30-Point Due Diligence Checklist for Restaurant Acquisitions

Financials (10 items). Three years of federal and state tax returns; three years of monthly P&Ls reconciled to those returns; current AR and AP aging; quarterly sales tax filings; payroll registers including any 1099 contractors; merchant processor statements (Square, Toast, Clover); third-party delivery statements (DoorDash, Uber Eats, Grubhub); 12 months of bank statements; vendor invoices for the top 10 suppliers; current inventory count with cost basis.

Legal and licensing (8 items). The full lease and any amendments — confirm the assignment clause, percentage rent, CAM, and remaining option terms; current liquor license and any pending complaints; DOH inspection history for the last three years (publicly searchable); fire and FDNY records; sidewalk café permit if applicable; certificate of occupancy matching the restaurant use; pending lawsuits or workers' comp claims; any ABC violations.

Operational (7 items). Equipment list with age, model, and service contracts; hood cleaning records (most leases require quarterly); walk-in cooler and freezer inspection; HVAC service history; pest control contract; current POS contract and any data export rights; key vendor relationships including any volume rebates that do not transfer.

People (5 items). Staff roster with tenure, role, and pay rate; immigration status disclosure under a confidentiality agreement (this matters more than buyers expect); whether key staff have signed letters of intent to stay; any non-compete or non-solicitation clauses; the chef's recipes — confirm they transfer in the asset purchase agreement.

Red flags that should re-open price negotiation: declining covers over the last 12 months that cannot be explained by a temporary closure, a lease with under five years remaining and no option, deferred maintenance over $50K, recipes that exist only in the owner's head, or a cash-sales gap above 15% of reported revenue.