Thinking of opening a shop...Tell me why I shouldn't!

Discussion in 'The Think Tank' started by Gary LeMaster, Aug 26, 2019.

  1. Gary LeMaster

    Gary LeMaster New Member

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    OK, so here's the deal. I have ZERO experience in the pizza business. I do have food service experience (owned a 2 location frozen yogurt shop). My entire experience in the pizza world is that I love to eat all kinds of pizza :)

    Now, here's the scoop. Small town (25k people). 3 "cheap" chains (Zanzi's, Dominoes, Little Ceasar's). 1 overpriced chain (Donato's) and a high priced (but good) local chain (Cristy's). There is not a NY style pizza shop in a 30 mile radius.

    I have an opportunity that came out of left field 4 days ago to lease a space that has had a continuously operating pizza joint in it for 12 years. I can get the space as well as all the equipment in it for $1k/mo.

    Obviously, if I pull the trigger I'm gonna be learning on the fly. I currently own 2 other businesses, and would be able to run the business side of things, but my presence would be limited to 15-20 hours/week.

    The shop that was in the space was doing $250k/yr give or take as a carryout only place.

    So, my vision is NY style pizza, with the house specialties all having a southern twist. We would also stock a wide variety of craft beers and ciders (bottled/sealed only).

    Looking at everything, and all the research I've done in the last 72 hours leads me to believe that it would take a disaster on the level of a meteor to not at least break even. Making a profit right out of the gate seems likely.

    So, since all of you have, literally, an infinite amount more experience than I do - tell me what I'm missing.
     
  2. jerseydevil1977

    jerseydevil1977 Member

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    Someone you can trust to run it in your absence and plenty of systems to make it as fool proof as possible.


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  3. Gary LeMaster

    Gary LeMaster New Member

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    I've got the person to run it. The systems are why I'm here :)

    The question is, am I crazy that this is too good of an opportunity to pass up?
     
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  4. jerseydevil1977

    jerseydevil1977 Member

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    I'm sure you can get plenty of advice just reading the think tank posts. I know I personally do. Always make sure that expectations are set up from the moment someone is hired, so there's no ambiguity. As far as recipes and equipment are concerned, there are more experienced here than me. I'm sure you did your due dilligence on how the business has done over the past few years to see if it was worth what you will be paying on it. If not there are others that can chime in here about that aspect as well. You've come to the right place to get answers in any case. Good luck.

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  5. Steve

    Steve Active Member

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    250k in the the Frozen Yogurt world is okay. 250k in the pizza world doesnt get me out of bed in the morning. Much more staffing is needed, prep is even more so than froyo. Positive is that the Pizza Business doesnt have (typically) as many issues with equipment as soft serve machines (I hope you dont have Taylor machines!) Customers aren't nearly as friendly with Pizza as they are with froyo (at least until they see their price on the scale haha). Pizza is in the way of, the customer is hungry now and froyo is a treat.

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  6. Piedad

    Piedad Active Member

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    Although I haven't given much thought to this, My first impression is like yours ... at $1K per month it would be hard to fail. A few thoughts to get started:
    * Make sure that the deal is in writing (you should probably use a lawyer, but there is no reason to spend a lot for something that is this simple), including an exhibit listing every piece of equipment and furnishings in the place. And include a statement that there is no debt, lien or lease in place on anything.
    * Since it's $1K a month for everything, I'm assuming that that includes the rent/lease, and that the transaction (it sounds like you are leasing EVERYTHING from the current owner) includes the building premises. Moreover, you should either get a seperate building lease or incorporate the use and terms for using the building in the business equipment lease. If you will be "sub-leasing" be sure to examine the lease carefully and notify the landlord (if that's someone else) if required by the lease.
    * Consider whether you want the current business name (it may, or may not, have a good reputation) ... and if you're going to change the style to NY, you may want a new name.
    * Consider including sales volume and profitability incentives for your operations person since you will have limited time to commit to business
    development.
    * Expect lots of errors, mistakes, etc., and be sure to "make it right" with those employees and customers who were wronged or inconvienenced.

    There a zillion more things to consider, and hopefully some of the folks here will pitch in with advice (especially about a delivery operation). But if the question rests with being profitable vs not being profitable, you will likely make a buck here ... how many bucks, relative to your time and effort expended, is a different calculation altogether.
     
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  7. clownhair

    clownhair Active Member

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    Off the top of my head, even paying 1k for rent and equipment, I think it would be super hard to make any semblance of a decent income off 250k a year in sales. It is possible to turn things around of course and increase revenue but in my experience businesses that aren't really doing well never seem to swing up even with owner and management changes.
     
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  8. Steve.L

    Steve.L Active Member

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    Ok, so here it goes..
    During my first years in U.S. I came across a pretty similar opportunity. This was my very first experience with running a shop!
    A guy was renting me the space with all equipment, utilities etc all for $1,000/mo.
    Little I knew back then, I thought this was too good opportunity to pass.
    So I fall for it. Put 3k down (2 months down + security), and was ready to get started.
    With:
    NO LEASE
    NO EXPERIENCE (running a place)
    NOTHING TO HOLD ON TO (Legal docs, etc.)
    NO DUE DILIGENCE (Due to lack of experience)

    Results:
    I don’t even wanna get into that right now... too much typing!
    But for general idea, all short of problems hit me and I had no say in anything!

    Not saying that you situation sounds like mine, it just reminded me of mine and I thought to share it.

    Definitely thought do your due diligence and get everything in writing as advised by other experienced members above.

    Good luck!


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  9. Mike

    Mike Member

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    What will you do if your person that you have to run it quits? IMO you have to be willing to run it on your own. For $250k/yr I wouldn't expect to make more than $35-40k per year; your margins will go up if you can increase the volume. My recommendation is don't do it unless you want to be an owner/operator for a few years. You really have to enjoy this business. I'm not sure how similar it is to the froyo business, but we have a gelato business as well and the pizza is a LOT more labor intensive. $250k in gelato would be like $500k in pizza.
     
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  10. boston09

    boston09 Member

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    at 250k a year, and you not being there your income will be close to 0 - 20k a year. but potencial for many things going wrong. I think it could be decent opportunity who would be willing to be there 70 hours a week for few years... I would also be curious if store before had sold mostly (80%) pizas and had 25% food cost or had huge menu and 40% food cost.. big difference...
     
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