Quick-service restaurant due diligence

A buyer under a signed letter of intent on a quick-service restaurant is no longer evaluating the concept in the abstract — the job now is to verify, document by document, that what the seller represented actually holds up. Because this format runs on standardized systems, multiple sales channels and a location-dependent lease, the diligence list looks different from a full-service restaurant’s, and several specific findings here are common enough to know in advance.

Pull the delivery-platform data directly, not the seller’s summary

Rather than accepting a seller’s characterization of delivery performance, a buyer should request the platform’s own transaction history, rating trend and any recent policy or commission changes for the specific storefront account, because a declining rating or a recent commission increase materially changes what that revenue channel is worth going forward. This is also the point to confirm, in writing, whether the platform will reassign the account and its history to the buyer or whether the buyer will be starting a new listing from zero — a fact that should already have surfaced during the seller’s own preparation, but must still be independently confirmed.

Search the equipment for registered liens before assuming it is unencumbered

Equipment standardized to the menu is often financed, and a lien registered against it under the relevant personal property security regime — Ontario’s Personal Property Security Act, or the equivalent registry in another province — does not disappear just because the business is changing hands. A buyer’s counsel should run that search before closing rather than relying on the seller’s word that the equipment is paid off, because an undischarged lien can attach to the equipment in the hands of a new owner if it is not cleared as part of the closing.

Test whether the lease genuinely survives assignment

A buyer should confirm the lease’s remaining term, any options to renew, and whether the landlord has actually consented in writing to assignment rather than merely indicated informally that it will — a landlord who cannot renew on workable terms at a location-dependent format like this one is one of the more common reasons a deal that looked sound on paper does not close. Any signage or drive-thru variance tied to the prior operator’s specific municipal approval needs the same treatment: confirm it transfers, or confirm what re-permitting under new ownership would actually require.

Check staffing costs against the crew you will actually inherit

This format depends on standardized, replicable roles filled by a largely minimum-wage, part-time crew with structurally high turnover, so a buyer should verify current staffing levels, scheduled hours and recent turnover against what the financial statements show as labour cost, rather than assuming the reported figure reflects a stable team that comes with the sale. A crew that has to be substantially re-recruited immediately after closing is a real transition cost, even though it rarely appears anywhere on the seller’s books.

Confirm the regulatory file is current, not just the licence on the wall

A buyer’s counsel should confirm the food premises licence and any inspection history with the local public health unit is current and free of unresolved orders, since an inspection finding that is still open at closing typically becomes the new owner’s problem to resolve. Where the sale spans more than one province, remember that certified food handler requirements are not uniform — do not assume a rule confirmed for one location applies to a second location in a different jurisdiction.

Confirm the WSIB account is clear before you close

In Ontario, a buyer purchasing a restaurant’s assets should obtain a clearance certificate from the Workplace Safety and Insurance Board before closing, confirming the seller’s account carries no outstanding premiums — without it, unpaid WSIB premiums can attach to the purchased assets in the buyer’s hands even though the buyer never incurred them. Other provinces run an equivalent workers’ compensation clearance process, so a buyer purchasing outside Ontario should confirm what the local board requires rather than assuming the Ontario process applies unchanged.

Verify the inventory the same way you verify the equipment

Food, beverage and packaging inventory should be independently counted and valued as part of diligence rather than accepted at the figure on the seller’s balance sheet, since inventory levels shift constantly and a stale or inflated number quietly changes the real price being paid for the business. Confirming how the count will be conducted on closing day — and by whom — belongs in the purchase agreement, not worked out informally afterward.

Know what typically kills a deal in this format

Three findings recur often enough in QSR diligence to name specifically: a delivery platform that will not reassign the account and rating history, effectively restarting the review record under new ownership; a lease that cannot be renewed on workable terms; and a signage or drive-thru configuration that does not carry over and cannot be re-permitted as-is. None of these are automatically fatal, but each one needs to be priced, restructured or resolved before closing rather than discovered after.