…it’s strange that it makes it seem as legit as signing the lease.
Got a little over 5,000 sq/ft (1K being kitchen space) as opposed to my current 1500 sq/ft that has 150 sq/ft kitchen. Amazing deal came in less than .30 sq/ft and bought the entire kitchen, small wares and dining room inventory for under $25,000 (just the chairs are easily worth 10% of that).
I’m pretty excited, we will be converting our current store into this one and then adding a full Italian menu that will use a wood fire grill. It’s only a couple blocks from our current store, so we’re still downtown, and we will be the only Italian restaurant in the town of 24,000 (plus 4,000 college students).
Pretty excited about this, it’s not something I really thought would happen, I just approached the guy who owns the building and we just clicked on so many things. The building will also house a college bar, a new bar he is putting into another part of the building and some other interesting ideas coming in, so I think he kind of needed an anchor business more than he needed to make any money off our space.
I’ll try to post updates and some pictures as we go.
Did I read That right? Did you say $ .30 sq. ft. ? If so, I hope you have a zillion year lease with no escalators in it. This could be a near perfect opportunity to expand. I was also wondering (particularly since there are gonna be two bars in the building) if you can get a liquor license, or at least beer and wine-----it really helps with the new concept. It all sounds very exciting, so I hope you will keep us posted on progress. Best of luck with it.
Less than .30 sq. ft., but only one year option (I tried to get 5), we both know that’s an insane price but it gives me a great chance to focus on growth instead of paying the bills for the first couple years. I will have a liquor license and full bar and wine menu.
New name, new domain. The old name was to pizza specific and I would like to become more of a dine in Italian Pizzeria than the mostly DelCo we have been.
So… what happens after the 2nd year? You really should have that nailed down. Even if the amount of rent is stated as “market” with an appraisal to settle any dispute, I would not move my business without some level of certainty that I would be able to stay longer than 2 years!
You make a great point bodegahwy. I would normally be hesitant to know I only had a couple years, but it’s a pretty specific situation. It’s one of those things where everything clicked perfectly and being able to buy the entire inventory for a song assured me that his plans included me for the long term, because he would have to spend a small fortune to reequip the place. I even did a preliminary inspection with the Fire Department and Code Services expecting some major problem and all they asked me to do was put up an extra emergency light and put up a small hand rail.
Brad - I had to go back and redo my math to see if I had a typo, where did you come up with that number…because I hope it’s in my lease!
Commercial lease rates are generally referred to on a annual basis. 30 cents per foot would be $1500 annually for the 5000 feet, equaling $125 per month. I would assume you are referring to your lease rate on a monthly basis at $1500 per month. That’s still an amazing rate for 5000 feet.
It’s a known fact here on the PMQ boards that it cost $350,000+ to open a sit down pizzaria. Check any of my past questions about opening a pizza place and this number always pops up. Problem is nobody ever tells me how they got their $350,000 so that is why I asked. I am $200,000 short so I must continue to save. Just trying to learn if there was a way to aquire the $350,000 in this economy. I don’t have a beach house to sell (well I do but then I would be homeless).
Freddy every situation is unique too its own. This find is not the common one…it is a dream! Everyone else want to chime in and tell how many times this plays out like it did? I am guessing one very lucky person a year if that! Freddy you want to open a full-service restaurant on Maui. What people have explained is that the biggest item people underestimate when starting in this business is the amount of money needed to open and run until a profit rolls in. Yes, there are the few that can make money and cover all expenses from day one. Then for each of those there are 1000 restaurants that do not. This is such a find you have no clue. You are looking at rents, if I remember right, of $7800 a month? Not too mention the higher buildout price at your location. You could probably open a full service for half that if you found a previous location that was “perfect” for your use. Safer too say 2/3 that for one that is so-so. And then the full $350k for a new build with enough cash to stock, open, and run. You have argued this view of startup costs before and its been stated…only you can get the real hard figures of what it will cost locally on Maui. You have a space that you like… have you met with a general contractor and building inspectors yet to discuss the layout and costs? Have you put an extensive list of purchases needed to buildout the full-service… everything from major kitchen equip to smallware to printer paper. Would you rather just have everyone say “go for it with what you have”? I was reading some old posts yesterday that all ended the same way… with someone asking “hey, has anyone heard from xyz lately?” and the next posts was someone saying… “No, they closed up last year” or something like that.
As far as investment money…everyone is just as unique as the startup costs. Friends, family, sometimes a bank… You save and invest your own and have to work to find the rest. If it were so easy to open a major investment and RISK like this is…everyone would and the so so high restaurant failure rate would be even higher. Ask yourself why there are all these open spaces for lease that are “so perfect” for your new place. Why? Because the last guy just lost everything trying to do what you are wanting too. He might end up working for you since he knows how things work! :shock:
I’ve put some thought into statements like; “You need in excess of 300K to open a sit-down pizza place”, “You will lose money for at least three years after opening”, “You have to spend (some ridiculously huge %) on advertizing”, “90% of all restaurants close within 3 years of opening - because they were “undercapitalized”.” All these statements are obviously inter-connected. They all relate to the one about losing money after you open your doors. Now, in my experience, every business me or my family has opened has MADE money from the first day. So the question is, “Why are all these businesses LOSING money for years after they open?” I think the problem is people trying (and planning) on getting rich. If you think, “I want to make $200,000 a year”, then you have dictated the annual gross of your restaurant. (Over a million). This dictates the size of your restaurant. Which dictates your overhead, and your staff to run that building. Even your food costs are dictated, as you have already locked in how much business you MUST have. Thus you are forced to advertize a ridiculous amount to bring in the business you have already budgeted for…
Want to succeed in the Pizza business? (as well as most other businesses) Don’t plan on getting rich today. Open the best/smallest/cheapest (a combination of those three things - I’ll just call them B/S/C) place you can. Don’t lease equipment (payments you MUST make) instead buy the BSC equipment you can find. Don’t hire employees, first try and do it yourself - if you have too much biz, THEN hire employees. When you open your doors, the ONLY fixed cost you should have is your rent for the building -(and you really should be BUYING that building). If and when you “outgrow” your first place, THEN you can move to something bigger and better… Everyone wants to start out an instant success. That almost never happens. You look at the Pizza Place down the road and think, “I want a place just like that, he’s making money hand over fi st”. Yeah - You do realize that shiny, line-out-the-door place is the result of 30 years of hard work, don’t you?
I think maybe you are reading my post the wrong way. I didn’t say that anybody was wrong about the $350,000 price. Perhaps you read it like I was being sarcastic? I see now that my measly $150,000 is not enough.
My question, and really continues to be where do most people come up with all that money? I ask the question but nobody ever answers it specifically how they did it. Perhaps its too personal of question?
i work and save and work and save and only have been able to come up with half of that. You can’t walk into a bank nowadays and get a loan for $300,000. And I have no rich friends or family members to borrow from. And I gotta say I am highly skeptical very many of you borrowed $100,000+ from friends or family. So I was just putting my feelers out for now others were financing their $300,000. A few years ago financing $300,000 was no problem, today forget it.
I have a feeling the United States will collapse before I save enough to open, that might be a good thing? We will probably be moving in a few years anyway. Maybe I can find someone on the mainland with a pizza place that would be willing to take a low ball offer of $200,000 for their pizza place. Probably not but maybe.
Smeagol8 you are right too a point. Like I have said a few times…every startup is unique and has to be looked at on its own merits. Yes some can open with minimal investment and not much else and have positive cash flow from day one, but others require a high investment because of the design idea they are basing their startup on. A sit-down in a small town or average strip mall might not need a large investment into the, lets call it, character of the place. Now Freddy is in a high tourism local of Maui and with rents of $7800 a month… at least in my opinion, had better be a place that makes people want to stop and eat at. There are some businesses that you can build up from not much and into something big. I have lived that one first hand. In 1985 my family borrowed, leveraged, got loans, took pop bottle back… all to get the half million needed to scrape together the property and equipment to start a new company based on a new idea. For 4 years we lived off my mothers job. My father worked a state away and did 12-15 hours a day. Came home on the weekends… sometimes. Bought used and rebuildable items and went from there. 18 years later we had an $18M production and storage facility with 300 employees and sales of +/- $65M. It took time and a lot of hard work and nobody thought get rich fast. As far as money being the number one factor in the 90% of restaurants that fail in 3 years…I would say 95% now. It is partially lack of working capital and a lot of poor money management or abuse. Inexperience and sometimes just lack of common sense. Everyone has dreams…but not everyone is of the ability to make these dreams work. Add to this the poor economy and it gets a whole lot harder. Where banks or even friends might have offered assistance 3-4 years ago…today you are on your own a lot more often. You need that extra buffer of cash to be there if you need it too be. Realizing that you need it after the fact will most likely put you into that 90-95% catagory. I do agree with the buy your building and not lease when possible…but that only happens in less than I would guess 3-5% of restaurant startups. You want to be in a high traffic area and hopefully a desireable area where people want too go. Those places are usually already built up and if not your startup cost just sky-rocketed. :shock:
Don’t get stuck on one type of business or model. When you notice a cracked door, kick it open.
Five years ago, I bought my first house for no money down, took out an extra $5K construction loan and busted my ass for a year with my retired contractor father and ended up with $30K in equity for my efforts.
3 years ago I took over my pizzeria by buying on contract from the owner for the exact terms of what was remaining on his loans. He lived 2,000 miles away and was losing his shorts on the business.
This Spring we assumed the loan on the only bed and breakfast in town (4 blocks from my store) that was about to go into foreclosure. The previous owners had divorced, both moved out of state and were way behind on payments. Our down payment was our tax return this year and $1,000 from savings. It came with another house next door, so we are now renting out our first home for twice what our mortgage is there and have no mortgage payment on our new home.
My new restaurant was a cracked door. I made an offer that was low, but I have to assume my other building will be vacant. He still had an equipment loan from when he was running it and let me assume that on contract instead of dealing with trying to auction it all off. I hope nobody faints when I say this, but that rent price includes $1K in utilities allowance a month.
I never dreamed of owning a pizzeria, a bed and breakfast or an Italian restaurant, but those are the opportunities I’ve dug up. I love business and I LOVE building and creating businesses, so I’ve found a way to make my passions fit with my opportunities.
Perfect example Freddy. There is no “number” that you need to open a place. Its a good answer to “how much money do I need in my pocket to open a sit-down pizzaria” but “how” you go about it is completely different. Think outside the box. Be creative in your thinking and don’t be afraid to approach people with your business proposals – no matter how crazy because you never know. If anything, you will gain valuable experience from the discussion.
I’ve seen many people literally laughed at or verbally assaulted for presenting ridiculas offers only to be called back a few months later with acceptance. You have to have a curious mind in business. i.e. how did this guy do it, how does that business work, how did he get that deal???
The point is, you have to go around having these discussions with people.
I would venture to say, if you really have $175,000 in cash you are in a better position than most of us here were when we started out. I would also tend to say, you make better financial decisions when starting out with less rather than more money.