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need advice on buying this store.

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matteo_0144

New member
Hey guys I have found another store for sale that I am very interested in. they are doing between 7500 and 8500 a wk according to the P&L report i was givin for the last 3 months. the store has been there for 45 years and is 1600 sq ft big with full basement. the rent is 3500. Does this rent sound high? the store is in morris county NJ. It could use some updating as some stuff is old. they are asking 70k for the business. What would a fair offer be?
 
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sales tax should be 8% of the total sales. …so Business.

Dude…You have been around here for a while asking should I buy this, should i buy that. If you have 70k why dont you go ground up. That way you can establish yourself with your own numbers. There is an empty store in every strip mall. if a business was highly profitable. your not getting it for 70 k. Dont take some one elses headache. start your own.
(coming from someone who bought someones headache) I have replaced everything in my store already. So the orgional 50 k i spent. Turned out to be Oxygen. and it didnt even smell good.
 
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Pakula's Pizza:
Dude…You have been around here for a while asking should I buy this, should i buy that. If you have 70k why dont you go ground up. That way you can establish yourself with your own numbers. There is an empty store in every strip mall. if a business was highly profitable. your not getting it for 70 k. Dont take some one elses headache. start your own.
(coming from someone who bought someones headache) I have replaced everything in my store already. So the orgional 50 k i spent. Turned out to be Oxygen. and it didnt even smell good.
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In my area, It can take around 1 year without ever opening. Between Town Permits , County Permits, & Fire Marshals and Health Depts.

Sometimes opening up from scratch isn’t feasible.
 
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exactly… i looked at doing a new build out and didnt move fast enough and somebody else did… this was 18 months ago and they just opened their doors last month for business
 
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Like i said in the previous post,
  1. Verify Sales Tax forms for the last couple of years.
  2. Verify IRS 941 forms and you’ll see payroll
  3. Get detail lease terms.
  4. Get Distributor Invoices on all purchases.
If the store is doing 7500 a week, it is a good starting point
However,the Rent amount would chase me from this deal.
 
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matteo_0144,

Without responding to your specific question, have you considered relocating to another, lower cost, lower density region? NJ/NY would not be on my list.
 
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i want to stay in NJ… this store is in the heart of a business corp area… daytime population is 80,000 within 3 miles.
 
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At $3500/mo (more than I pay) I’d need the potential of doing at least $650K/yr. Among all the other things to check, at $3500/mo, $400K/yr probably won’t cut it. They’re at $7500/wk, without verification, which means they’re fudging some, and only doing about $350K-$380K/yr - meaning they’re most likely UNDERWATER! If they’re selling $7.00 pizzas, they are definitely going BROKE! If thats the case, the business isn’t worth anything, except perhaps some goodwill.
 
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i am going to ask for the tax info tomorrow.
Be tactful. I doubt he’ll be prepared to provide detailed supporting documents. From the asking price, he’s looking for a sucker who won’t investigate or ask the right questions. Who’s the landlord? Question the surrounding businesses. Do a background check on this guy, or anyone else if you’re serious about going into business there.
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Robt-
If it really takes a year to get a business going in your town. Your town sucks. That’s absurd. I have never heard such blasphemy. I could start from scratch and have a liquor license in three months. I find it hard to believe it takes a year to get ventilation and gas lines approved and a health permit. I could be wrong

If this guy is doing 7,500-8,500 he’s making money. He’s working his a$$ off but he ain’t losing money. It’s just not possible. And 3,500 is not too much for that area. Unless the store is beat.
 
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If the following:

$7500 X 52 weeks is 400K per year (not including sales taxes!)
$3500 month (total not 3net) is $42K per year

Rent is higher than ideal but if sales rose to 8500 a week not impossible to live with. There are some people that enjoy occupancy costs that are half that, but in many areas, that is very much what you will find.

It is certainly possible that the seller makes 60K on those sales with that rent. In my store, running it day to day myself I would make that on those sales with that rent.

You are correct to shy away from opening from scratch with 70K. We have had that go-round on the boards many times with some advocating that starting from scratch can be done for less. No doubt it has happened, but the usual experience is quite different and more like what some of the other comments reflect, 18 months and 150K later…

If the overall condition of the place is good and equipement is updated, I like the sound of 45 years history. If the equipment is 45 years old and so is the tile, the walk-in, etc etc, I would have some concerns that you are looking at some expensive equipment and maintanance issues.
 
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the place is in pretty good shape… its not great its not terrible. its better then ive seen…i how ever am very picky and would be going over everything with a toothbrush… ex. his ovens are bari ovens which ive never used or heard of and they look to be pretty old so id be looking to upgrade to some used bakers pride… and he doesnt have a walk inn box which i would find very hard to stay organized without… so id add a walk in down the basement to simplify organization.
 
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If you are somewhat hands on you can for sure open a Delco from the ground up with 70k…

I have done it 4 times. As long as your not buying brand new Equipment you will be just fine. I bought all the equipment i needed for my 1st store from a closed pizza place for 12k. 2 linclon 1000 ovens, 60 quart hobart, 2 three door reachins, a 2 door reachin. single door feezer, sheeter, sinks, racks, make-line etc etc.

The other time it cost me 30k to buy the place out, however it was my competion and they had really nice PS360Q ovens double stacked and all dominos stuff that was less than 8 years old and it was putting another pizza place out of busniess down the street. my location still failed a year later but i was able to open 2 more stores in other towns that are banging the pizza out now.
 
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The price of rent is all relative and as you look around talk with business brokers and other professionals FOR YOU AREA you will learn what is appropriate or not. Typically message boards bring out the naysayers, haters or just those that don’t add much helpful dialog. There are places that the price of land is dirt cheap or business space due to market conditions is available on every corner and can be had super low. There are other places like Downtown New York that $3,500 a month for a parking spot for your car is a good deal. Or in Hawaii land is scarce and they would rather have the place sit empty than to rent to a pizza store instead of a dream customer like a Doctor or such.

Find a local business mentor there are whole organizations of retired business people that can for little or no money give you insight and advice. Look at the successful stores find out what they are paying for rent in your area. Put together a spreadsheet figure out how much you want to make how much your food cost will be rent taxes other costs, then how much you need to sell to do that. (Then factor in a lot of work and surprise costs plus a huge amount of reality to get there).
 
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