Im thinking about buying into this franchise of a local pizza chain there are eight area locations and this is the #1 store. Looking at there numbers they are doing about $12,000 a week. The seller is asking $325,000 and i think that is a little on the high side, and i just found out i would be taking on a POS system debt of about $20,000. Any advice would be helpful. For a store doing about 12 a week worth that much?? How much should a store like that go for?? (basic pizza store carry out and delivery no dining room has the basic items pizza, wings, etc…)
Is this not the right area to ask this question? I am new to this forum.
It would be very helpful to know what the store is cash-flowing. That’s the best way to determine the value of the business. $325K might be low, high or just right…
cash flowing? (sorry i am new at this)
are you a pizza person…do you have pizza experience? why are they selling…
a lot of questions…
do you have a lot of competition?
willing to work 80 hours a week?
I have been working for this company for 7 years, slowly moved up the chain pizza maker, manager, store manager, etc… my owner is now buying the franchise and offered up the store i know how to run the buisness like a pro, just not to familiar about the numbers game and the finiances. i know about the working part of pizza just not familiar with the business end.
At 12k/week, a carry out /delivery store could be barely breaking even or it could be making 100k+ per year profit. This would depend on overhead, menu prices, # of hours per week open, franchise fees, and numerous other factors. If the store is juat breaking even, all you are doing is buying yourself a job and future “blue sky” . In that case, 50k-100k would seem to be the max that the store would be worth. If the business is netting 100k to 125k, the asking price might be a little high but still reasonable. Other factors to consider. Is the seller going to finance the majority of the purchase price? If so you may pay a slight premium. Right now is a very difficult time in the delivery/carryout market. Record cheese prices, flour nearly double previous years prices, record high energy bills, huge increases in insurance costs, minimum wage increases, and driver reimbursements increasing due to $3=$3.50/gal. gasoline have really put a squeeze on the bottom line. This really has been the perfect storm. The big three have seen same store sales slipping and they are going to advertise and discount and do whatever else is necessary to try to gain back marketshare. Yet, a well run independent will be able to ride out these rough times and enjoy some good times when the roller coaster comes back to the platform.
If you’re not familiar with that term, or with the “numbers” part of the business you’re probably not ready to make this deal on your own.
You should find a good accountant that knows the restaurant business and bring him the financials. He or she will be able to analyze them and tell you what your offering price should be.
If you know how to run the operations part of the store I think you’re in good shape. But you need somebody that understands the finance part too. The good news is that you can always outsource those functions.
Also, is your owner absentee or is he putting in a significant amount of hours at the shop?
i am going to assume that the bussiness does not make much money ,i could be wrong but when someone say this is my sales with out giving the net for owner operator!!!?
as an average for a 48 grands in sales your net should be around 15 % of the sales before debt obligations. IF every thing was inline = food cost 30%,labor including manegment 27% fixed overhead 18%(rent electric insurance etc),10% to the franchise company, you have 15% left