Restaurant table

Should we invest in the walls occupied by a restaurant ?

There are many announcements of sale of walls occupied by a restaurant, and even more of sale of funds.

Like the article “should we invest in the walls occupied by a bank?”, What are the risks and especially the opportunities to have a restaurant as a tenant?

Catering is one of the sectors where there is “margin”, if the volume (number of covers) is there. The activity still has a bright future ahead, as the uberization of the economy turns into an opportunity to deliver to customers at home, but there is always an audience to eat and be served in a setting different from home.

If, and only if, the location is good, the activity is therefore a guarantee of stability and sustainability, especially since the value is monetizable with a goodwill.

It is one of the rare businesses to be able to sell its exploitation, there is a market for that, that ensures you a continuity of exploitation, the buyer buying the current lease. Attention on this point, it can also change catering and therefore customers in particular.

Another point, premises allowing catering activity are rare, condominiums generally prohibiting it for their odor nuisance, this makes the supply scarce and therefore increases their value.

Like any asset class, you must determine the rental value in order to know if you buy or sell occupied walls with a rent called “market”, this then allows you to calculate the rate of effort for your tenant (see our article on the “effort rate for a business”), by recovering the average price per cover multiplied by the average number of covers, you thus obtain the average turnover of the establishment.

You may be wondering why the tenant does not buy the walls of his farm, there can be several reasons for this: lack of means, willingness to remain flexible and be able to leave if necessary or even willingness to devote his capital to development of operations.


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