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Buying a Pizzeria, Validation of Sales & Performance Clauses

H

hgtny28

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Hi Everyone, I just want to say how grateful I am to have such an awesome community like this where we can all talk shop. Thank you in advance for reading this.

I am in the market for a pre-existing place and almost all of them are managed and report financials quite differently. If you guys were buying a new place, what should I ask for to validate the numbers represented?

And what are your thoughts on a performance clause with a range of what we can absolutely provide vs what the seller represents? How could that work? Appreciate your help.
 
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Ive always said if i bought another I’d only pay on POS data and match that to bank statements and payment processing statements
 
I would also ask for P&L’s also. They may not give you the full info but, I would want to see the reported sales from the accountant vs POS sales.
 
Just don’t do what a bunch of people did around here buying restaurants. They bought successful places for a lot of money and immediately changed the menu, name, etc. A steakhouse sold for a lot with a jazz theme and live jazz nightly, the new owners changed the name, fired the band, and changed the menu and closed in 6 months. A pizzeria sold and the new owner stopped all advertising, got overly political pissing off around half his customers and losing staff and closed in 6 months. I sold a pizzeria/restaurant and the owners kept everything the same and they are still doing 2million in sales. Hidden things to check. Lots of places have a pos ‘hack’ to delete cash sales (basically stealing sales tax) so they can pay people under the table so labor is off on the pos to p&l, sometimes the owner is working full time underpaid so there’s no real management, sometimes family is all working there too depending on the place.
 
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Thanks for your response marias. I found a deal from a well known group of pizzerias in my area. The dynamics are this:
  • steep discounted price
  • I have to agree to change the name in 30 days
  • I can keep menu, all apps, accounts etc but they need new name
  • They won’t give me recipes outright, I have to get them from the existing staff manually
So I have what I believe is a superior name and brand IMO, but it’s new. If everything remains the same for the most part with the exception of the name change do you think that is too much of a shake up? What you mentioned seems like more of an entire concept change. Appreciate your time
 
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