How can I tell if a taco shop or burrito restaurant for sale is profitable?

A taco or burrito shop looks simple, and the sales are often easy to see. Profit is harder. The owner may work most of the shifts, delivery apps may take a share of every order and ingredients such as proteins, avocados and tortillas can move in cost. A fair test checks each of these against paper, not against the seller’s summary.

Match sales reports to deposits

Ask for point-of-sale reports for the same periods as the financial statements, then match them to bank deposits and card-processor statements. Cash sales deserve special care. If reported sales and deposits do not line up, ask why before you go further. Your accountant can say how much to rely on what you are shown.

Delivery apps and their commissions

Delivery sales can look strong in gross terms and weaker once the app’s commission, promotions and refunds come out. Ask for the statements from each app, not just the orders. Check whether the shop is dependent on one app, and whether its listing and customer reviews belong to the business or to the owner personally.

Food cost and the owner’s hours

Compare the cost of food in the statements with supplier invoices for protein, produce and tortillas. Then look at labour. If the owner cooks and manages for long hours without pay, a buyer who hires someone to do that work has a different result. Ask what each role would cost you to fill.

Franchise charges as line items

• Royalties and marketing contributions paid to the franchisor.
• Technology, supply and renewal charges set by the brand.
• Any required spending on equipment or remodels.

The burger restaurant version of this test covers the same method for another trade.