Due Diligence Checklist for Buying Restaurant

Industry Economics to Reconcile

Restaurant diligence must connect sales and gross margin to permits, lease economics, labor, food cost, delivery platforms, equipment, health history, and the concept’s dependence on the seller or chef.

Build monthly and trailing views. Preserve the source, period, entity, and reconciliation for each material conclusion.

• Reconcile POS sales, merchant settlements, delivery platforms, deposits, sales-tax filings, and tax returns
• Analyze food and beverage cost, waste, comps, voids, discounts, tips, chargebacks, and menu contribution margin
• Normalize owner and family labor, manager coverage, repairs, marketing, insurance, and permit costs

Operations and Assets

Observe the operating process and compare it with the financial story. Identify the people, equipment, systems, locations, and outside relationships that can stop revenue after closing.

• Health inspections, food manager credentials, liquor license, fire approval, grease, hood, suppression, occupancy, and patio requirements
• Equipment ownership, refrigeration and HVAC condition, maintenance, warranties, and replacement
• Supplier terms, recipes, brand/IP, catering contracts, delivery-platform accounts, and customer data

Official Records and Compliance Routes

Start with exact legal names, addresses, license or facility identifiers, and transaction structure. Search the responsible official authorities and record coverage limits; a no-result search is not a guarantee.

• State and local food-service, liquor, health, fire, zoning, and tax authorities
• UCC searches for equipment and blanket liens
• OSHA, DOL, court, and EPA records where applicable

What Must Transfer

Obtain written confirmation where consent, assignment, change of control, new application, or account migration may apply. Build approval lead time into the closing plan.

• Lease and landlord consent
• Liquor and food-service approvals
• POS, delivery, reservation, domain, phone, and social accounts

Industry-Specific Red Flags

Treat each warning as a verification trigger rather than an automatic accusation. Quantify revenue, margin, downtime, replacement, remediation, penalty, or continuity exposure only when support exists.

• Sales cannot be reconciled to POS and deposits
• Labor model depends on misclassification or unpaid owner work
• Liquor or health approval cannot be available at closing
• Lease, hood, refrigeration, or plumbing requires major capital

Buyer Closing Controls

• Reconcile current financial performance immediately before closing
• Confirm licenses, consents, insurance, lease, key staff, and operational accounts
• Obtain payoff and release evidence for relevant liens
• Complete inventory, asset-condition, and working-capital procedures
• Version the report and list every change since the LOI
• Escalate legal, accounting, tax, environmental, insurance, or technical issues to qualified advisers