New pizza / carryout delivery

C

CheeseMan

New member
Opinions please…
Me and a buddy have been thinking about opening a small shop for several years now and a deal has presented itself…
We are looking to have a dual type menu (pizza & something that does not exist in the area)
A closed pizza shop with:

a Lincoln dual stack oven (1450)
2 six foot prep tables
walk-in cooler
freezer
h600 Hobart mixer
phones, registers and basically everything we need to start…

we have had everything checked and its all in good order… the rent is fair as well. (we can do 1 year leases with 3 single year options)
Is the above worth 18k?
What do you guys think?
Thanks!
 
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Bottom line is that if the location will handle the volume you hope to do and IF the location is not the problem that sank the previous owner, the answer is yes.

Do you know why the last place went under?

VERY IMPORTANT: You idea for a lease is a serious mistake. If this buisness is a “go” you want a lot more than a 1 year lease with three one year options. I would suggest that you look for a two year lease with 2 FIVE year options.

One year is often not enough to see if you are going to make it. Two years should be enough. If you have a successful launch, you will want to lock up your location a lot longer than 4 years.
 
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first off Thanks for the response!

OK about the lease… I didn’t explain it correct… I meant to say were would be locked in for three years min with one year leases with OUR option to renew after each year… 50 bucks increase per year in rent…(still very cheap) +HVAC is covered for the first year as well
This is in the contract…
Its in a strip mall that’s pretty much full and a new secretary of state super store opens this summer (signs are up and construction has started).

2-3 other places are in the delivery area. one is a jets:(
the plan to compete with that is a dual menu and lunches…
no day jobs are being quit and no loans were used period… we would have enough cash to last for 4 months without selling a single order… (indefinitely if we do 2k a month)<<NOT the goal!
On to the reason it failed…

We will never know for sure I suspect… but the local tenants says the owners just stopped coming for the last year… kids ran it and one person insists it was a free for all and it was ran into the ground.

We pulled the health dept records and they had violations as well… nothing to bad mostly things that would be caused by lack of management…
The landlord said two brothers owned it and they had a falling out… who knows!
Couple other things… I have ten years experience in the food biz… (high end place) 5 in management. bad thing being that was 15 years ago… I now do software / electrical engineering (management)
We also have a 2 station touch POS system lined up as well to track every order to the tee. (they didn’t have this and its sourced elsewhere)
Thoughts?
 
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You will find out relatively fast if the business concept is a “no-go” or your partnership is dysfunctional or the location just plain stinks. If the venture turns out to be a disaster, you’re gonna be pretty glad that you are only on the hook for one year of rent. I would be stunned and baffled if after a couple more years of being a good/successful tenant your landlord decided to boot you or gouge you on the renewal - perhaps I’m being naive, but I’ve heard of very few instances of that happening in my time in business.

Anyways, when my business partner and I opened our 1st location we also took over failed shop. Back then, we got about the same package you did for $6,000 and with about another $10,000 were up and running. Not having any build-out costs is a huge bonus and is having a partner if the relationship works. Also, if I could start over again I would have loved to have owned a P.O.S. system from the beginning like you are planning to do - that is a great decision.

Are you changing the name? We did make a the switch and even so people still thought we were “that place” that had previously upset them, served awful food, etc… Even with a name change, a different color scheme and a fresh concept a location carries the baggage of its previous failure, so be prepared for that challenge and patiently answer the questions the customers will ask about it.

Also, get an accountant. Even if you guys do the sales taxes/books/payroll/pay bills yourself, have some help setting up the systems correctly from the very start. And it is so very worth paying that same accountant to do your personal taxes at the end of the year.
 
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no day jobs are being quit and no loans were used period… we would have enough cash to last for 4 months without selling a single order… (indefinitely if we do 2k a month)<<NOT the goal!
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Who will be working those shifts?
Do you have cash to pay a manager type person while the owners are away?
Do you have cash to bring the store up to all the necessary codes?
Do you have cash for extra equipment?
Do you have cash for the first large food/beverage order and all the other orders thereafter?
Do you have cash for marketing?
Do you have cash for new menus, smallwares, uniforms, insurance, pos system license transfers etc etc?
Do you have time to work a ton more hours apart from your day job?
 
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steveo922:
no day jobs are being quit and no loans were used period… we would have enough cash to last for 4 months without selling a single order… (indefinitely if we do 2k a month)<<NOT the goal!
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Who will be working those shifts? US! plus family and a few employees to start.
Do you have cash to pay a manager type person while the owners are away? yes
Do you have cash to bring the store up to all the necessary codes? yes
Do you have cash for extra equipment? yes
Do you have cash for the first large food/beverage order and all the other orders thereafter? yes
Do you have cash for marketing? yes
Do you have cash for new menus, smallwares, uniforms, insurance, pos system license transfers etc etc?yes
Do you have time to work a ton more hours apart from your day job?
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hehe thats a good one and yes! (we know our lives are over for awhile… this particular topic has been beat to death and then some.

Dan
 
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CheeseMan:
Opinions please…
Me and a buddy have been thinking about opening a small shop for several years now and a deal has presented itself…
We are looking to have a dual type menu (pizza & something that does not exist in the area)
A closed pizza shop with:

a Lincoln dual stack oven (1450)
2 six foot prep tables
walk-in cooler
freezer
h600 Hobart mixer
phones, registers and basically everything we need to start…

we have had everything checked and its all in good order… the rent is fair as well. (we can do 1 year leases with 3 single year options) <— a 1 year lease is crazy… unless your intent is to do a $100 paint job and resell.
Is the above worth 18k? <---- Not really, ask yourself, could you resell the same in a reasonable period of time.
What do you guys think? <---- If you can’t afford to throw-in $200K & 3 years, then walk.
Thanks!
Click to expand...
 
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I think it sounds like a great opportunity. You are buying the equipment for less than"retail" but over “wholesale”. You are saving tens of thousands on buildout. You can be up and running quickly and cheaply. Ultimately what will determine whether you succeed or fail will be the area, your concept, and how well you execute, not necessarily in that order. I wouldn’t be too worried about the previous business failing. Businesses fail for a lot of reasons. With a new name, most of your delivery customers won’t even know you are in the location where “@#$” pizza failed. Do your research and make sure there is a market for your product. If you succeed, you can upgrade your equipment as needed. If you fail, I would rather fail with an 18k equipment/ buildout investment than with a 200k investment in the same. This could very well be one of those opportunitys where you don’t need 100k to open and succeed in the pizza business.
 
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we have had everything checked and its all in good order… the rent is fair as well. (we can do 1 year leases with 3 single year options) <— a 1 year lease is crazy… unless your intent is to do a $100 paint job and resell.
Is the above worth 18k? <---- Not really, ask yourself, could you resell the same in a reasonable period of time.
What do you guys think? <---- If you can’t afford to throw-in $200K & 3 years, then walk.
Thanks!
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Wow 200k? What for? Not to be argumentative but why 200k? I fully realize we will make nothing for at least the first year and also most likely will need to dump a bit more cash in but 200k?

heck to keep the doors open for two years its only 60k (no food or Emp) and that would be with 0 sales… weird… I guess if I had a full 200k cash… it would be easier but is it really 100 percent required?.. well anyway… my math says no, heheh I guess we will see!
Thanks for the thoughts and warnings!
Dan
 
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60k in 2 years? Whats your rent and utilities?

Believe me… things add up fast… There are tons of unexpected and things you dont exactly plan for…
 
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steveo922:
60k in 2 years? Whats your rent and utilities?

Believe me… things add up fast… There are tons of unexpected and things you dont exactly plan for…
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This is the static cost… rent/cam, utilities, insurance etc… no employees or food advertising etc etc…for arguments sake lets say 80k…still that’s not bad…
as most have said… we will know in 4-6 months…
 
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Cheese, you asked and I gave you my thoughts. If you’re willing to dump $80K for 6 months… well, I don’t think that’s smart. The $200K number and 3 years is just a rough number. The point is, you’re going to need some cash to start and grow the business. Sure, lay down $80K and after 6 months you’re running on empty, just when a little more will help you over the start-up curve, but you don’t have it - so boom, you’re just like the previous owner. You’ve lost $80K and looking to sell the equipment for anything you can get. I’d rather short a stock for 6 months, than start a business. Just my 2 cents.
 
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pizza2007:
Cheese, you asked and I gave you my thoughts. If you’re willing to dump $80K for 6 months… well, I don’t think that’s smart. The $200K number and 3 years is just a rough number. The point is, you’re going to need some cash to start and grow the business. Sure, lay down $80K and after 6 months you’re running on empty, just when a little more will help you over the start-up curve, but you don’t have it - so boom, you’re just like the previous owner. You’ve lost $80K and looking to sell the equipment for anything you can get. I’d rather short a stock for 6 months, than start a business. Just my 2 cents.
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Thank you for your comments! Please don’t take me the wrong way at all! I think you misunderstood…not 80K in 6 months 80k in three years!
Let me explain… We plan on starting small and going real slow… We both have decent jobs and very little debt (same with wives),… we can afford to support the biz for quite some time… we both plan on working as well… its cost 2500-2700 tops to keep the doors open per month… we will float that…so i guess if after 2 months we cant do 500-800 per week then well we will need to think… that’s not gonna happen though… its a busy center…for what its worth we took control today and I checked out the books…they were sustaining it… but the owners didn’t want to be there so kids ran it 24/7… we will see… We also tracked down a previous employee and she confirmed that it was just ran into the ground,…

Other things to note… we will do all pluming, electrical and repair of ovens and cooler ourselves… All computer work as well… it seems crazy… but we will…
Hehe it will be lots of fun anyway!
still accepting criticism as I believe I can learn a lot from it!!!
 
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Hi Cheeseman:

You do not state how long the shop has been in operation but, to be safe, You should have the building department, health department and Fire Marshall check out the place before you buy. Codes are always changing and you don’t want to have to make a lot of up grades.

Check also that there no liens on the equipment. Check that suppliers do not have outstanding bills. You could get stuck for anything the present owner owes.

George Mills
 
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It seems EXTREMELY prudent to execute this as an equipment/asset sale only. There is no goodwill or cash flow value to purchase . . . and you don’t want any legacy issues (debt, taxes, liens, lawsuits, etc) from the previous business. Just check the liens on equipment and buy that. Leave the other business headaches to the current owner.
 
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Sounds like a fairly good deal for the equipment, are there tables and chairs too? Can you get back that much if you have to sell. It’s a big decision, even if it’s not a big chunk of money. Are you up for it, or is this a hobby?
 
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OK we are open! We have been open for 3 days now… we will see! we are paying the bills! hehe no more bleeding…
Thanks for all the comments!
Cheeseman
 
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JRFPizza:
Sounds like a fairly good deal for the equipment, are there tables and chairs too? Can you get back that much if you have to sell. It’s a big decision, even if it’s not a big chunk of money. Are you up for it, or is this a hobby?
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Sorry for the slow response! (I have been buried)

Yea not alot of cash for sure… but a big chunk of family time for sure… << that’s priceless
We opened officially three days ago but have been open kinda for a week or so… no hobby here! Dead serious…
The main stress is over and we are starting to joke around again… that’s good… now to making people happy!

Cheeseman
 
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Good luck Cheeseman, if you got questions, ask away. There’s a wealth of knowledge on this board.
 
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