Opportunity to buy owners second store.

Less than a year ago the owner opened a second pizza shop and I’ve been running it since. Unfortunately, it isn’t turning a profit or even breaking even for him and now he is pretty much out of capital. From our estimates we are off by about $130 a day on breaking even. So I guess he is losing about $4,000 a month ($3,900). I’m currently on salary for $48,000 a year or I guess $4,000 a month. It comes out to about $14-$15 per hour. We are doing roughly $11,500 a month in sales. At this point, he seems to just really want out. And would rather just lose the $2,200 or so a month on the lease. He said he would sell the business and the equipment to me for $25,000. So basically just the cost of the equipment. I feel like this would be a decent opportunity for me to take a chance if it were not for the biggest problem looming over my wife and I’s head. We do not like the city the store is in. In fact we more dislike it than like it. We both agree that we don’t want to raise our kids here and we would like to be out of the city within two years at the most.

I guess one of my other options could be just buying the equipment and storing it until I am ready to open my own place. And what are the possibilities of buying and working the store and then moving it in a year or two? I know that if I buy it and run it I can obviously kiss my $4,000 dollar salary good bye. The owner keeps saying I will be making money because I’ll be working it. Obviously I won’t lose as much as he is but I think I will be lucky to earn $500-$1000 by the end of the month. That is a huge pay cut. He says that the insurance and payroll taxes will be substantially less since I will be the primary employee.

I know there are many more details that probably need to be known, but that is a start. As for his other store it is doing well probably $40-$45 thousand a month. But down from the pre-recession days of $48,000 per month sales.

I also have a fun interview for a food sales rep position with Sysco later this afternoon.

Thanks in advance for your input.

Sounds to me like you’re answering your own questions Gbomb. Follow you heart…or at least where you wife tells you where you heart is leading!

Walk away with your life and savings! You are making $48k (plus employer side costs…also any benefits? Health Insurance? This store is at $150k +/- a year. You buy him out…you now have zero income. Also, how many expenses are shared between stores… advertising? Insurance? Bulk buying discounts? These are all yours now! You also HATE the town. Think how much you are going to hate it if 10 years down the road you are still there raising the kids not making any money? If the equipment is good and worth it…maybe buy it up. But your boss is looking at the $25k mark with you taking over the lease and him walking away. That price might go up a lot with the lease having to be bought out. It sounds like he really shot from the hip with this place and missed. I feel bad for him…dont make it feel bad for you too! :idea:

Gbomb…sorry but I need to point this out. Only as a pizza shop owner or manager can a $48k a year job be broken down to $14-15 an hour! Damn pizza business!!! :!:

Haha. I know right? My wishful thinking going into the new store was that it would slowly increase to $16, $17, $18… as business picked up and I was able to schedule my self maybe 2 whole days off a week!

I think the owner definitely bit off a bit more than he could chew. The store is 45 minutes away from the first store and where he lives. There could have been opportunities in better cities, ones that I would actually like to live in, just 15 minutes away. Also, he opened an unrelated restaurant just a couple months after the second pizza store opened. Pretty sure I’ll be walking away from this shop and the equipment. I can’t lie, it is kind of scary thinking about being unemployed. I’ve worked at the same business for the last 9 years. I feel bad for the few customers that were actually very loyal to us in our short time of existence.

Man, we just moved down here two weeks ago mainly because I was getting sick and tired of the commute. And too top it all off, I am actually getting married this Sat, Aug 27th.

Feeling a lot of emotions.

Congrats on getting married gbomb!

As to the restaurant…RUN! Those numbers are horrible IMO, doesn’t make sense to me. Don’t buy it just for the sake of buying it. You can find a better situation if owning a place is really what you want to do.


Why is it doing bad? What would you change?

How much is left on the lease? If it is a while, you might be able to get the business for cheaper than the 25k. It might make more sense for him to walk away than being stuck with that lease. Though If you dont have a plan to turn it around I would run

Given the fact that you have not mentioned one good reason why it may be a good deal yourself says a lot. And given you haven’t offered any reasons for the business’s lack of success, or reasons why it would have better success with you seems to suggest you don’t know.

You are asking a question based merely on a purchase price. A million dollars could be too cheap and five thousand could be too much.

“You” have been running it since the beginning and it can’t turn a profit. So, “you” as the owner changes something?

I have owned multipal pizza shops since i was 22 and now i am 28, i would not even consider buying or keeping open a pizza place that did not gross over 300k. Its just to dam much work and headache with employees to work that hard and not make good money. I have had highs and lows in my 6 years.

I owned a pizza place that did about 140k a year for 1.5 years its just not worth it trust me, i grew to hate the place and walked away and let employees run it until i pulled the plug. It was the best thing i have ever done, I took the equipment and moved it 45 miles to a new town we now the new store is on track for 700k in its second year open, the first 12 months were over 500k

Think twice about this.

LOL it took me about six years to paint the mens’ room…

At $11500 per month in sales, I’d tell your boss you’d be interested in purchasing the equipment. I understand your attachment to the business, but even if you doubled the sales there, sounds to me like you’d be working for nothing.

Annual sales as they relate to profits are somewhat relative to your area, but this statement is so true. This business is too much hard work to consider for little return.

And if you are considering buying an underperforming business, you need to know why its underperforming and what you can do to improve it.