Free 125-Point Due Diligence Checklist For Restaurants

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125-point due diligence checklist for restaurants

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Use this template with Lumiform

The Lumiform application helps frontline teams uphold internal standards effortlessly.

Customize this template or build your own
Fill out templates via mobile app
Assign and track corrective actions
Get reports and analyse your data

Prices start from ░░░ per month

Book a demo

Learn more

Conducting thorough due diligence is crucial when purchasing a restaurant, and this 125-point checklist offers an in-depth guide for your evaluation. You’ll methodically assess key ares like profit and loss statements and health department compliance records to identify potential issues.

For example, when you’re examining a restaurant’s transition plan, you can verify whether the seller will provide adequate training and introductions to key suppliers—factors that significantly impact your success after acquisition. As reported in Forbes, around half of business deals fall apart during due diligence as buyers discover undisclosed problems. Careful preparation empowers you to avoid these common pitfalls and move forward with greater confidence.

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Preview of the template

Page 1

Financial Records and Evaluation

Profit and Loss Statements for the Past 3 Years

Balance Sheets for the Past 3 Years

Cash Flow Statements for the Past 3 Years

Tax Returns for the Past 3 Years

Amount of free cash flow (available to you as new owner)

Evaluation of Asking Price vs. Market Value

Gross Margins on Product A Sales

Percentage of Sales from Product A (Core Business)

Cost of Goods Sold (COGS) Analysis

Operating Expenses Review

Provide a breakdown of major operating costs (e.g., payroll, rent, utilities)

Debt or Liabilities on the Business

Amount of outstanding debt

Year-end balance sheet verified for furniture, fixtures, and equipment (F/F/E)

Based on the provided financial records, how would you rate the financial health of the restaurant?

Licenses and Permits

Certificate of Occupancy

Food Service License

Food Handler's Permit

Building Health Permit

Sign Permit

Resale Permit

Sales Tax License

Liquor License (if applicable)

Health Department Inspection Report

Fire Department Inspection Report

Workers' Compensation Insurance

General Liability Insurance

Is the restaurant in compliance with local zoning laws?

Have there been any violations for permits?

Contracts and Legal Obligations

Are there signed contracts with suppliers?

Review of contract terms:

Are vendor agreements in place?

Continuity of service verified with suppliers?

Is there a valid lease agreement for the property?

Lease expiration date

Option to renew:

Are there any restrictions on use of premises?

Are there any service contracts in place?

Are service levels acceptable?

Is there valid general liability insurance?

Are there signed employee contracts, especially for key employees?

Is the restaurant part of a franchise?

Are there any restrictions or obligations as part of the franchise?

Franchise royalty fees:

Based on the provided contracts and legal obligations, how would you rate the restaurant's legal compliance?

Staff and Key Employees

How would you rate the overall experience of the management team?

What is the retention rate of employees over the last 12 months?

Are current staffing levels sufficient to maintain operations?

Total number of employees

Number of full-time employees

Number of part-time employees

Are payroll costs in line with industry benchmarks?

Are employee benefits offered (health insurance, paid time off, etc.)?

What is the turnover rate for the past 12 months?

Are the key employees skilled in essential areas (e.g., kitchen operations, inventory management, customer service)?

Is the restaurant compliant with labor laws (minimum wage, overtime, etc.)?

Are employees trained in health and safety regulations?

Operations and Processes

Are there formal, documented processes for daily operations?

Are there documented recipes for all house-made menu items?

Are proprietary recipes protected (e.g., non-disclosure agreements)?

Are there documented procedures for opening and closing the restaurant?

Is there a formal system in place for managing inventory?

Are there documented quality control procedures for food preparation and service?

Are there documented procedures for handling customer service, complaints, and feedback?

Are there procedures in place for waste disposal and recycling?

Are there formal procedures for handling cash, deposits, and security?

Based on the processes in place, how would you rate the overall operational efficiency of the restaurant?

Comments on operational efficiency

Property and Equipment

Is there a comprehensive list of all kitchen equipment and machinery?

Are there records for when the equipment was purchased?

How would you rate the overall condition of the kitchen equipment?

Estimate the remaining useful life of critical kitchen equipment (e.g., refrigerators, ovens, stoves):

Does the kitchen equipment comply with health and safety codes?

Is the storage and refrigeration space adequate for current operations?

How would you rate the condition of the restaurant's physical structure (e.g., floors, walls, ceilings)?

Is parking available and easily accessible for customers and staff?

Health and Safe Compliance

Is there a valid business license?

Is there a valid food service permit?

Is the restaurant fully compliant with local health codes?

Is there valid worker's compensation insurance in place?

Are food handling and sanitation procedures documented and followed?

Is there a pest control service contract in place?

Are there proper procedures for sanitation and waste disposal?

Based on the provided documentation, how would you rate the overall health and safety compliance of the restaurant?

Comments on overall compliance:

Marketing and Competitive Landscape

Is there a documented marketing and advertising plan?

What is the annual marketing budget?

What is the marketing budget?

Is the budget in line with industry standards?

What are the primary customer acquisition channels?

Which channel has the highest return on investment (ROI)?

Does the restaurant have an active online presence (e.g., website, social media profiles)?

What are the average customer review ratings?

What are the most common customer complaints or praises?

What are the restaurant's key competitive strengths?

What are the biggest competitive threats?

Does the restaurant experience seasonal fluctuations in sales?

How is the restaurant perceived in the market (e.g., budget-friendly, upscale, family-oriented)?

Based on available data, how would you rate the overall effectiveness of the restaurant's marketing efforts?

Supplier and Vendor Relations

Is there a comprehensive list of suppliers and their contact information?

Are suppliers willing to continue service post-acquisition?

Are the current pricing terms with suppliers competitive and fair?

Are there any overdue payments?

How reliable are the suppliers in terms of delivery and quality?

Are there any key suppliers the restaurant is heavily dependent on?

Is there a comprehensive list of vendors (e.g., maintenance, cleaning services)?

Are service agreements in place with vendors (e.g., for equipment maintenance, pest control)?

How would you rate the performance of key vendors?

Is there a transition plan in place for working with suppliers and vendors post-acquisition?

Based on the relationships and agreements, how would you rate the overall supplier and vendor relationships?

Transition and Seller Support

Is the seller willing to stay on for a defined period to assist with the transition?

Duration of assistance:

What is the agreed-upon length of the transition period?

Has the seller agreed to provide training and onboarding for the new owner?

Will key management personnel be available during the transition?

Is there a plan for introducing the new owner to the staff?

Will the seller facilitate introductions to key suppliers and vendors?

Has the seller agreed to hand over key operational information (e.g., passwords, software access)?

Will the seller assist in transferring necessary licenses and permits?

Is there a plan to introduce the new owner to existing customers or update the restaurant's marketing to reflect the change?

Is the seller willing to sign a non-compete agreement?

Is the seller available for consultation after the transition period?

Has the seller provided all necessary financial information (e.g., financial records, tax filings, etc.)?

Has the seller agreed to transfer any intellectual property rights (e.g., trademarks, proprietary recipes)?

Based on the agreements and plans in place, how would you rate the seller's overall support for the transition?

Frequently asked questions

What makes this 125-point checklist different from standard restaurant due diligence forms?

This checklist is exceptionally comprehensive, covering eight critical evaluation areas that standard forms often overlook. We’ve included detailed sections on supplier relationships, transition planning, and proprietary recipe protection that are typically missing from basic checklists but crucial for restaurant acquisitions specifically.

What’s the most commonly overlooked section in restaurant due diligence?

Transition and seller support is frequently overlooked but critically important. The checklist helps you formalize arrangements for training periods, staff introductions, and ongoing consultation with the previous owner. All of these significantly affect your success in the critical first months of operation.

How can this checklist help negotiate a better purchase price?

By systematically documenting issues discovered during due diligence—like outdated equipment, supplier contract limitations, or compliance concerns—you create leverage for price negotiations. The checklist provides an organized way to quantify necessary investments so you can adjust your offer accordingly.

When in the restaurant acquisition process should you start using this checklist?

Begin using the checklist as soon as you have a serious interest in a property, even before making an initial offer. Early identification of potential deal-breakers saves time and resources, while complete information gathered through the checklist strengthens your negotiating position throughout the process.

This template, developed by Lumiform employees, serves as a starting point for businesses using the Lumiform platform and is intended as a hypothetical example only. It does not replace professional advice. Companies should consult qualified professionals to assess the suitability and legality of using this template in their specific workplace or jurisdiction. Lumiform is not liable for any errors or omissions in this template or for any actions taken based on its content.