I really am guys! However I am bit new to this “owning a business” thing. I am 25 and as of now my entire income is from poker and roomies that pay me rent. I’ve come to find out that a local pizza shop that I used to work for (i was a delivery guy) is going to be up for sale. The reason is because the owners wife is relocating for school (medical school) and they have to move. The reason I want to buy is because I like investing, and I love pizza, and I do have some experience in the industry.
Now here are the numbers
Customer base has been around for a decade…also in with the local schools…basically this isnt a start up…it’s an established place (not a franchise)
monthly sales =24k
monthly rent/utlities= 2800 (it is not dine in)
labor costs usually kept at 22%
cost of food per month = 8kish.
(feel free to add in any other costs I may be forgetting, which Im sure I am)
That leaves around 8kish in profit a month leftover. (unless I am forgetting other costs)
You might be thinking “OK SO WHAT”
Basically I want to know what you would value this business at? What would you pay for a business that has been profitable for nearly a decade?
Assume the sale price would include the ovens/ walk in, etc…store is in working order…(double deck oven, a big walk in, a make line with cold air fridge like thingys under, and another line where the toppings are stored)
Also, do you guys have some tips for me? Should I not even worry about the headache that will ensue due to the stresses of running a business? Is this worth my time? (my hourly from poker is around 80/hour) Should I open it and hire a manager to do most of the in store stuff or do I need to be there? (i prefer to not be there since I have many friends that run pizza joints well and I’d rather be sitting at home watching the braves play.)
Actually, any advice would help since I’m quite ignorant on the nuances of owning your own biz…thanks
There are better places to invest money than buying your own store. There is a TON more that goes into running a shop than just hiring a manager and letting him run it.
If you really have your heart set on investing in pizza find a place that is already established and has a solid crew in place including management that maybe needs an investment partner to make some improvements.
And im not sure what “taste my sausage” is supposed to be but if its a store name then you are definitely barking up the wrong tree.
There are LOTS more expense categories, including, but certainly not limited to, sales taxes, insurance,licenses, FICA contributions, trash removal, hood cleaning, repairs, advertising, Murphy’s Law, etc. etc. And, if your gonna be absentee management, expect both gross and net profit margins to suffer.
Now, the most important question is : How do I play pocket Jacks in middle position, while short-stacked ??
tournament or cash game? if I’m over 20bb deep, I make a normal size raise, if I’m like really short or something (12 bb or less) I open shove.
thanks for the info, i mean i dunno if id be an absentee manager or not, I mean, I have lots of free time you know so it wouldnt be a HUGE deal for me to show up and get nasty. You make good points about cost of repairs and stuff. In other news, I just ran out of toilet paper and it SUCKS!
Hey dude, regarding your points about other investments, I agree, and I am invested in almost every asset class, but this is just an idea that I think, in the long run, would be a AWESOME stream of income, I think my fundamental error is thinking that this is a passive investment when it is really more of an active investment, it sounds like there is a lot more work than I am prepared to do?
Regarding your point about established pizza…it is very established and already has a crew in place.
Well my line of thinking is this…it wouldnt be a “living,” like I would still grind out poker and just have the pizza thing on the size as a stream of income, maybe I should invest in a cloning machine and clone myself so I can do both?
My main argument is this…even if I can grind a 60k profit in one year at the pizza place, and say I pay 150k for the business, then that means that after 2.5 years, the investment is paid for and it’s all gravy after that…right? am i missing something?..I probably am
If you don’t go all in bro, you might have to fold. Pizza is a horrible investment right now. Gas and food prices are at an all time high, which means you get hit on both ends…your costs and your sales due to an increase in expendable cash with your customer base. Pizza seems easy, but could not be more competitive. You can’t go half ass, it will take all of you. As previous poster said, find a successfully running business that is looking to grow and invest in that as a silent partner. Make the terms work for you and count your cash. Less risk than a pizza shop, that you may or may not want to work in.
You’re purchasing a low paying, active job. Honestly, this economy and the changes people have made in what they spend money on is not good. The sales volume you put out there is seriously low and you are over thinking your gain, big time. It might be interesting for to you to grab a few buds, go to the shop, order some stuff and sit there and observe over a game of poker for a few hours.
What are they asking? You threw out 150K…RUN.
What’s your opinion of pokerstars?
thanks for the info, pokerstars has one of the biggest player networks out there, which means a higher concentration of bad players, but that also means more good players, but on an aggregate level, the site has lots of fish, pokerstars rewards program sucks because you cant get rak back until you have generated x dollars worth of rake, most other sites provide rakeback instantly, without generating any rake. However, once you generate the amount of rake, you begin to earn more rakeback than competing sites (full tilt)
Personally I play on the cereus network which is comprised of Absolute Poker, Ultimate Bet, and Victory Poker…I’ve been doing poker full time for 5 years and 3 of those years on the Cereus network…no complaints so far.
Thanks. Excellent input. After I sold my place with a vision of the economy, I had some time off with poker and like you, I have a talent. However, not so high paying because sitting still for that amount of time will drive someone that moves all the time …BONKERS!
The plan you propose is an eventual possibility, but low volume means high involvement. I run a shop with the low volume issue, and it is a grind daily. To realize profits, it will take active participation by ownership on a daily basis doing marketing, customer development, networking, business assessment and development of growth plans, marketing, networking, personal skills development and training, negotiating with vendors, trouble-shooting and improving physical site, networking, economic planning with any managers, networking. The greater the volume, cash flow and stability, then the more delegation of these tasks to managers is possible. You’ll need big dollars to attract a professional, reliable, effective general manager who can do all the management tasks and supervise the entire operation. Otherwise, you may find the back office tasks more than you bargained for.
If you are up for a daily occupation, then owning a small independent pizzeria is definitely a challenge for the taking.
I would go so far as to say that a store doing less than 300K can not make a profit for a non-operating owner. At that sales level, if you come in as the owner/manager and work 50 hours a week, you have a decent shot at making 50K.
If the current owner can prove both sales (use the numbers from his monthly sales tax reports for the last few years) and seller’s cash flow (use the income tax returns) and the cash flow is 50K on 300K revenue I could understand 150K as an asking price, but a more likely selling price based on that performance is 100K assuming all the equipment is is reasonably solid condition.
What I think you will find is that the sellers make more like 30-40K on that sales unless they are both working there and there is a second wage stream going to the owners. Most pizza stores like the one you describe sell for less than 100K if they sell at all. More often the owner sells the equipment for 20K or walks away from it.
Less than 300K revenue is tough unless you own the building free and clear. (or have rent under 1K)
thanks a lot man, I think for this to be worth my time I should pay not a penny over 70k, especially if I am going to be a passive owner, I doubt he will sell it for 70k however if he CAN get 125k+ from someone who wants to be there and work 40+ hours a week.
I respectfully, disagree. I think that to pay for a job is wrong, which I am sure is NOT your situation but I honestly believe, that investing in a pizzeria in this economy is not for most. You and your wife are unique, as others here are. But, we are hearing low and understated numbers and the only way out of that is the reaction of spending. Investment in any aspect of the restaurant business is sketchy, at best.