New location purchase price

I have been given the opportunity to purchase another Padrone’s that is not doing so well. The only problem is the price they are asking is not backed by any factual reports or data. I can not discuss the asking price but I am wondering what you guys would consider a far price for this pizza parlor. It is in a town of 24,000 people. They have a small dinning room and also serve locally made ice cream in the summer months. They do not own the building and have been open for 11 years. The equipment is in rough to fair shape. The only numbers I have is that their monthly sales are 18-22K including the ice cream and their profit margin is around 4%. What do you guys think? My current store was in the same state and I got it for 50K plus current food inventory at time of sale.

Sounds to me like you already have a pretty good handle on the value. PM me if interested in some detailed feedback. What I do for a living (besides owning a pizza store for the last 17 years) is business brokerage and appraisal:

I am the fifth guy down the list.

Sounds like you already answered your question.

Don’t pay a fools tax!

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I sold my 2nd store about 8 months ago for just under 3 times my profit from it, not including my salary. It was a busy store with decent margins. My reason for selling it? It was killing me to run two stores. 8 months later I realize that despite that store being pretty profitable, by focusing my efforts on store number one since the sale, my profit at store number one has increased such that my overall income is not much different than it was with both stores but my quality of life is so much better. Are you sure you want double the responsibility and double the headaches for just a small increase in profit?

well In my mind that business has no value. Your basically paying for opportunity cost really. And thats a number that is up to you really. Whatever you feel the equipment and build out is worth and potential you see with you in charge.

I would low ball the crap out of them with those numbers. I promise on paper it does not look good

The issue I have is that the other store owners that want to sell me their store are basing their price off of what I did to my current store. I took a store that was loosing money every month to making 18-22% profit a month in just 8 short months. I just would rather buy these stores now instead of waiting until they are so bad off that they shut their doors but at the same time I don’t want to pay 2x the value just because I know I can turn it around.

Yea no kidding. I hate people like that. Its worth what it does today. Not what you can make it do

Im trying to buy the building that my wifes shop is in, its 9000 feet and theres me a 1 other guy and 5500 empty feet. They are asking what its worth if it was full. Well its never been full, and the wonder why it won’t sell. They want 1.7mil when its worth maybe 1.2 right now

Why should THEY get paid for what YOU do? That is absurd. What they have for sale is equipment that is already installed… and that is it. Tell them to get a bid from an equipment broker to buy all the equipment and that you will pay a premium above that. On top of that you take them out of the lease. Good deal for them.

A store that does 250K per year and makes 10K has zero enterprise value.

Just give them a written offer of what it’s worth to you and put an expiration date on the offer. Works for me every time. See what happens, but don’t overpay for something that needs a ton of work and repair. That’s fucking silly!

Good News! We have come to an agreement on price and we are moving forward with the purchase!