I’ve recently been offered an opportunity to partner up with someone for a little project. The restaurant is in a food court in a pretty busy commercial center and the owner has a bit of extra space he would like to turn into a pizza making station. I’ve known him for awhile and i’ve seen him being a hard worker so i went down there and checked his idea out. Basically he proposed i get about a quarter of the total area to set up as i please, with the aim of making pizzas for the food court and delivery around the place. At the moment there’s just one or two pizza options in a huge area full of customers and employees so it sounds like a good idea.
However i’ve never been in a position before and i’m thinkin how to go about this, before we really start putting the details together. I’ll be using my own suppliers, recipes, equipment (which i will have to install), my own LLC, accountant, etc. What’s the usual way to go about putting an agreement together? Do i just offer to pay a quarter of his rent (for a quarter of the area) or some percentage of the sales? I average around 28-30% COGS for most of my products, what’s a ballpark figure for these kind of things i should propose?
Also, aside from delivery we’re thinking of serving new york style slices ready-made for customers and i’d be doing it for the first time so there’s a bit of learning for me to do here as well. Any particular type of display cases i should look out for? Do they do a good job of keeping the pizza slices fresh? For how long? Any particular changes i’d have to do to my recipe?
Any and all ideas/advice would be appreciated. Thanks
I think the thing that will deliver the best long-term results for me is to be completely ethical and fair. That’s what keeps people around, keeps relationships going and brings in new ones via reputation. I don’t want to go ahead with this and 5 months down the road realise i did a bad or one-sided deal that will have either me or the other guy wanting to pull out and cancel everything.
An attorney will look at the papers but i’m still kinda clueless as to what the best way to set up the deal would be. Kinda like when you evaluate a business, there seems to be a standard way of doing it by adding up all the assets worth and then two years’ profit on top would equal the sale price. Any thoughts welcome.
If your using a POS you can divide the sales by the products that are sold. So all the sales of pizza would be yours. Then for rent you can pay the percentage of sales. So if 20 percent of the sales were pizza related then you would pay 20 percent of the rent and all other costs.
I was saying though you really want to talk all this out with the other party just to make sure your on the same page.
In my opinion it sounds a little complicated to be able keep everything organized and accounted for.