I’ve been lurking on here for a few weeks trying to soak it all in. I’m looking to move out of the corporate would and into restauranting. Pizza and wings are my style.
I’m looking at purchasing an existing delco, and am waiting for full financials. Business is listed with broker. What I do have it them saying the place averages about 8k a week and rent is 1700 per month. Currently has 2 full time and 6 part time employees.
My question, with just eye balling those numbers can this place be profitable and worthwhile all things considered?
Opportunity with this particular store is the fact other than a mailing every blue moon it does absolutely no other marketing. (I have a marketing degree) No Website, not even a simple facebook page. Competition is certainly here with with the national brands and other locals. (I’ve tried them all and never been impressed with any of the locals pizza or wings)
My plan would be to run the business as is while preparing a major rebranding effort.
Thanks for your time, I sure do appreciate it and respect it.
IMHBCO…don’t run it as is, run it as it should be, right from the gate…as an owner/operator, you can be quick on yer feet to make any change as needed…sales are a little weak tho…minimum goal is $450K/yr…
Hi Jason:
You do not indicate how old the shop is.
Note everything will have to be brought up to the current code before you can occupy.
Have the Building, Health department and fire Marshall do an inspection to see what, if anything will have to be done.
I suggest that you ask for a copy of their lease, and then review it with someone (a commercial rental agent) who is familiar with area commercial properties. Several questions will be answered by the lease, like when it expires (could they demand that you vacate then), does it include extension provisions, what are the rental escalators if any, can you walk away to sign a new and cheaper lease at a different location. It’s also important to consider the value of the current location relative to it’s proximity to the delivery area targeted, it’s storefront value, if any, etc.
I too encourage you to immediately implement your new marketing strategies upon taking over (if you indeed get to the settlement table). I hope that your strategy model includes the possibility for a name change … that’s not a major consideration if they already have a good product and a good name in the community.
If they only have 2 FT and 6PT employees I do not see how they are doing 10.5K per week (or even 8K for that matter). Is this an active owner who is not counting themselves in that figure? At that sales levels, being a DELCO, they should be scheduling 290-330 hours per week.
FTx2 = 80
PT(25)x6=150
Total 230 hours + an owner/operator MIGHT be accurate. Although I always like to have MORE staff that I actually need. Make them hungry to want more hours, don’t have JUST ENOUGH people so that every shift is covered. What happens when there is a call off? Sick? Quit? Then you are scrambling trying to find coverage.
I guess just pay close attention to this. Either they are WAY over stating their sales, or they are running too lean of a crew leading to bad customer service.
I was thinking that the # of employees was too small for that volume also. You may want to ask to see receipts for food purchased. You can work backwards fro m the amount of cheese and flour purchased to approximate volume and also overall food costs. Invoices from their main suppliers should support the claimed volume sold.
The simple answer is yes. Even at the 8K per week, depending on pricing, rent, labor etc, it should be possible for an owner to make 70-100K out of that sales volume… assuming the owner works 50 hours a week. Costs or a low price environment could blow that statement out of the water though.
[SIZE=4]bodegahwy[/SIZE] nailed it. If you’re in a low cost ($5 all you can eat area), FORGET about it. If you’re able to charge a fair price, $10 or more, you’ll have a chance.