How to buy a tea room?

| 1 min read

Tea is one of the most popular hot beverages in Britain and tea rooms are seeing a surge in popularity. This is our guide to help you buy one to ensure that the process is smooth and stress-free.

Overview of the sector

The cafe culture in the UK has been an ever-growing market. However, due to more number of cafes and coffee shops, it is a competitive market.

Tea rooms, on the other hand, offer something more unique, personalised, upmarket and more luxurious.

Should you buy a tea room

When one thinks about tea room, they think about a bright airy open space filled with flowers and bunting. However, it is not as simple as one might think. It is similar to other catering business. The hours will be long. The busiest time will be lunchtime and 4 pm which are the traditional afternoon tea slots.

Further, you must have excellent social skills to get return customers. As compared to cafes and coffee shops, successful tea rooms have to provide a service and experience which customers cannot get at cafes.

Your customer base will mostly be tourist and party groups. Additionally, tea rooms are popular for celebratory activity, birthdays, and reunions. You need to cater to the needs of such customers.

Additionally, modern tea rooms have to be imaginative and offer additional services and products. You will have to come up with a bright idea to make your tea room unique and relevant.

It is a very hands-on business and you need to commit to physically being at the business before it opens and stay back after it closes.

Finding the right business

If you buy an established tea room, it will help you avoid the difficulties of launching from scratch. While looking for the right business, you should look for a business that has a solid customer base, great reputation and room for reinvention and improvement.

It will be greatly beneficial if you research the nearby competition. Firstly, you want to make sure that there is a market for your tea room. Further, by visiting the competitors you will learn from their shortcomings and replicate feature which work well.

The location of the business is of the most importance. You need the business to be located in a busy area so that it gets enough footfall to make your business more profitable. If the location isn't right, you won't stand a chance to be successful in this sector.

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 tea room.

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.

Last but not the least, you also need to be aware of the legal considerations on the purchase or sale of a business.

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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