Possible Business/Partnership Proposal

I’m looking at opening my own place but the leap is expensive. So, After reading about Papa Johns beginnings, I thought I would approach a small local bar that I’ve been to several times. It has a full kitchen and serves the obvious bar food… burgers, fish and chips, etc… and offer to provide an in store pizza shop.

I would provide the oven, purchase ingredients and, of course, make all the pizzas. They wouldn’t have any expenses at all. My question is this: What sort of partnerships or deal should I present them with? Should I offer to lease the space and pay them a flat fee? Is a percentage of sales more desirable. I couldn’t offer any numbers at this time as far as projected customers. I will say that this place is just blocks from the local university and literally in the middle of a neighborhood that is, I would guess, running about 50% students. The neighborhood consists of many homes rented to students, dedicated student housing and a large apartment complex that houses students as well as working families. Another student housing complex is being built directly across the street.

I want to present the owners with a plan that will be attractive to them and work out for me as well. Has anyone done this or have any experience doing this?

Thank You
Steve

I would make sure you have a no complete clause in whatever contract you work out. If you are a success they will pretty quickly find out they don’t need you if they already have a kitchen

Great point. I agree with you.

Sounds like you are buying a job, I’m don’t think it would be for me.

ask them to rent out the kitchen, you will take care of all the food related needs and they will take care of the bar. Have separate registers maybe even separate servers…or give a kick back to the existing servers for pushing your food. Get yourself a food delivery service and start throwing menus! Maybe even start marketing yourself as a separate business “Tony’s Pizza at Joe’s bar” so when you do take off you can drop the joe’s bar and still have a known name.

The only way I can see this flying is if the current owner isn’t making it or doesn’t like the food aspect of the bar industry. Otherwise whats the point of giving up that control.

Several thoughts: 1) I agree with tguag when he reccomends that you come up with a name that distinguishes you from the bar … like he said “XYZ Pizza @ Joe’s Bar”, so that when the “partnership” gets rocky (all partnerships do), you can keep your valuable identity for marketing purposes, 2) Get it in writing … if you need a lawyer, get one and tell him that you want a very simple and straight-forward short agreement, but whatever happens it MUST be in writing so that the arguments that later arise can be sorted out, hopefully without lawsuits, 3) you probably don’t need seperate servers or registers, since most POS systems today can be used to easily determine how much in sales are attribuatable to pizza and pizza-like products created and sold by you. You will probably want to agree to a very small subsidy for servers and food runners (maybe something like 15% of their total cost). 4) Your utility costs for running a pizza oven should be built into the agreement … seperate metering will be out of the question, so an alternative will need to be found, 5) There is no reason for you to agree to any payment of rent, real estate taxes or any other fixed or variable amounts … just agree to a percentage of your gross sales as payment for using their kitchen and providing a venue for your sales, 6) if you must use part of their kitchen crew, be sure to include payment consideration in the agreement, 7) be sure that the agreement covers your total independence in what you offer and how you price your products, along with your hours of operation, 8) I know you said you would buy an oven, but what about refrigeration for dough balls and other perishables (along with space for dry storage too) … if you need their equipment, write it in the agreement, along with what you will or will not pay, 9) include some kind of latitude for you to do delivery pizza in the agreement, even if that’s not your initial target, and 10) as you go through the negotiating process with the owner, be suree to stress that your pizza will provide a foundation for him to increse sales, with the understanding that your sales could also decrese sales of his existing food offerings … try to be fair. Good luck, and let us know how the negotiations go.

Great responses. I like the ideas.

tguag… My plan was to take over the kitchen and make the transition as painless as possible for them. I will provide EVERYTHING. They won’t need to lift a finger. I’m trying to make it as attractive to them as possible. This place is nearly dead. They only have a bartender so I would be the server.

I like the separate identity idea. It would serve me later should I decide to open another store.

The only way I can see this flying is if the current owner isn’t making it or doesn’t like the food aspect of the bar industry. Otherwise whats the point of giving up that control.

They only serve fried food and the kitchen is under utilized. It is there for the occasional order. I want to turn it into a full-time pizza factory that does eat-in, take-out, and delivery.

Piedad… A lawyer is a must for the fine points.

I already have most of the equipment and what I don’t have I can purchase easily enough. I’ve been collecting it over the years from auctions and craigs list.

I’m thinking a percentage of sales is the only way to go. I don’t know if this idea will work and a % would be a good insurance policy.

As stated above, they have no kitchen crew. Just a bartender that runs in the back and throws some frozen fish and fries in the fryer or a burger on the grill.

  1. as you go through the negotiating process with the owner, be suree to stress that your pizza will provide a foundation for him to increse sales, with the understanding that your sales could also decrese sales of his existing food offerings … try to be fair. Good luck, and let us know how the negotiations go.
    This is my selling point. They do very little in food sales and they are doing poorly in alcohol sales. This place used to be THE PLACE TO GO in the area. Now it is old and worn out. The students used to be lined up at the bar 3 deep with a full house. Now if 30 people are in there at a time they would feel lucky. Did I mention this is in the middle of student housing at the State University and the nearest pizza places that deliver are almost a mile a way. The University bought the property across the street from this bar and they are building a 4 story dorm that houses up to 400 people. I think this is a great opportunity.

The only road-block I can see is convincing the manager. All proposals go through him. The owners have had it for 30 plus years. They were a couple until the husband died about 10 years ago and now the remaining owner has little to do with the property and she, from what I understand, doesn’t like change. So, it is an uphill battle for me but I will give it my best try.

Thanks again for the replies. Some very good points to bring up and consider if I’m able to make the deal.

If you think you can do better than them, you may also want to consider buying the shop. If it currntly performing poorly, you may be able to get it cheap. But it may have risk that isnt readily visible, so be sure to do your due diligence.

Yeah, lets say you turn this place around, you might be eyeing those drink sales and thinking this guy should be giving ME a percentage. I suppose that’s a problem you’d like to have in the future…

‘Everything goes through the manager’

aka the manager is robbing the old lady blind.

my thoughts exactly!

@Steveinid that’s another thing to consider… soft drink sales make up a lot of the higher profit sales in this business. You will have to account for those lost “low food cost” items you won’t be selling.