Is it wort it?

Pizza Shop Talk The Think Tank
1

Hello everyone, I am looking at purchasing an existing business, the pizzeria has been open for over 2 years now
and basicly just pays the bills with not much profit, if any at all ,at the end of each month. The current owner has many
holes in his business practices ex:no delivery, opens 6 days a week, closes at 9, as well as a sub par product.

What I would like to ask all of you is what is this busines worth? He is asking 68 thousand (Canadian) for the business
which in my opinion has an equipment value of about 16 thousand outside of fixtures and leasehold improvements that he couldn’t take with him anyways if he were to close tommorrow. However, if you were to factor in the fixture and
leasehold improvments the value is there.

The location is good, the demographics are good, I know there are no gurantees in this economy but it seems to have potential if done right .

My concerns are 1st The price, what is it worth? Considering he might be at his end. Is 45 Too much?
2nd Buying a failing shop, could it be turned around in a reasonable amount of time, or is there too much baggage?
3nd The economy, not that this particular area has been hit hard, but in general is it a good time to open?

Thanks everyone.

2

Only you can really determine a lot of this:

local economy
demographics for what “you” want to do
how desperate he is

68k is a great price to pay to open a business “if” it is a location that your truly believe in. I would not suggest buying an existing location just because of the asking price. It has to be a location that you would want to invest in yourself if you had the money (don’t know what your worth is). A good roi does not necessarily equal a good investment.

Figure if you go in and improve things, the low in sales are what they are now (what the current owner is doing). Then figure what you think is a reasonable sales level you can pump it up to. The sales level you can bring it to may be a good roi but not worth your time.

From what you said, I would gather the existing business has no “good will” and so the thing to do is to just recreate the concept under a new name with no mention of the previous business. You don’t have to do anything real expensive to recreate the image. Most of the time simply creating a new color scheme works.