Restaurant financial due diligence tests whether reported earnings are supported by consistent records. Before valuing a restaurant for sale, request source documents for comparable periods and have an accountant investigate material differences.
Reconcile revenue and expenses
Compare financial statements with tax filings, point-of-sale reports, bank deposits, delivery summaries, sales-tax returns and invoices. Review payroll, supplier costs, rent, utilities, insurance, repairs and owner compensation. Investigate cash sales, voids, refunds, discounts, related-party payments and unusual one-time entries rather than accepting an adjusted number without support.
Test working capital and obligations
Review inventory counts, accounts receivable and payable, gift cards, deposits, taxes payable, loans and equipment financing. Ask what is included in the sale and which liabilities remain with the seller. Compare monthly performance across seasons and identify upcoming repairs or staffing changes that could affect cash needs.
Build an independent view
Separate verified historical results from forecasts and assumptions. Document each adjustment, its evidence and whether it is likely to continue after closing. Use findings to shape questions, financing and offer conditions—not as a promise of future profit. Our restaurant buying guide places the financial review alongside legal and operational checks.
This article is general information, not accounting or investment advice.