Buying a restaurant is no simple thing. We’re not talking about buying a building to put a restaurant in; this is specifically about buying an existing restaurant, owned by a landlord. You might think: Isn’t that the same as renting an apartment?

Welcome to the world of commercial leasing. It’s nothing like renting an apartment, and it’s actually quite a bit more complicated than buying a house.

“When people are buying a home they do inspections and look into the neighborhood, even check the traffic patterns,” says Tyanna Brooker, an executive assistant at a brokerage in Toronto. “When people get into restaurants, they just look at the restaurant they are taking over and talk about their dreams for the menu. They don’t look into all the other factors.”

In the restaurant market, someone is always looking to open a place, and someone is always looking to sell. It’s a business that never sleeps, but the end of the year is when the majority of new buyers come in. When things slow down after the holidays, there’s a relatively dormant period in which to renovate and get ready to open the doors for spring.

I’m a food writer, but I also work as a part-time restaurant broker at Carve Real Estate. I spoke with fellow restaurant brokers and agents across the United States and Canada to find the top things you should know if you are thinking of buying a restaurant.

Landlords are greedy

“Yes, landlords are greedy,” says Douglas Wagner, who’s worked in New York City real estate since 1995 (and for full disclosure, is the husband of Food & Wine executive features editor Kat Kinsman). “For income producing buildings in New York, 39% of that has to go to the city. A lot of landlords are operating their buildings on a 26% margin by the time they pay real estate taxes and their banks. That’s before staff or insurance or maintenance. Landlords are greedy because they have to be.”

I’ve heard it said that a chef who has opened their own restaurant has “bought themselves a job” in that they own the restaurant and they’re working for themselves, but the work is so all-consuming and the pay so minimal that ultimately, what they’ve bought and paid for is a minimum-wage job. In deals where the rent is more than the tenant can afford, that means that the landlord becomes the de facto boss.

“Do you want to open your own place only to end up working for your landlord?” asks Julie Osland, who’s been selling restaurants for 14 years in Toronto. “Ultimately if you sign a lease you’ve agreed to something, if you can’t afford what the landlord is asking for, then it might not be the right place for you. I tell clients all the time to walk away.”

But if the space is right and the rent is right and you decide to go for it, Wagner has some advice. “To be successful in a tight vacancy market like New York or Toronto or Chicago, you have to think like the landlord. Think long term,‘Is the landlord going to be able to remain happy?’ I’ve seen dramatic breakups over rent escalations and lease renewals.”

Consider existing restaurants over new builds

When chef David Schwartz first opened Mimi Chinese in Toronto, he took over an Italian restaurant in Yorkville that had been in operation for decades. The renovation took eight months and cost less than $1 million. When he opened Linny’s in a former hardware store on Ossington, it took over a year and cost $2 million. His advice is, “Definitely go into an existing space, do whatever you can to have a healthy bottom line. Building out from scratch is just too expensive,” he says ruefully. “The juice isn’t worth the squeeze.”

Schwartz has since opened another Mimi, this time in Miami Beach, in a former Japanese restaurant.

“You want to benefit from the discount that comes with something that’s pre-built and all those grandfathered-in licenses and design requirements,” says Osland. “Building out new means everything has to be built to today’s accessibility codes.”

“If your city is as hard permitting-wise as Miami — in my opinion the worst in the country — you’ll know that something as simple as signage can take six months,” says Felix Bendersky, a restaurant broker in Miami. “Building out from scratch takes so much longer, and everything just becomes a fight with the city. We’ve seen million dollar buildouts that never even opened. We see it over and over and over again.”

Your equipment isn’t worth anything

Bendersky used to work in Miami nightclubs. In 2017 he got into real estate, and it wasn’t long before he started to specialize in restaurants. “The number one misconception is what you think you’re buying when you’re buying a restaurant. A lot of people think it’s all about the equipment, but it’s based on location, rent, and the lease,” he says. “The right location, the right rent, and the length of the lease — that’s the trifecta. That’s where the real value is.”

Bendersky has a podcast and runs @fandbmiami where he reports on the state of the industry, giving chefs and owners insight into the inner workings of his hometown’s restaurant scene.

And before visions of shiny new stainless steel appliances cloud your vision, it’s best to know what value restaurant equipment actually has.

“Market value is what someone will pay,” says Osland. “Your equipment definitely isn’t worth as much as you think it is. Your gas lines probably have more value than the equipment attached to them. Kitchen equipment is just like buying a new car. You lose half the value once you drive away.”

Ryan Earl, a former bartender, runs Carve Real Estate, based in Toronto. He’s been selling restaurants for over a decade. “There are auctions or Facebook Marketplace,” he says, “but none of these things will get you back what you paid.”

Wagner agrees. “Pennies on the dollar. Even if you can document what your Garland range costs or your salamander, it doesn’t matter. Any incoming tenant — they’re expecting a fire sale.”

The exception: your kitchen hood

When renovating his first restaurant Schwartz was grateful for the kitchen hood. It wasn’t gorgeous and shiny. In fact it was decades old and kind of beat up, but it became one of the most treasured assets in the space. “A lot of people might not know this, but one of the most expensive parts of a reno is the hood and exhaust and HVAC,” he says. “Building out Linny’s from the ground up, a space with no hood — almost a third of the cost was air handling and exhaust.”

A residential agent is not a restaurant broker

“When you get your real estate license the Sale of Business portion for the entire course is usually taught — from start to finish — in a single afternoon. That’s it,” says Earl, who has exclusively sold restaurants since 2012. “A real estate license does not make you a business broker.”

You wouldn’t hire a tax lawyer to handle your divorce, and you shouldn’t engage a residential agent to buy or sell a restaurant. “Get a restaurant broker who understands these deals, and get a restaurant attorney, because it’s a whole separate vocabulary and protocol,” says Wagner. “In New York, liquor licenses alone are their own cottage industry.”

“These are complicated little deals that involve multiple parties beyond the primary parties that are the buyer and the seller. You need someone who understands the process, the key players, and how they all come together,” says Earl.

Do your research

“People need to do their due diligence before getting into the restaurant sector,” says Brooker. “So often, the people that I deal with — buying a restaurant is their dream, but their knowledge is next to nothing. People do way more research when looking for a house, but a restaurant is a business. It’s so critical.”

Exquisitely cooked fillet of sole? Sure. Expertly balanced books? Not so much. The greatest culinary minds are not necessarily the best business owners.

“Chefs will have a vision for the menu and the dining experience, but they always don’t have a head for operations,” says Wagner. “You might want to have two different brains on that. Someone who thinks about the food and then someone who thinks in dollars per square foot and dollars per check average.”

“You are looking to find Cinderella’s slipper, something that fits perfectly. If you’re going to be putting all this money into your new restaurants you should make sure you’re being careful,” Osland advises new buyers.

No two restaurants are the same, and even the ones with Michelin-level chefs and deep-pocketed investors can belly flop. There’s no magic formula, and if there was, you can bet every chef would have it tattooed on their forearms. But if you go in prepared, you stand a much better chance. Whether it’s fine dining or quick service, the bones are the same. Use this guide to help you navigate those first steps into buying your own restaurant and living the dream, not the cautionary tale.