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Need help estimating sales in a captive market

J

jokergerm

New member
So we are looking at a store on Air Force Base that has about 900 homes on it and 1300 people that live their year round. On any given day 3-5000 people are on base for work, from 8-4pm So this would be a lunch thing with a early dinner and close around 8pm.

The only food on base is a subway that does 50k a month and a Burger King that does 80k a month or so. The spot we are looking at is already a restaurant with a hood and equipment, so all we need to do is paint and install ovens. There is no Bills or rent, its just 10% of gross sales for rent, power, gas, trash and water etc etc

I think we can open this for about 25k, im just having a hard time estimating what our sales would be, Now I know this will be an extremely low volume store, we would be happy with 35k a month in sales from it, but im nervous that we will not hit that goal.

Since it will be low volume with only a driver or 2, labor should be rather low, roughly 25% with payroll taxes included. If we do 35k a month the store would net about 5k without the owner in the store. That’s a big IF, we can do 35k a month in gross sales. With the majority of people being there for lunch I would think it would be harder to do those sales, and with 900 homes on base I figured if we got .01% of people to order a day that would be 9-10 deliverys a day at 25 bucks average.

FOOD SALES 35000
Food Cost 30% 10500
Labor 25% 8750
Franchise fee 1400
Payroll tax 875
AFB fee 10% 3500

Total 25025

Fixed cost

Rent 0
Power 0
Phone 300
Trash 0
Deliverys 700
CC Fees 700
Marketing 525
laundry 300
Insurance 600
Repair 250
Permits 100
Propane 0
misc 500
travel 500
accountant 375
menus 50
Total 4900

Daily Fixed Costs 161.5562

Profit 5075
 
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Ok, some questions, based on what you have posted.
  1. Is it even worth it to open a franchise place (and pay their fee), given the low volume?
  2. Given that most pizza places do the vast majority of business for dinner, in your market, do you might be over estimating your monthly sales a bit? In our market of population 1000, we do 10K-12K a month (about 25% more in the summer). Our area is pretty depressed though, so with steady jobs (a military base) I am sure you would do better, but we are in a tourist area, so our monthlies are cyclical, big summers, slow winters.
  3. Compared to us, your monthly fixed costs seem out of wack. Are those accurate? Our phone is $175 per month, including 2 lines and 40MB DSL. Our insurance is about $50 per month. In a store as small as ours, I do our books in QuickBooks, and the accountant does payroll for $50 a month (but CPA is about $500/yr for taxes too).
  4. The goal is 30% food costs, but with the skyrocketing cost of cheese & meat, small places are going to have to rethink that a bit. Previous years we were dong about 28%, but the last 6+ months it has gone to almost 32%, primary due to the market exporting tax payer subsidized product (primarily to China). Will these prices ever come back down… I’m not holding my breath.
  5. I am surprised that Subway and Burger King are doing those numbers a month, in fact I am really skeptical. Are you confident those numbers are correct? Do military personnel not take advantage of eating for free at the commissary? Don’t contractors get free or discount meals there as well?
Also, don’t forget, 8-10 days a month are weekends. So how does that affect your market? Do those 3-5K of people work 7 days a week?

I certainly wish you success if you go for it. Just make sure that those Subway and BK numbers are accurate (how do you get those anyway? It’s not like they will just hand that info out to anyone who asks). Good luck!! 🙂
 
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The 1,400.00 looks like a 4% “royalty”…In some operations paying 4% for a decent brand is worth it and other times not…I have been in a couple of this chain’s locations (in eastern WA) and I think they present themselves quite well…Now in a “captive” location it may not be needed as much, however, as the OP is already involved it would be kind of hard to exclude this new location…Plus the chain has been doing quite well in the last few years…
 
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My costs are estimated on the high side for a worst case situation. Im already in a franchise and im not here to aruge whats better for this location. just looking for input on potential sales for a niche market like ths
 
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One question that must be asked is: Will you be taking market share from BK and Subway? I am thinking that with a captive market there are limited dollars to be spent on eating out. How does this fit in you planning?
 
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I’m not here to argue either. You stated some facts, and I raised a question. Thanks 🙂
 
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I got that, I love my franchise and I would not have it any other way. Unless I started my own franchise.

I guess its hard to tell what sales could or would be, since you are just dividing up the pie differently from BK and SW. I assume weekends would be a DUD, since the 5k people coming on base are not there on weekends

What kind of sales are you guys thinking I could do here? is 30k estimate to high?
 
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Our pizzeria is located near a military base, and it’s not at all cut out to be “easy business” at least in the beginning by any means! Your estimated sales do seem pretty high (especially if you do not sell alcohol), but not unobtainable. There are a lot of strict rules and regulations that come with just delivering on base, I can imagine that there’s plenty when your business IS on base. Also, your average delivery order seems a little over zealous, I’m not sure what your menu consists of but $15 on average seems more reasonable.

On a positive note, if you have barracks living quarters and civilian contractors working on base there’s plenty of business to be done there if marketed correctly (emphasis on IF marketed correctly!).
 
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My concern is only Having 1000 ish People Who Live On Base. Yes they have barracks and some dorms

I may pass on this. Low volume is not my thing. Stresses me out to struggle. Been there done that. Don’t want to do it again
 
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Marketing looks low. We would spend about 4X that much on marketing based on those sales. With a captive market you can probably spend less than that but I doubt that 1.5% of sales will cut it.

In your description you estimate labor at 25% “with payroll taxes included” and then you show payroll tax as an added item in your numbers below. Looks like that may be doubled up?

Phone looks high. We pay $240 per month including DSL internet for four lines with caller ID and rollover.

What are “permits” that will cost you $100 month? Our permits cost us about $200 per YEAR.

Misc $500 month? If you know what is going in there it should be broken out if it adds up to that much. If not, our Misc is maybe $30-40 per month.

$500 month travel? !! Going to Hawaii with your family? Do you mean delivery expense?

For an operation the size you describe I would expect to pay my accountant $500 year for the tax return and that’s it. I would pocket the other $300 month and spend a half hour every other week using quick books to do payroll and pay bills.

Our cost for menus is closer to $100 per month but we have a lot of hotels with brochure racks. Your number could be fine but it will depend on how you distribute the menus.
 
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I guess I was just estimating high to paint a worst case scenario

So yes I put 500 a month in travel as my business partner is 300 miles away from the store and I am 800 away so 500 was just an estimate to go check up on it monthly.

I think I’m going to pass and let my buddy do it on his own as he is much closer and is more confident that it will work

Given that 80% of the population is there from 7-4pm. I see that being an issue
 
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Sounds like a good idea. I would never consider owning a pizza shop I could not get to in person in less than a couple of hours!
 
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