Taking over an existing restaurant seems to be the quickest route to success. However, without meticulous scrutiny, the dream can quickly fall apart due to legacy issues and incorrect calculations.
Taking over a restaurant instead of starting one from scratch sounds tempting. The tables are set, the kitchen is equipped, and there are usually even regular customers and experienced staff. You save yourself the tedious search for a suitable property and the lengthy approval process.
But this supposed quick start comes with a few risks. When you take over a restaurant, you are not only buying the inventory, but also entering into a complex web of contracts, obligations and an established reputation – for better or for worse.
Careful due diligence (a thorough commercial and legal review) is therefore a necessity. We will show you what to look out for and what costs are really involved in the takeover.
When founders calculate the costs of taking over a restaurant, they often focus on just one item: the purchase price. This amount is usually paid for the inventory, the customer base (goodwill) and the name. However, the true costs are often hidden.
1. Realistically assess the transfer fee (purchase price)
The seller will quote a price that is often based on emotional values. It is therefore advisable to check this value objectively. Is the kitchen equipment modern and well maintained, or is it on the verge of breaking down? How much is the good reputation actually worth? An external appraisal or consultation with an industry expert (e.g. from GastroSuisse) is a sensible way to arrive at a realistic figure.
2. The investment backlog (the hidden cost trap)
This is where the greatest financial risk lurks. A restaurant may look good at first glance, but the technology is crucial. Do the ventilation system, grease separator and cold stores comply with the current requirements of the Food Act (LMG) and cantonal fire safety regulations? Retrofitting can quickly cost five to six figures.
3. Legacy liabilities and obligations
A key issue is the question of liability. Check meticulously whether there are any outstanding invoices from suppliers, tax debts or outstanding wage payments. Particularly critical in Switzerland: debts to social security institutions (AHV/IV). Depending on the form of takeover (asset deal or share deal), you may be held liable for the debts of the previous owner (see Art. 181 - 183 OR for business takeovers). A trustee should conduct an in-depth analysis of the balance sheets for the last three years.
Even more important than the money is the contract. If mistakes are made here, the business is often doomed to failure even before it opens.
4. The lease agreement: the heart of the takeover
The lease agreement under the Swiss Code of Obligations (CO) is the most important document. The agreement is not automatically transferred.
Landlord's consent: The landlord must explicitly agree to the change of ownership. If they do not, the entire deal falls through. Landlords often use this opportunity to increase the rent or amend the contract.
Term and options: How long does the contract still run? Are there any renewal options? A contract that expires in two years does not offer any investment security.
Intended use: Is the business registered as a ‘restaurant’? Are outdoor seating and music events explicitly permitted?
5. Staff check (transfer of business according to Art. 333 OR)
When you take over a restaurant, this also includes the employees. Swiss law is clear on this point: According to Art. 333 OR (transfer of business), you automatically enter into all existing employment contracts with all rights and obligations. You cannot simply dismiss the employees. Analyse the personnel structure: Are the salaries in line with the market? Is there protection against dismissal or high holiday entitlements? Is there a collective labour agreement (CLA) that must be complied with?
6. Supplier and brewery contracts
The classic pitfall in the restaurant industry is the ‘beer supply contract’. Is the restaurant tied to a specific brewery or beverage supplier? These contracts are often linked to purchase obligations and unfavourable terms and conditions that you cannot get out of for years.
7. Licences and patents (Cantonal sovereignty)
This is one of the biggest differences compared to other countries. In Switzerland, hospitality law is regulated at cantonal level.
Hospitality licence: The most important licence. It is often tied to the previous operator and the premises. It is not automatically transferred to the purchaser. You must prove your personal and professional suitability.
Certificate of competence: Many cantons require a certificate of competence (formerly known as a ‘Wirtepatent’) to run a business. The requirements (training, examination) vary from canton to canton.
8. Why is the previous owner selling?
This is the most honest question, but also the most difficult to answer. The reason may be impending insolvency, a dispute with the landlord or competitive pressure that the business cannot withstand.
9. Does the concept suit the location?
Analyse the location (walk-in customers, parking spaces, demographics in the neighbourhood) and check whether the existing concept still works. When you take over a restaurant, you also take on its reputation – for example, on review platforms (Google Reviews or Trustpilot). Repairing a bad reputation is often more expensive and laborious than starting from scratch.
10. The business plan: a buffer for the unexpected
A business plan is just as important for a takeover as it is for a start-up. Don't just calculate the obvious costs (transfer fee, renovation), but also the working capital – the buffer for the first six months, during which rent, staff and goods have to be paid for, even if the business is not yet running as hoped.
Taking over a restaurant is a highly complex process. It requires the expertise of a local trustee (for the figures and the AHV audit) and a solicitor who is familiar with cantonal hospitality law and the Swiss Code of Obligations. These consultations are not cheap, but they are a worthwhile investment. They are a protective shield against hidden debts, invalid contracts and an investment backlog that could end the dream of owning your own restaurant before it has even begun.
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