Growth & investment
Hospitality due diligence for investors
Hospitality due diligence: test earnings durability, leadership dependency, site obligations and the operating priorities after an acquisition.
Who we advise · Investors & Developers
Hospitality investment decisions, examined from the operating side.
Hospitality operating advisory tests the business assumptions behind an investment and the decisions that follow it. Leviathan advises investors and developers on operating due diligence, acquisition priorities, portfolio performance and food and beverage programming.
Let’s chat.
Terras · Photography by Josh Cherner · Credits
Who this is for
Private equity · Family offices · Lenders · Real estate developers with food and beverage space
Our home market is South Florida, with experience developing, launching and advising hospitality concepts across North America.
Before the investment
Test the business behind the investment.
Test the guest proposition, operating assumptions and management capability behind the investment. Review the site, lease and physical plant with the specialists responsible for financial and legal diligence.
Use Research & Feasibility to examine the operating assumptions alongside specialist diligence.
Explore before the investment services
- Market and competitive research
- Who the guests are, what they choose today and where the market opportunity lies.
- Feasibility and financial underwriting
- Review a model built from seats, turns, check average and labor, tested against a downside case.
- Capital strategy
- How much the project needs, and the trade-offs between debt, partners and outside investors.
- Operational due diligence
- For buyers and investors: what the business earns and what that depends on.
- Concept development
- The occasion, the guest, the price point and the reason to pick you over the place next door.
- Real estate strategy
- Neighborhoods and sites judged against the concept and the numbers, and lease terms reviewed alongside your attorney.
- Management team assessment
- Assess leadership capability and the operating responsibilities that depend on a founder or key manager.
- Physical plant and capital needs review
- Review the equipment and property constraints that could change the investment case.
After the acquisition
Give the new ownership a clear operating agenda.
Set priorities before closing and clarify who owns each decision. Guide leadership through the reporting, organizational and performance changes the business needs first.
Our Stabilization advice helps leadership distinguish immediate priorities from longer-term changes.
Explore after the acquisition services
- Organizational design
- Roles, reporting lines and pay structure for the opening team.
- Tech stack advisory
- POS, reservations, payroll, scheduling, inventory and accounting chosen to work together, and reviewed as the business changes.
- Executive and general manager search
- Sourcing, screening and interviews through to an accepted offer.
- First 100 days plan
- Set operating priorities, decision owners and review points before the transaction closes.
- Reporting cadence
- Establish comparable operating reports and a review rhythm across the portfolio.
- Profit plan
- Prioritize improvements from the operating evidence, with ownership and management aligned on the sequence.
Across the portfolio
Understand performance across the portfolio.
Review comparable operating evidence across the businesses. Assess leadership depth, guest experience and readiness for expansion or an eventual sale.
Use Growth & Expansion advice to assess whether the model is ready for another investment.
Explore across the portfolio services
- Fractional COO or head of food and beverage
- Senior operating direction and oversight for ownership and leadership teams.
- Monthly P&L review
- What moved, why it moved and what to do next.
- Mystery diner program
- Unannounced visits scored against your standards, with a report managers can act on.
- Expansion readiness review
- Whether unit economics, leadership and systems can carry a second location.
- Sale and exit preparation
- The business put in order before a buyer looks at it.
For the property
Make food and beverage fit the property.
Define the role of food and beverage in a real estate project. Review programming, operator candidates and deal structures with the property team and counsel.
Start with Concept & Positioning before choosing an operator or committing to a layout.
Explore for the property services
- Operator selection and deal structure
- Compare self-operation, a lease, a management agreement or a license with operating assumptions and counsel in view.
- Property food and beverage programming
- Define the role of hospitality space in the property and assess the operator and deal structure with counsel.
Related insights
Questions worth working through.
Financial performance
Build a useful restaurant financial model
How should a restaurant financial model work? Connect guest demand, menu contribution and labor schedules to break-even and cash needs.
Growth & investment
Is your restaurant ready for a second location?
Before signing another lease, assess whether the restaurant’s economics, leadership, training and supply can support another location.
Common questions
Before you get in touch.
What does an operating due diligence review examine?
An operating due diligence review tests the assumptions a hospitality investment depends on. We examine the concept, market and management capability alongside the site and physical plant. The findings help an investor understand operating dependencies and capital priorities, complementing the legal, accounting and other specialist diligence carried out before the investment decision.
Can you advise after an acquisition closes?
Yes. We guide owners and leadership teams through the operating priorities that follow an acquisition. That can include organizational design, reporting and the profit plan, as well as technology decisions. Leviathan also runs leadership searches when required. The aim is to establish clear responsibilities and a review cadence for the changes the business needs.
Do you review businesses across a hospitality portfolio?
Yes. We review operating performance, leadership needs and guest experience across a portfolio. Comparable reporting helps distinguish an issue within one business from a pattern that needs wider attention. We also advise on expansion readiness and preparation for a sale, using the operating evidence available rather than assuming that the same intervention fits every location.
How do you support developers with food and beverage space?
We help developers define what food and beverage should contribute to a property and what operating model can support that role. The work can include programming, operator selection and review of proposed deal structures. We bring the operating perspective to discussions with the property team, prospective operators and the attorney responsible for the agreement.
Start a conversation
What does the investment depend on operationally?
Tell us about the acquisition, portfolio or property decision you are evaluating.
Let’s chat.