Would you take over this store?

[system]

I am in a suburb of Detroit. I recently got a call from a fellow pizza guy telling me he planned on closing up. His rent is $2000 a month for about 1100 square feet. The rent includes all of the pizza equipment, deck ovens, walk-in, make lines etc. His marketing has been pushing a $4.99 large chesse & pepperoni pie. He also has a lot of funky pies, like a Coney Dog pie for instance. He is now doing about $2500 a week. I can get in by just taking over the lease. There is 18 months left on it and at the end of that time I would own all the equipment. I am in the process of selling my store. The economy here is terrible. Everyone I know of is down except for Little Ceasers who sells a boat load of $5 pies. So my question is would you guys do this? I do have a black book and would do some more marketing. I would also put in a cheap POS to keep in touch with customers. The million dollar letter pulls about 6% at my current store. If I do go ahead with this though should I keep making gourmet pies or go for the Cheap Pizza theory I read about on another thread? Not quite sure what exactly to do. Please share your thoughts good, or bad!

 

[pizzaguy]

You say you are selling your store and the economy is terrible so why would you want to buy another store when its not making any money?

 

[system]

Amen. Why buy his problem? Buy the equipment, and go somewhere that has greener pastures. The best predictor of future performance is past results.

 

[PIZZAMAGOO]

I have to agree with the others. Go someplace where you have a greater chance of success. Good luck!

 

[system]

Hello Gusto

I guess I have a couple of questions.

1. Why do you think you can do better?

I see the others responses and that was the first thing that came to my mind as well, but unless you are willing to leave the state and go west or south, moving to somewhere else is probably not an option.

1. So what are the total costs involved with this? How much down and how much to buy out his store?

If we had that info maybe we could give better advice. I know that a lot of places are making money in your area, I think it is just a matter or how to go about it.

 

[system]

Thanks to everyone for the repsonses so far. Let me expand a bit.

The store I am selling is a store that has been at the same location for over 10 years. It has served as a drug den and been the scene of many “lovers quarrels” between the couple who were the previous owners. It was dirty and nasty when I bought it and they completely lied to me about the income. I have built it up but the franchise won’t let me change some things (like the name) to try to make a serious go of it. Unfortunately I walked in to a buzz saw.

The store I am buying was up in the $4000 a week range less than 3 months ago. THe guy was very overstaffed and stopped advertising. He also had a major dispute with the city about his signage. It got a lot of press coverage. He is not a franchised shop. He is indy. The place is next door to a Blockbuster video in a high traffic area. My current store has no neighbors on a big road but not a big commercial area of the road. His pizza is not too good. It tastes pretty much like a little ceasers pie. THe equipment is mostly newer and in good shape. Though the bakers pride oven needs one replacement stone as it is cracked.

As for cost. Well it would not really cost me anything. Just 1st month and security really. Right now I pay 1500 a month for 900 sq ft plus my land contract pyumt of 850. Thats 2350. This place will be 2000-2100 a month depnding on CAM and Taxes. So I save money right off the bat. Plus it is nicer. Plus a higher traffic area. Plus this store was actually doing well not too long ago.

This came about becuase I had talked to the owner a while back about some ad reps that were trying to get me to advertise. They used him as a reference. We chatted and it came up that my lease was up at the end of the year and the landlord would not renew for me. So when he called it was on the premise of “Hey I got a pizza place that needs to get leased and you got a pizza place that needs a lease. Let’s help each other out.” I am faced with having to move at the end of the year if I can’t sell the store. SO that is why I am thinking of this. Perhaps that enlightens you guys to my situation a little better.

As for why I think I can do better. Well from everything I have read a POS that allows postcard marketing is a HUGE plus. He is not doing this now. Plus I will send out 2000 “million dollar letters” every two weeks. That ought to generate at least 5% response whcih would be about 100 people every two weeks. Hope this helps.

Thank you everyone.

 

[Scott_Hack]

What would be your plan to get out from underneath your current store? I’ll admit that the other store has a lot going for it from what you said. A payment of 2100 a month for rent and to pay for all your equipment sounds fantastic. Next to a video store, and a large chain one at that… bonus points. How much is the equipment worth? How much do you have saved up for rebranding the store?

 

[PIZZAMAGOO]

Ok this changes things a lot! It sounds like you can make a pretty good go of it with all of that going for you. I guess the only thing that still scares me is that you said the area is really economically depressed, so you might be stuck trying to be the lowest cost provider to make a good go of it. If you are ok with that it sounds like a great deal as far as getting all the equipment for free and all. After you are there for a while and have built a good customer base maybe you can even start to raise your prices a bit. It sounds like you have a better product than your competitor so you have a very strong chance for success, and worse case scenario sounds like you can at least do better than you are at your current store. I wish you the best of luck in your decision, and business ventures!

David McGuire

 

[system]

I think the cheap niche is the one to target. I understand that during tough economic times price is king so all hail the King! I am meeting with the owner tomorrow. We’ll see what happens. Any other thoughts anyone?

Gusto