What should I ask about a restaurant’s suppliers before buying?

Start with a list of every supplier the restaurant uses for food, drink, packaging, cleaning and equipment service, along with how much each one supplies. Ask which accounts are on credit and which are cash on delivery. A supplier who has extended generous terms to the current owner may not offer the same to a new name, so ask how those terms were earned and whether they can be kept.

Look for contracts. Some suppliers tie a restaurant to minimum purchases, exclusive products, or leased equipment such as taps and coolers. Have your lawyer read anything with a term or a penalty for ending early. Ask also about rebates or sponsorship money that depends on the current owner’s relationship.

Meet the people who deliver, if the seller agrees. Their view of how reliably the restaurant pays, how orders are placed, and what prices have done lately tells you things the statements do not. Finally, make sure unpaid supplier bills at closing are the seller’s to settle, and write that into the agreement along with any credit holds.

Key takeaways

• List suppliers by category and find out which hold credit terms or contracts.
• Have your lawyer review exclusivity, minimum purchase and leased equipment clauses.
• Make unpaid supplier balances at closing the seller’s responsibility in writing, with any credit holds.