Found An Abandoned Shop...Need Advice!

[imathieu]

Hey guys. Thanks for all your help so far. Came across something interesting tonight. My wife and I were driving around and saw that one of our favorite places had gone under. It’s a pizza place. There are about 10 in our area of this company. We were actually looking at a location about 2 miles from this place and we were driving around checking out what would be our delivery area. We noticed the lights were off where we usually get our pizza from. The product was good…It was just POOR management and not very clean…At any rate, It has about 100,000 people within a 5 mile radius and has 31,000 cars pass by daily. It’s in a strip center anchored by a National Grocery Chain and a National Pharmacy…It had an eviction notice on the door and it had the “Yes” box checked that everything had been removed by the landlord; however, all the signs and everything are still up and the oven is still there. I looked in the window and can’t see beyond that back into the kitchen. Would I be able to scoop this place up WITH the oven and everything already in place. Do you guys have any idea what the landlord’s plans might be for this equipment. It sucks that I can’t call 'till Monday morning. Seems like a great opportunity and could be a win-win. There are 3 other vacant spaces in this strip so I’m sure the landlord is ready to deal. Any help would be appreciated.

 

[pizzapirate]

Sounds like a possibility.

Don’t be overly anxious when talking to the landlord. You never know where the landlord is coming from. They don’t always react to the circumstance you perceive.

You may be able to just sign and lease with him and take over or he may offer to sell the equipment to you or lease it.

Just be friendly and let him know you are just inquiring of the circumstances.

 

[pizza2007]

there are 3 other vacant spaces in this strip

So there are FOUR vacancies in this strip. I’d wonder why?? There must be a common reason why 4 businesses failed at this mall…

 

[imathieu]

LOL…I knew somebody would say that. I don’t know how your part of the country is; however, there are vacancies in EVERY single strip around here. Urban Sprawl and then the economy. 5-7 years ago these strips were popping up everywhere. I guess it’s just supply and demand for space. I truly believe the internet killed a lot of retail business. Just as an example, record stores and adult book stores are no longer needed thanks to the advent of the internet. When I want to buy something I don’t go to a strip mall. I order it online. Way cheaper and it comes right to my house. However, until they can figure out a way for a pizza to come through the internet, communities need us.

I’m not an idiot. I know a good location when I see one. Rent is 2k a month. 1600 sq. ft. 31,000 traffic daily. 100,000 pop within 5 miles. One of the busiest streets in town, tons of parking anchored by major grocery and pharmacy. I guess I must be missing something. I appreciate your heads up on that though.

 

[imathieu]

Pizza 2007,
Also, thanks again. You were the one who advised me against another place I was looking at so I went in this direction. All your help is appreciated. Thanks. What other aspects should I be looking out. It sounds good, right? One less competitor right off the bat. Is there a way to get demographics in a radius of a certain address or can you only do it by zip?

 

[Wizzle_Wassell]

imathieu:

I’m not an idiot. I know a good location when I see one. Rent is 2k a month. 1600 sq. ft. 31,000 traffic daily. 100,000 pop within 5 miles. One of the busiest streets in town, tons of parking anchored by major grocery and pharmacy. I guess I must be missing something. I appreciate your heads up on that though.

this one sounds a little more interesting than the last one but without figures its hard to tell. I’m interested how you know its just 2k rent when you’ve not spoken to the landlord?

is the 100,000 within 5 miles or 5 miles away? As a delivery business you want the majority of your customers in a mile or two really.

 

[imathieu]

I saw the other spaces on the web and all those are 15.50 sf/yr. There are neighborhoods in all 4 directions very close, with a dense population.

 

[Bubba]

If you have the opportunity, talk to the previous owner.

If he is behind in rent, he probably signed over the equipment to the landlord in exchange. The LL may mark it up. See what his take is on why he went out.

Is there a possibility you would keep his recipes and procedures and possibility the key employees? The longer it sits the harder it is to get the customer base back.

I don’t know what part of the country you are in, but if you are serious enough, pay to have his phone turned back on-if he is not behind- and have an answering machine provide a message that “due to unforeseen personal circumstances, we have a need to close for 30 days. Please call back on (pick a firm date while you do your due diligence) and we will gladly provide quick service once again.”

Bubba

 

[pizza2007]

imathieu,

Thanks for taking some time to re-evaluate that other place. Ughh!! That place had big NO NO’s all over it and I don’t even know what it looked like. **When an owner offers to work for free for 600 hours (obviously no contract involved) that should serve as a big FAT SUCKER ALERT!!!

I have seen several ‘empty’ pizza places, but I’ve also researched and discovered their demise - usually linked to arrival and success of high-powered competitors and no money. I also know a guy who’s been pretty successful at opening locations and selling them within 2 - 5 months. From his success, I infer that a lot of folks are willing to get into this ‘easy’ business. But imathieu, there is nothing easy about it!

Consider this, you’ve already said that you guys could get by on your wife’s pay while a business developed. Why not go to work at a nearby pizza place? You’re going to have to learn operations; you’re also going to have to learn business and marketing. In the 3 - 6 months that you work at whatever pizza joint, take every penny you earn and put it in a jar for your future business. In other words, work for free. I’m still working for ‘free’ nearly 3 years later. Sure my operation is profitable this year, but until the debt is paid back, I’m working for free.

Also, during this 3 - 6 months (if not 12 months), you should live and breath pizza business!! Emulate what it would be like if you jumped in head-first with no training and education! You’d get no rest, not have time to learn about business, fret and worry about $$s - sales - bills ALL THE TIME, and simply just wear yourself out. Now jump forward 12 months. You’d have a little savings built up, have read and learned a tremendous amount about the business, everything from purchase checklists, to local fire & health codes, and business - employer accounting and taxes. Hopefully, you’d have experienced work at 3 different locations, 1 dive where the employer’s paycheck bounces, 1 average joint, and 1 successful joint where you’ve spent time learning from the owner/operator/franchisor.

You’d either be much more prepared for owning your own pizza business OR consider another business to get into.

 

[Wizzle_Wassell]

^^^^^^ Very very good advice.

Even if this site was viable chances are it will take some time. So do yourself a favour and go get a job at a good pizza shop, show some enthusiasm and learn from what you see. Drive, offer to do phones, whatever. You will learn the good and bad points of the business and the experience is so valuable.

 

[imathieu]

Oh yeah guys…Sorry…I forgot to mention that I ran a place very similar for 7 years. From ordering to scheduling and been in the restaurant business for the last 16 years. The pizza idea isn’t something that just popped up out of the blue for me. I know this doesn’t change my financials; however, it gives you all a better idea that I do know the business…somewhat. Also, I currently have a job and am willing to take everything I make from that and invest it too. We are COMPLETELY debt free right now except for the houses so I do have credit options available as well…But I’m not a big debt fan. Don’t get me wrong. I am taking all the advise you guys give me very seriously. I know you’re not trying to be negative…just realistic.

 

[PrintJerks]

You stated that you can get by on your wife’s income. Would you be able to survive if you were losing money each week and you had to dip into your wife’s weekly income?

I have opened 3 pizza shops in my lifetime. I currently still operate 2 of them. I was successful with my first 2 but my 3rd was a failure. It was in a great location but I ran into problems with the local code enforcers. It took me 10 months to get open and ate up my entire bank account that I had set aside for payroll, advertising, emergency money, etc. I ran the place for 10 months and could never get it off the ground. I was losing $1600 a week. This was a worse case scenario that I never envisioned. I’m telling you this in case a horrible scenario like this were to happen to you. I would never wish something like this on anyone, but you need to be prepared if it were to happen. Would you be able to still pay your personal bills if your wife had to contribute $1600 a week of her money to keep your pizza shop opened? I was lucky in that I had the income from my other 2 shops to help keep my 3rd location opened for as long as it was. If not for that I would have probably lost everything. Keep in mind that the pizza business is extremely challenging. You will be working more hours than you ever imagined and it could take a long time to see a decent profit. You might look and see that pizza shops bring in a lot of money in sales but only a very small percentage of those dollars is profit. It took me almost ten years and a lot of headaches before I was able to get out of the kitchen and have managers run my 2 shops. The hardest part for me was the night time hours. My wife works during the day and I worked at night so we were only able to see each other a few hours a day. When my daughter was born it made my decision to step away and hire managers. Are you prepared for the type of hours of operation that a pizza shop requires? I was until I got married and had a family. Now with my new graphic design/printing business, I’m working normal daytime hours, doing something I really love to do, and I’m able to eat dinner and spend quality time with my wife and daughter. I’ve never been happier. Make sure you’re getting into the pizza business for the right reasons. Like any business, but especially with the pizza business, you need to love what you’re doing!

If you decide to go ahead and open a pizza shop, make sure you have enough money in the bank to get you through at least 6-7 months of zero profit. You need to also go straight to your local code enforcer and check on every single thing that will need to be done in order for you to get your certificate of occupancy. Just because it was a pizza shop already does not always mean that you can move straight in and immediately open. I found that lesson out the hard way. I wish you the best of luck.

 

[imathieu]

Thanks. Just wondering, I read somewhere that you can negotiate to have your lease start when you actually open or upon receiving certificate of occupancy. Also, $1600 a week? What expenses did that include if you don’t mind me asking. The more I’m on here the more discouraged I am getting. Am I naive thinking that my “guerrilla” marketing will actually pay off.

 

[Wizzle_Wassell]

the lease options are totally up for negotiation, I have a rent free period when I opened which lasted for a further 3 months once I was in the shop and opening really does depend on how strong a position you are in and how much the landlord wants you.

Re ‘guerrilla’ marketing, what specifically do you mean by this term, I ask as some people tend to confuse it with ‘cheap’. What every you do in marketing needs to be wide ranging (in terms of covering the population) professional, clear (in terms of its message, and consistent. You need to hit people with the same message time after time after time. That costs money. One of the key difference I have found between a busy shop and a (relatively) quiet one in the same town is down to market awareness, which of course comes from marketing spend…

 

[pizza2007]

I forgot to mention that I ran a place very similar for 7 years. From ordering to scheduling and been in the restaurant business for the last 16 years.

Whew, thats a breath of fresh air!!

You’re going to need cash and/or credit. I dumped $50K (asset purchase, equipment, 2 months expenses and advertising) in cash when I started and after the first 8 months, was another $120K in debt. ** I’ll publish my experiences once I get back to zero $$ debt. We are profitable now and improving every quarter.

If I’d only had access to $100K, I’d lost everything in 6-8 months. *Something to consider.

If I do get a 2nd location, I will be extremely picky, looking for the perfect spot that matches store #1 in every metric.

I’m sure you’d have a 50-50 chance of breaking even (while working for free 100 hrs/week) during your first 3 months. But how are you going to ‘grow’ your business while working those hours? If you tie-up your total $15K in just opening up, what’s going to fund your advertising? Who’s going to do your “guerrilla” marketing if you’re making pizzas? Who are your major competitors? Who are your minor competitors? How are they doing in the current economy? Whats the employment rate of your local economy? Can you market/sell a $10 large cheese pizza versus a $5 large cheese pizza? Will your customers come see you or will it be 95% delivery?

If you’re in one of those $5 pizza areas, I say forget it!! If you want to enter the pizza business, move to a region where you can sell a $10 pizza.

It may sound like I’m trying to talk you out of this, but truth is, you’d probably have more fun spending that $15K in Vegas.

 

[pizza2007]

Wizz,

I like to think of “guerrilla” marketing as ‘door hanging’ or other “in your face” physical type of marketing, ie ground and pound…

 

[imathieu]

Absolutely…Also…Going to kids sporting events handing out slices and menus/magnets. Also, dropping off lunch by surprise to businesses. Get in good with the girl who places all the lunch orders and you should have something there. Give her free lunch if she places orders over $30 or more. Also, just talking to people in the neighborhood at events and what not…Granted I don’t know when I’d find time to do that. I plan on doing a lot of the delivery myself and have a couple key people I would have working inside that are trustworthy and share my same customer service attitude.

 

[Wizzle_Wassell]

Door hanging is everyday basic bread and butter marketing I wouldn’t have said it was guerilla at all. Guerilla marketing is more about what you can get without budget but with a little imagination. Doorhanging needs a budget and very little imagination but lots of effort (although in my case doorhanging is very effective)

The problem with marketing when you’re in the shop running the day shift day after day is getting the marketing devised, planned, organised and implemented. You can’t be in two places at once and door hanging (for example) is a time consuming business.

My key bit of advice is to have a marketing plan figured out - you need to do this now - what is going to happen, who is going to do it, who’s going to pick the stuff up and how much is it going to cost etc etc. You simply won’t have the time to do it if your running the shop and without it. You can do a lot of stuff with little cost. Banners, press releases before you start, business visits, free samples when you start. But once the initial buzz has happened you need to have a solid plan in place and the wheels turning.

In my experience this a key difference between an average sales shop and a good one.

So often we here of people who come to this site having seen sales drop after a few good opening weeks and ask for help. Better to have had something in lace before hand.

Hope this helps.

 

[PrintJerks]

imathieu:

Thanks. Just wondering, I read somewhere that you can negotiate to have your lease start when you actually open or upon receiving certificate of occupancy. Also, $1600 a week?

I negotiated 3 free months of rent. The space I was leasing was already a restaurant that had just closed so I figured all I had to do was clean, paint, and move in my equipment. I thought for sure that I would be ready to open within a month. That turned out not to be the case. I had to get a building permit before I was even allowed to clean, and before they would give me one I had a long list of things that needed to be done that cost me thousands extra such as blue prints by a registered architect (cost $1,000), etc. The code enforcer made me jump through expensive hoops for 8 months before I could get my certificate of occupancy. After I had bought all of my equipment I had got another small loan for 16,000 so I would have some money in the bank for advertising and just in case sales were slow in the beginning. Unfortunately I had to use all of this money for rent before I ever got opened. When I finally got opened I had no money left in the bank and no way to get any more. That’s why I advise you to check with your local code enforcer to see exactly what needs to be done and also to make sure you have enough money in the bank for back up cash.

The following are most of the expenses broken down to weekly amounts that lead to me losing $1600 a week:

Rent = 500
supplies = 1300
payroll = 1800
garbage removal = 30
telephone = 30
gas & electric = 300

Total = $3960 which doesn’t include insurance, workers’ comp insurance, disability insurance and other misc. expenses which will add a few more hundred a week.

I was only making around $2500 a week in sales.

Here’s the marketing/advertising plan that I had wanted to implement but wasn’t able to because of lack of money:

• Mail out 1500 menu/black book magic letters a week
• Mail out follow up thank you post cards with offer to all new customers immediately, and then also to 30,60,90 day lazy customers after 3 months.
• Pass out 1000 door hangers a week.
• Menu inserts in the local Penny Saver each week.
• Box toppers with bounce back coupons on every pizza box.
• Pass out free pizzas to local businesses every day.

This is the same formula that I used when I opened my first 2 shops that was pretty successful.

From that list I was only able to pass out free pizzas to businesses and door hang. I did do a menu/magic letter mailing one week and my sales were $4000 but I wasn’t able to afford to do them again and sales dipped back down again. That’s why it is so important to not be underfunded. In order to build sales you have to have an effective marketing plan and do it consistently week after week.

Don’t let everyone’s comments scare you off. Many of these challenges that we speak of are just worst case scenario things that you must be aware of. The more you know, the more you will be prepared and will hopefully be able to avoid these bad situations. The bad scenario I spoke of isn’t always the case. You might have a line of people waiting at your door the first day you open. For my first 2 pizza shops that was the case. The first months were crazy. The phones rang off the hook and we had a hard time keeping up. I was making money from day 1. So basically what I’m trying to say is don’t be scared of the horror stories. Learn from our mistakes and be prepared so you can avoid them.

 

[system]

Just curious…and sorry if it was posted and I missed it…but what were the other 3 empty spots before they closed and how long ago did they close up. Also…how long were they in business before they closed up? Dang…I just keep thinking of more… how many other units are occupied right now and other than the grocery store and pharmacy…what else is in this strip mall? Just trying to paint the total picture. Good luck either way.