to communicate and to decipher information. A number of meetings will be required with the seller and don’t be frustrated if the meetings don’t reveal some of the significant information. It is natural for the seller to be a little protective and to want to gauge your enthusiasm and see whether you are really serious and qualified before divulging delicate data.

Before you can start projecting a position in the future, you need to know some basic facts and figures. What style of food does the business favor and how many tables are there in the restaurant? You need to know how many meals are served per day, per week and by month and if the menu is somewhat specialized, are the supplier contracts strong enough and is the supply chain sufficient?

Labor is a major cost in any business and particularly here. Find out how the costs breakdown and whether the strength of the entire business is based on the skills and strong personalities of key figures, notably the master chef. You may not expect to get a lot of the finer details during the early process, as a seller often wants to keep any news of a potential sale away from the employees until the appropriate moment.

Write up a check-list of questions to ask the owner; you should have hundreds and not be afraid to be very specific, nor to insist on detailed answers. As you are preparing your position, though, remember that this type of business will call on very long hours and is typically a seven days per week activity. You will be required to deal with many “fires,” be great at managing people and your time and may not expect to see a specific net profit for quite a while.

As a new owner, you will need to set up and develop new relationships with all your suppliers. Some suppliers see a change of ownership as an opportunity to significantly “amend” their contracts, and prices. You must be able to deal with distraught people, who may be upset because their table is not available, even though they booked it but arrived late. You must be able to motivate your employees and be able to handle all situations immediately, resulting in praise or termination accordingly.

If you are really sure that you want to get involved with the restaurant industry, have thought about the right questions and received full answers from the seller, have crunched the financials and studied the contracts, then you are now ready to look at the business value. Experts in this field should be engaged to help you understand what you are dealing with and you should use their findings to help you solidify your thoughts. If you know what the business bottom line is, the salary take of the owner, net profits and owner benefits, then you should adjust this figure according to any capital expenditure you feel is important.

With any restaurant for sale, the three major costs involved – labor, rent and food, should be no more than two thirds of total expenditure and always remember that you will have to have a superb marketing plan so that you can tell everyone about your new creation.

Richard Parker is the author of the How to Buy a Good Business at a Great Price series. As President and founder of Diomo Corporation – The Business Buyer Resource Center, his materials, seminars and consulting have helped thousands of business buyers realize their dream to buy a business.