2nd location for DELCO...what do you guys say?

So I have an opportunity to open a 2nd delivery carryout location, here are the details:

Asking rent - $3400 for 1300sf
1 mile radius - (households/population) - 4,212 / 11,337
3 mile radius - 22,211 / 58,518
5 mile radius - 50,207 / 132,506

Pizzerias within 3 mile radius -
PH - over $1m annual sales at this branch
PJ - over $1m
DM - over $1m
Round table pizza restaurant - over $1m
Independant - less than $500k
5 mile radius -
Godfathers - over $500k
Little Caesers - over $500k

With this information, do you think it’s worth taking this place? Comes with new convection oven, walk in cooler, freezer, 3 comp sink, as it used to be a pizza shop with really high priced pizza relative to this neighborhood which closed down. With this population within a 3 mile target radius, do you think we’ll be able to pull in $35k in sales within 3 months with marketing consisting of doorhanging, direct mail menus, road signs on busy road (in front of restaurant) etc. I think the rent seems to be high for this location, as I’m paying a third less than this at a much more prime location with a 3 mile population 3 time as dense.

Thanks for the input!

One thing to consider is how close is it to your other operation? Is your name known in this town? You are going up against some stiff competition that have huge advertising budgets. Just something to think about.

Its about 40 miles away from my first location. I live in this town, and mostly see the big 3 delivering all the time. I’ve never seen a single doorhanger on my door, as I’ve been living right up the street from this location for the last 7 years. That’s why I’m trying to think of what to do, surrounded by the big chains with big advertising budgets

I have to admit, it would be something I would have a good look at. If there is 5M in pizza sales in the neighborhood, I do not have be a rock star to get 500K!

Right now it is a tenant’s market EVERYWHERE and the LL just had a pizzaria fail on him. Are you working with a commercial broker on the lease? (Working as YOUR broker not the LL’s)

In your shoes I would be very tempted to come back to the LL with a much lower offer on the rent. Not that that rent is a problem if you can do 500K or better in sales.

Get professional help on the lease. It is one of the areas that so many small businesses screw up on. Think about it: with typical rent increases, this lease is a contract to pay a HALF MILLION dollars over the next ten years… it is worth paying close attention!

(BTW, yes I own a pizza shop, 12 years now, but my profession is busines brokerage and commercial property sales and leasing… so I am a little biased)

I like that it is “plug and chug” with equipment in place and already built out as a pizzeria (thanks previous tenant!). I’m a big fan of turnkey. Just keep in mind that often an old reputation can attach itself to a location and require some time to shake.

How does the amount they are asking compare per sq ft to other locations around the area? Is the lease that expensive because the equipment is somehow rolled into the price or is that just the going rate for the town?

Minus the rent i say go for it.

my question is if dominos is doing 1m in sales and we are going to hit iver 400k our first year open how can you project your sales over the next few years? or is it a crap shoot.

this is the situation that i am in

I did some research and the rent for retail for similar types of units are anywhere from $12/sf to $28/sf. They are asking $25sf + $6 NNN. No wonder the other 2 pizzerias here went under. We just opened up our first DELCO this month, so I don’t want to take a too large of a risk right now, being starters in this industry. I’m thinking about offering about 1/2 to 3/4 of their asking rent, along with free rent/half rent etc. I want to go for it, but don’t want to make a decision I’ll be sorry for, being new in the pizza game.

yea thats alot of rent

We pay 825 for 2200 Feet no NNN

and my other store is 1600 a month for 850 feet no NNN