How to buy a deli?

| 2 min read

More and more British consumers are now buying ethical food products. A growing number of consumers are shifting to healthier and luxury foods that have niche ingredients.

Therefore, buying a deli is a sound investment, but there is also a lot of competition from which you will have to set yourself apart. Read on to find out what it takes to buy a deli.

Should you buy a deli?

To be a successful deli owner, you will have to ensure that your stock is constantly fresh, homemade, and of high quality. You will have to spend some time sourcing good quality ingredients from the local suppliers.

Further, you will have to learn who your customers are and what interests them. The location of the business will determine which type of customers it is most likely to get. If the business is located in a tourist town, you will have to offer local products and goods that people can also take home.

You should know that building a loyal customer base will take time. However, if you buy an established business, it will be a good place to start rather than having to start from scratch.

In order to be successful, you will have to do the following:

  • Build a dynamic team – it can get quite tough to recruit, train, and keep motivated staff in the food sector. Your employees will be the face of the business. Therefore, you should have management skills to get the most out of them.
  • Manage your stock – one of the most important factors in making a deli successful is managing the stock. It is about ordering the right quantity of products. Since you will have to use them before they expire, there will be a tiny window for you to sell them. If you do not offer fresh and unique items, it is unlikely the business will stay relevant.
  • Cater to regulars – Deli customers prefer to eat healthy and fresh products. You will have to review your monthly accounts and price your products to cater to the area's social demographic.

What to look for in a business

Often delis are located in smaller towns and villages as they are specialist stores that are frequented by customers who have a high disposal income. Comparatively, in larger towns, delis are usually located in secondary retail sites and not the high streets.

Further, you should also be careful about purchasing a deli in an area mostly tourist-driven. Tourist-driven areas are seasonable and you may find yourself struggling during the offseason.

You should review the business's accounts and trading history for the last 3 to 5 years so you have a fair idea of the profit margins and turnover. You also need to take into account the time and money that will be required to put into the business when making the offer.

Due diligence

The process of due diligence is one that provides a thorough investigation into a proposed investment transaction. It means you check the investment worthiness, and assess the full claims made by the owner. This check is usually performed by a solicitor and accountant who act on behalf of the buyer. A large portion of due diligence will involve checking financial statements and accounts.

Click here to find more about due diligence.

If you buy wisely and do a thorough research of the background and potential of the business which attracts your interest, you will get immediate access to the existing base of customers and suppliers. This will ensure that you know what you are getting into.

You need a solid contract

You, as the buyer, will have to produce the sale document. This agreement will have to cover the mechanics of the deal – what is being sold, where it is, how it is to be transferred, and so on. This is where warranties come in. Click here to download a business sale agreement if you are purchasing a deli.

Warranties which are legally binding promise as facts about the business, which provide information relating to the business. Click here to know about how warranties work and why they are important.

Other documents you need

The starting point for documents are those relating to the sale and purchase – of company shares, or of business assets.

Additionally, you may need assignment and novation agreements to transfer contracts the seller is a party to.

If company shares are being sold, then you will need directors service agreements, board minutes to document approvals to changes, and possibly, a new shareholders agreement and new articles of association.

We can help you find exactly what you need for your circumstances if you contact us and ask.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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