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Buying Existing Pizzeria with the Building

Figuring out times is not rocket science. Ask the landlord, since he operated there at one point he will know. Figuring out the weeks will be harder. Talk to the local chamber and see if they maintain a bed count/occupancy report. Our local chamber produces a report that shows occupancy by the week with Wednesday and Saturday forcasts and actual numbers based on a weekly survey. Our business tracks that very closely.

How many people is tied to the kind of menu you have and how efficient your kitchen is in addition to how busy you will be. Ask the former operator/landlord. Figure on wasting some money being overstaffed while you sort it out.

I have no idea what the “black book” is. The advertising challenge in a resort is that you probably can not give the consumer the idea to have pizza but you CAN be where ever they look when that idea comes up. Most likely it is too late to get into the in-room directories but you should find out who the publishers are and call them so next time around they come to you. Depending on the publication cycle for yellow pages you may still get in… you should be there for sure in a resort. Just hope that there are not too many of them! In my town there are four yellow pages. One is great, one is OK and the other two are a complete waste of money. Go after visitor contact people like front desk clerks in lodging, shuttle drivers, taxi drivers, chamber info center and all your business neighbors within walking distance. Print up some business cards good for a FREE small pizza with a couple of toppings and give one to EVERY person like this you can find once you are open and have a product you are happy with.

Direct mail is pretty good for finding locals but does not reach visitors. Door hanging in frowned upon where I am and the lodging staff would throw them away if we did it. Look for events to sponsor. Join your chamber, join Rotary or the Lions or some other group depending on which has the lasrgest memebership in your area. (Just remember that these are SERVICE organizations and the reason to join is the community service not the business benenfits… the benefits are real but if you go in with the attitude that that is why you are there it will not work out.)
 
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Italiano,
What will the monthly payment be-including property tax and insurance. The $2,000 apartment rentals won’t cover all the monthly so you will need to make up the difference with the pizza shop income. If the owner is right about a $30-40K net from the pizza shop, you should be able to do a simple calculation to calculate your take home after PITI(principle, interest, tax, and insurance). This, of coarse, assumes his range is correct and the rentals are at 100% occupancy with minimal repairs.
 
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Your taxes must be quite high down there…I was thinking with 20% to 25% down payments would be under 1,500 a month…
 
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Bodegahwy:

Thank you for the tips. Really great ideas!

BCP:

I’ll give you the annual figures.

Mortgage: 13,350
Insurance: 3,000
Taxes: 6,000
Total: 22,350

I would also add that as of now, the landlord pays ALL utilities for the building and apartments. This is what will put me in the negative as soon as I become owner. Utilities for the two apartments could run up to $6000 per year together. By the way, he did not have full capacity for the year so the annual rental income for this year will be 21,250.

Even if I go off the projected net income from the pizza shop owner, it will not be a comfortable living exactly. And since there are no books to look at past earnings, I’m not willing to pay the asking price for the building. I shouldn’t have to bet on the pizza shop earnings to cover the mortgage. There is no business to value. The landlord ran the business about 10 years ago. Since then there were at least two different pizzerias that operated at this location and both closed. The two previous pizzerias were paying rent, not owning the building. Even though I will own the building, my rent will be replaced with the amortization debt and taxes.

How will I be able to do better than them???

I also learned from the Landlord that, the location used to be in the middle of a thriving bar scene. So the previous pizza shop owners made a killing when the bars closed at 2am. All the hungry young drunks left the bars and went looking for pizza. They’d stay open all night and make a couple grand in a short period of time. Now most of the bars have closed and have been replaced with restaurants. So the earnings potential has decreased immensely for the pizza shop.

Any more thoughts, feel free to tell me! I hope you’re enjoying this discussion as much as I am! Many thanks! 😃
 
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I passed on the deal. The owner was not willing to come down in price. The building is losing money as I write this. He claims that the building’s earning potential is like 50K with full occupancy of the apartments and if I leased out the pizzeria. However, I can’t pay for potential earnings. If he couldn’t lease the pizza shop, how does he expect me to?

I’m sure there is another building out there somewhere that is much cheaper, and that I can buy new equipment to build a new pizza shop for less than that old building and old equipment. How much would the equipment cost if I had to buy everything to start a pizza shop from scratch and the property would be a 1000sq feet?
 
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Lets also look at his comment that the potential is $5OK annually. Well…sorry but that is total BS! First he was at $48k then lets take those property taxes out. Oh…commercial insurance on the property. Hmm…LIABILITY!!! Throw in CAM expenses and honestly the building might gross $48K but would put realistic net at close to $0! (ZERO) Then just hope the roof doesn’t leak! :shock:
 
Yes Mike. The risk was way too high. However, this experience has got me thinking.

Hypothetical:

If I wanted to build a pizzeria that nets about 50K per season (4 months) in a resort beach town in let’s say a minimum 1000 sq ft. building. And I bought that building and put in all the pizza shop equipment.

What price range for a building should I be looking for? Also, adding to that 30K in new/used equipment for the shop.
 
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You might want to get some experience in a shop to see if this is something you really want to do. This will give you some great experience with everything from product handling, marketing, equipment choices, etc.
Build out price can vary a lot depending on how much work the existing building needs, the type of equipment you purchase(new or used), the quality of the decor, and county health, fire, and engineering requirements.
 
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