unsecured loans...is this shop worth it???

Has anyone gone this route to gain financing? Pit falls? Suggestions on one over another? Companies to avoid? Shop I’m looking into does $3000/wk open only 5 days a week, 2 employees, 1 full (girl friend) 1pt (owner), del fri/sat. P&L shows net of 5%. COG high @ 38%, rent is low @ 800…7 years left on lease…small town of 2500…only shop in town.
Asking 90K, think can get for 80K, but still seams like alot. My plan is to have wife and son (21) run it; he has pizza making and some dough making experience. Wife has sub shop experience. I will continue current job and run books and help out with del at night and weekends. I know we are crazy, but I think with all your help from this site I know how to market and build this shop to 4000/wk and reduce COG to 30-33%.
Should I take this risk with unsecured loan? Thanks so much.

[size=7]NO![/size] you should not take the risk. Let’s assume profits and cashflow are identical in the scenario below. I’d like you to look at some numbers:

Net Sales : $3,000/wk

Profits : $600/wk (I’m being VERY generous by saying this place generates 20% profit)

Annual Profits : $31,200

Buyout formula : (2 x cashflow) $62,400

In this scenario the proposed store is worth only $62,400. Please read the following posts…


after you read these topics, a fellow poster by the name of Pazzo Di Pizza just came up with a cataloging system. Please read the ones under the heading: BUYING AN EXISTING PIZZERIA. Here’s the link for this:



-J_r0kk…thanks, I felt the price was too high…let me give you a little past history on the place. FHM.

Current owner there for 11 months, issues with him and girl friend…hours and COG…seams she want to buy top$$ goods no matter what…
Looks like if I were to improve hours (reliablility for customers) and hire a couple drivers, I should get up to 4-5000k/week. Talked with previous owner, he owned for 10 years, then got sick. He said he had it at about 4800/wk year after year. He showed me his 03-04 and 05 returns and P&L, they support what he’s saying. He was doing this using dough balls, my son can make dough and his current boss 25 miles away is teaching him now (friend of family).
If I can get for 70K with past owners track record, is it worth it? Still would have to do unsecured loan for a portion. I have 20%, but little to no Collateral, credit is good. Town is growing, but only about 1-2 % per year. Son and wife really want to go forward, but I’m not sure this is the one. Pizza shop in this location for 26 years, current owner is 3 or 4th. I’ve read most all the information Pazzo di Pizza has listed over the last several months while thinking about this. I have about 30 hours into my business plan, majority on marketing, but I am SCARED! I will continue to look, maybe I need to find a bigger town! Thanks.

I am absolutely certain you can buy this place for $80,000 . . . I’d sell you MY place for $80,000, and we do more sales with better percentages!

Not no, but [size=5]H#LL NO!![/size] I would like to know a lot more about your market before saying too much about business growth potential: what town, number of households, other foodservice competition within 3 and 5 miles, proximity to nearby towns and cities, as well as population concentrations like apartments, colleges, large commercial places for lunch traffic, etc.

We operate a pizza place in Grantville, GA, with rough household count in
our zip code of 1600. If I do some math, on market potential, I get

1600 households X $17.85 per month = $28,560 monthly potential sales
$28,560 / 4 weeks = $7,140 potential weekly sales

We had same rent as you, and 7 employees on peak weekend shifts.

After three years of working hard to build our brand and reputations, we were hitting about $4,000 average weekly sales with ZERO, NONE, pizza competition in town (relocating our place around corner). Only competition is one mexican cafe place that doesn’t do same sales as I did. That means we are drawing in about 56% of theoretical potential market. Our demographics actually shrink the potential, and there are NO aprtments, colleges, businesses, etc. to draw from for business. It is all just getting people from their homes.

With hard work, deep capitalization, and a stong business plan, you can make a small community pizzeria work out. You take satisfaction from the intangibles since the money will be short for a looooong time.

We overpaid large when we bought the place doing reported $2200 to $2400 weekly sales. Purchase price: $27,500. All coolers/freezers failed and were replaced within 12 months, all their recipes and menues were ditched pretty quick, and we built our reputation in spite of theirs. Paying $70,000 is almost a frog-choking overpayment. We might be able to talk somone into paying $65,000 for our shop with a strong community presence throughout the county, and lots of customer goodwill, plus newer equipment.

Unsecured means lousy interest rate usually. You can get this for a much, much better price, or you should walk. Don’t make an offer on yesterday’s glories of a pizza guy who hasn’t run the place for a year.

PS If you do find a way to get an unsecured loan for $80,000 to buy this shop, you GOTTA promise to give us a blow by blow of how you pull the rabbit out of the hat. We need it for our FAQ page. Getting that kind of money for a restaurant venture is going to be more than a small challenge, with no documentable restaurant management record and no collateral. 6 months liquid assets in reserves will help a lot, but many have asked here how to get it done.

SBA guaranteed our loan, and we still had to have a lien on our house to get the $35,000 loan to open our store. We have a three year record of success and growth, and the best we can borrow today is still only $15,000 from a bank. I have an above average credit rating, $100,00 in credit card limits and a sweet mortgage rate on the house. $15K is it, given the tiny market, the risk of businesses and the lack of stockpiled liquid assets as collateral.

FHP writes:

If I can get for 70K with past owners track record, is it worth it?

I’m going to ask you a rhetorical question and I really want you to think long and hard about this:

Why would you pay “owner C” $70k for the work “owner B” did 4 years ago?

It simply doesn’t match up. This is business and sometimes you’ve got to make smart business decisions. You’ve got to be firm with “owner C” and pay what the store is worth now… not what it was worth 4 years ago. If you want this process to be fair you get 3 years worth of P&L’s and see how much this store generates per year in cash flow. You offer 2x’s the annual cashflow and no more… period. Anything more would be like p…ing into the wind. In all honesty, this deal seems to have $20k written all over it. What’s the $20k for? The price of the equipment. I’ll tell you a little something about pizzaland and I don’t want to insult anybody who’s doing this kind of volume because I’m sure you’ll agree with me: $3k/week isn’t really that much. Actually, it’s on the low end of low volume.

Why not use the funds to build a new store? All you need is a location that was once a restaurant and a landlord who will help pay for the buildout. Find that combination and you can get into the place for under $50k. That, to me, seems like a wiser choice. I’m doing one right now and getting into it for $56k. That number is with over $9k worth of signage.

You’re making a good decision by coming to this great forum for answers. Make another good decision by thinking about the ramifications of poor judgement.


Thanks for all the good advice! I will walk away for this store, but continue to look for opportunities in Southern New Hampshire. Many small towns in the area I live and one city 25K pop with a state college. I’m looking for a small town 3-5K, lower rent, hopefully a manageable size shop for the 3 of us with some delivery help. I would get no income, just my wife/son and delivery help. Still working with my bank of over 15 years, but collateral is an issue. If using the $$ to buy equipment for start up, would they count it as collateral? I have about $17k to invest, but sounds like I would still need 30-40K more to get going? If I were to find about 1200 sq of space to rent, is this enough for say mostly del/co with maybe seating for 15-20? Son and wife are really up for this, they want to move forward, and I know they are both hard workers, I just want to give them everything they need to succeed! Thanks again for confirming what I was feeling about this particular shop!

Hitting me where I live :shock: You’re right, though. $3k to $4k is a hard life to live if you have any rea lbills to pay, like rent and utilities and food. You have to be incredibly lean and efficient to make any sort of living that way. We aren’t. Small towns of fewer than 5000 people (2500 households) is a big challenge, even with a monopoly. Even small events can influence the marketplace enough to mess up your business. Gas prices, election year, property tax increases, heat wave and utility bills.

The trade-off is that you get to know your community and customers much better. It is easier to be involved in community activities and culture. Your donation dollars are more personally appreciated by the small orgainizations . . . what dollars you can afford to give away.

All that said, I love our place and our shop. . . for now. We are growing it slowly. I would recommend small market to anyone with the patience, resources and personality to make it work. You won’t make $30K too soon, but will diligence you can make a good business.

What town in Southern, NH is this located? I know of a few locations. I tried registering but did not get email from the site admin or I would leave an email address. American Express Blue for business will get you up to 100K interest free for the first twelve months with excellent credit, non secured.

I’m out west near Keene. Rather not say what town the shop is in. Do you know of any shops out that way for sale? I see there are few over near Salem, but that’s to far to travel.

I have family near there and a good shop will do excellent there. I know someone who is pondering a movie/pizza theatre. You also have the college. Salem? Fuggetaboutit. Too many to compete with and its not about competing with shops; its about competing with the 9’s, etc. In that area, no. I’m sorry, I don’t know of any.