OK guys here we go

[amnkeefe]

I don’t know if you all remember me or not but I almost made the mistake of buying a pizzeria near Buckeye Lake in Ohio. I took yall’s advice and bailed. I am glad I did after talking to their distributors I found that they had a horrible reputation for buying junk.

After all this I decided to go to business school to learn everything possible to be successful. I have worked at Pizza Hut, Donatos, and now Papa Johns, and have taken what I needed from each of them. I have 67,000 in the pot now and want to make sure that I can make it with that amount. My wife is graduating nursing school in two years and she is going to be my sugar momma until we get off and going.

Most of my questions have been answered on this site but I was wondering if anyone has started a pizzeria on a 25,000 dollar budget. I am looking at existing units with hoods and plumbing already installed I just buy the equipment, etc.

My demo is outstanding with 35,000 pop 44,000 income and the average age is 23 because of the multiple military bases nearby.

 

[royster13]

There was someone selling a couple places in SC recently…Somewhere on this forum you shoudl be able to find that info…However, the search function is not the greatest…Good luck…

 

[pizzapirate]

If you can find a deal for the money you have there you go. It will most certainly have to be an existing unit at those numbers.

If your wife can support you, you just lowered your risk significantly. Interesting how that works though. Sometimes knowing you have that as backup prevents you from making the wisest money decisions.

 

[amnkeefe]

She will be supporting me but she will also be reminding me that she is supporting me we are both competitive people and she will push me to make well researched and thought out plans. We figured why have her work there and make nothing when she can keep us afloat with a well paying job. Also with her paying the bills leaves me with more time to market and grow the business while being able to afford to pay employees to prep and etc. If anything I say is off or wrong please feel free to yell at me

 

[mandino]

Make sure you have starting cash for cash flow. If you spend your 67000 all on equipment and building improvement, you won’t have anything to get started. You need to project a cash flow loss for the first year, and make sure you have enough to cover it. It may not need to be cash on hand, it could be from a line of credit at a decent interest rate (1 or 2 % over prime), but don’t let it be credit cards.

I feel the number one mistake small businesses make is not having enough cash to support their initial startup losses. Hopefully you don’t show too large of losses, and if so you’ll have some extra money sitting around. But the day you open your door for the first time and not a soul walks through it, you’ll understand what I mean. You would be extremely mad at yourself 3 months from now if you’ve started to catch fire with building a customer base, feel like you’ve improved and that you are going to make it, but don’t have any money left and have to go out. Figure out where the money will come from up front so that you aren’t scrambling later if it doesn’t go as well as you had hoped.

 

[amnkeefe]

I was wondering if anyone has started a pizzeria with 25-30 thousand so I could keep the other 37 thousand for my cash flow. I still have two years to figure it all out so if anyone has a magic formula dont be afraid to let me know

 

[bodegahwy]

I would suggest you save some more money if you are planning to buy a place outright. On the other hand, a better option might be to find a successful place that already makes money that you can buy with 40K down and an owner carry on the balance.

 

[amnkeefe]

bodegahwy:

I would suggest you save some more money if you are planning to buy a place outright. On the other hand, a better option might be to find a successful place that already makes money that you can buy with 40K down and an owner carry on the balance.

I don’t plan on buying the building just leasing a space that is already built out if thats possible. I have so much invested in my own place. (time not money… but just as important) I have menus food costs spreadsheets name marketing for the niche of the pizzeria, but if I can find someone who would carry at 40k down and they make money where do I sign.

 

[Rick_G]

It may be able to be done with the money you are talking about, but you will have to be lucky enough to be in the right place at the right time. We started up with a 50K loan and had about 10K left over. We bought a shop that had closed up. The finance company owned the equipment and wanted it off the books. The landlord had 3 empty storefronts in the shopping center and was eager to make a deal. We walked into a fully equiped shop and only had to buy a couple thousand dollars in small wares, uniforms and such and then bring in food and employees. Keep in mind you will need a small fortune for deposits for your utilities and you will want enough cash on hand to subsidize a few payrolls.
We were lucky, the old customer base came back even though the place had been closed 6 months and in the second week we were bringing in more money than we were spending.
The right proportions of hard work and luck are necessary to pull this off. More money can replace the luck, the hard work is still needed.

Rick

 

[George_Mills]

Hi Amnkeefe:

Just a word of caution:

Just because there is a hood in a building do not assume it will meet the current code.

The same is true for the rest of the building code, NSF rules and the Fire Marshall. In virtually every jurisdiction nothing is Grand fathered in for a new operator he must bring everything up to code before he gets an occupancy permit.

Many codes have changed in the last few years.

George Mills

 

[bodegahwy]

“but if I can find someone who would carry at 40k down and they make money where do I sign?”

Deals are out there. Get creative.

What the comments are telling you is that you probably do not have enough money to start from zero sales. I bought an equipment package from a failed shop, in place, in good order. Signed a new lease, got the old phone number from the out of business, fired up the ovens… did 337K for the first 12 months. Cost was about 110K invested. It made money afterr a while…

On the other hand a seller with a shop up and running and paying the owner a living wage might cost you 150-200K. Plenty of shops are for sale at that kind of price that earn an owner operator 50-80K. A seller that wants out might very well sell to a qualified buyer with 40-50K down and an agreement to pay 20K per year for several years.

I have a buyer for the real estate my stores are located in that would finance a buyer for the business that could put up 20% on the business. That is another option, look for a store that is for sale WITH real estate and an investor that wants the real estate with a tenant in place…

I guess my point is that there is more than one way to do this on a shoestring (65K is a shoestring).

 

[GMAC]

You might try contacting tommyknowspizza who used to post here. He seemed to very successful at getting his places going on a shoestring. I was impressed with his ability to achieve a profit on low sales and ROI. He reduced his downside risk significantly.

 

[amnkeefe]

I will try to PM him to see if he answers.

Bodegha I know 65k is a shoestring believe me

If I need to save more I will, I am not planning on opening anything until 2010 I am just taking my time getting my ducks in a row before I even think of starting. I mean we all have to start somewhere right?

I helped open a buddies shop about a year ago and he is doing ok. We did his on 25k and about 30 cases of beer.

I am 25 now and a veteran so they are willing to help me get a unsecured business loan up to 25k on top of the 65k. I mean if I can only afford 600 sq ft to get started then so be it. You all just come by and buy a pie

 

[pizzachop]

I started my business 14 years ago at the ripe old age of 28 with $12K in equipment, $2K in working capital in 400 sq ft (no real build out to speak of) in the back of a convenience store (formerly a deli). Exhaust hood was in place but as I was using two old CTX 70s, ventilation wasn’t really an issue. I too was a veteran without any pizza making experience but had a strong desire to succeed and produce a quality product. It was a small market and it allowed us to grow at our own pace as we worked out the kinks.

Since that time, I have opened 3 new shops, 1st one a relocation with about $6K-$7K in renovations (moved existing equipment), 2nd one was a new shop which ran about $45K (including equipment, POS system, some buildout), and a 3rd one which was a relocation of the 2nd one, which cost about $30K (my portion of the buildout, reinstallation, etc.) using my existing equipment.

Your skill set will determine much, but not all of the cost of a new shop. There are some things you can do yourself, others that require licensed contractors (electrical obviously, HVAC) as well as inspection permits, etc. You really do need to make sure that you’re aware of the local codes as they can make some spaces impractical to convert.

Start with as little debt as possible. $25K is defiinitely possible if hood system is already in place.

 

[snowman]

amnkeefe:

I have 67,000 in the pot now and want to make sure that I can make it with that amount. My wife is graduating nursing school in two years and she is going to be my sugar momma until we get off and going.

NO, you cannot make it in this situation. It almost certainly cannot be done.

1. Your wife needs a job first, THEN you can let her support you. That’s 2 years away.
2. 67k is a recipe for failure, unless that’s 67k in CASH and you can get a loan about twice that big.

I don’t think you could do a build-out and get equipment for 67k. This isn’t taking into account such things as food cost, rent, and paying workers. Your first food bill is going to kill you. It’ll probably be several (5ish) thousand dollars. Expect then to toss another 2-10k in “oops, I forgot I’d need THAT” stuff. These are usually smallwares or cleaners, etc… just little stuff that will add up – “wet floor” signs is a good example.

 

[Pakula_s_Pizza]

We just opened a year ago and I was in the same boat… I wanted a place so badly my partner and I jumped into a place for sale for 50,000…It was and old deli that has had 5 owners in five years but was pretty much out of business…We bought no goodwill so it was basically key money…Most people say why would u pay for a place thats closed…In my tapped market (NYC suburbs) we had to just jump on the opportunity…After the initial 50,000 we used about 70,000 to open the doors…We made some mistakes…but we opened and bam…8,000/wk from the day we opened…we have seen a 20% increase since then…Go with your gut…and watch out for the “I forgot about this expense” there is alot of them…if it is meant to be then it is…at least youll never have the what if?