Author Topic: The Inevitable Happens  (Read 5259 times)

0 Members and 1 Guest are viewing this topic.

Offline Puzzolento

  • Registered User
  • Posts: 349
  • Location: South Florida
The Inevitable Happens
« on: March 02, 2010, 01:54:41 PM »
Tomorrow morning I'm going to pay a visit to a pizzeria which is up for sale.

This forum is a bad influence!


Offline GotRocks

  • Registered User
  • Posts: 255
  • Location: up to my butt in snow
  • Trying to get financing sucks!
Re: The Inevitable Happens
« Reply #1 on: March 02, 2010, 02:40:46 PM »

This forum is a bad influence!

Only if you had not planned on opening your own place, were looking for management advice for an existing place, or wanted to lose weight by eating boring foods that taste like dirt!!

I hope things go well and it has what you need in facilities and location, do not discount lack of parking either.
I would really spend some research time to decipher exactly why the place you are looking at is closing it's doors. They may tell you one thing, but it is up to you to figure out the many other things that were the actual cause.Realtors are realtors, not restaurant number projection guru's! they may go on about traffic flow and other things, but you got to get those drivers in the door first.
it may be perfect in every way, but please check crime statistics too. median income, or what the majority of the neighbors do for work, all this little stuff can help you make a more informed decision..
Most restaurant failures are from little nickel and dime inconveniences that have no particular bearing on the success or failure by themselves, but when all those little pieces come together, disaster is usually imminent.

I wish I lived closer to you, I would love to be able to help you out with a few aspects of the restaurant business. PM me is there is anything you feel I may be able to help with such as Menu costing strategies etc etc etc. You already got the cooking part handled!

So, ya ever thought of living where you have snow up to your butt 6 months of the year? You seem to have the passion that is required to be in the hospitality/food industry, just lacking in past experiences, <<<----(not a flame job, nor is it meant to be offensive in any way)
I would working with a guy with your determination.

A skinny cook is not to be trusted!

Offline Dan101

  • Registered User
  • Posts: 8
Re: The Inevitable Happens
« Reply #2 on: March 02, 2010, 03:48:52 PM »
All the very best Puzzolento.  I move apartment tomorrow, so once the initial moving in crazyness is over I will be contacting realtors in the area about a couple of locations I have my eye on.

Offline pcampbell

  • Supporting Member
  • *
  • Posts: 767
  • Age: 33
  • Location: VT & NJ
Re: The Inevitable Happens
« Reply #3 on: March 02, 2010, 06:18:31 PM »
where in FL are you again???
Patrick

Offline Puzzolento

  • Registered User
  • Posts: 349
  • Location: South Florida
Re: The Inevitable Happens
« Reply #4 on: March 03, 2010, 08:38:44 AM »
Thanks, GR. Looking at the place in an hour and a half.

I'm near Miami.

Offline Puzzolento

  • Registered User
  • Posts: 349
  • Location: South Florida
Re: The Inevitable Happens
« Reply #5 on: March 03, 2010, 11:59:18 AM »
I'll just repost what I wrote at PMQ:

I took a look at the place. Here is the story.

It's a tiny rathole. That's fine; I did not want to start big. It used to be a Jerry & Joe's. This is a fairly good chain.

Equipment:

1. Blodgett oven, two-deck, 650. Stones cracked. It will handle three 16" pies per deck. I'd say the decks are about 48" by 36". It's ancient, but I suppose it will make pizza as long as the gas flows.

2. Three-door refrigerator. Did not spot a brand name. It's about eight or nine feet wide, and it's maybe seven feet tall.

3. Three-door prep station with a polyethylene (I think) surface for pizza. Did not see a brand name.

4. Household fridge.

5. Two small microwaves.

6. Hoover planetary mixer. I think it got the name because it was made during the Hoover administration. Could not tell the size in quarts, but it will accept a batch of dough requiring 22 lbs. of flour.

7. Gural 120V slicer.

8. Two big stainless prep tables.

9. One small prep table, occupied by slicer.

10. Two-door beverage cooler, probably the property of Coca-Cola.

11. Phone system.

12. Three-compartment sink.

It has two small round tables with two seats each. No beverage fountain. No range. No conventional oven. The only thing he does not own is the Coke cooler.

Here is the deal with the lease. I misunderstood. It does have a lease, but the lease is locked at $975, provided I take over. The problem with this plan is that it has seven years left on it.

The place is in unincorporated Dade County, so I don't have a lot of city regulation to drive me crazy.

Minimal parking, although there is unlimited public land across the road, and people use it.

There is really no dry storage, but the refrigerator is so outlandishly huge, I could keep a lot of stuff in it.

I have not seen the books, but they claim they grossed around $650 per day. The cost of the gas will probably be higher than the figure they quoted earlier; they got a 20% discount as a franchise.

Here is my take. This is not a fantastic deal for $20K. If the business tanks, I'm stuck with a seven-year lease, and it's very hard to find new tenants these days. The equipment is not worth $20K. The goodwill is virtually nonexistent; it basically amounts to local knowledge that pizza is available at this address. I'd be starting from scratch.

I think the real story here is that this guy wants out of a lease, and he doesn't want to sell the equipment piecemeal. I suppose the lease would not be a problem if I incorporated and the business died with no assets, but that seems like a cheesy way out.

I'd say this deal is worth more like $5K, purely for the cost of the dubious equipment.

The up side is that the potential for a financial catastrophe is pretty limited.

One thing I learned: a business in an unincorporated area is a good thing. This place delivers to all sorts of over-regulated, posh areas, but it does not have to answer to their politicians and bureaucrats.

**************************************************** end of paste

I have to admit, it's tempting. If I could get in dirt cheap, I could go up there and run the place by myself for a few months, just piddling around as a relatively affordable hobby. If it caught on, I could hire lackeys and flunkies and stooges and extend the hours and try to make some money.

Offline Dan101

  • Registered User
  • Posts: 8
Re: The Inevitable Happens
« Reply #6 on: March 03, 2010, 12:48:39 PM »
Just be careful not to let the fact that you really want to do this make you pick the 1st place you've seen.  If it's right and the problems are easilly fixed, go for it.  If not it's best to go the less exciting route, say thanks but no thanks and look elsewhere. 

Definately be a hands on manager for the first 6 months to a year bro.  You want to know every inch of that shop, every crack, regular customers, busy times, quiet times.  Basically you want to be an expert of your business so whenever problems arise, you are comfortable enough with everything to be able to fix it.  If somebody gave me a a few tours of a Macdonalds I still wouldn't be able to run the branch.  However I could field any question, resolve any dispute and take over any shift at my old PJ's store.

Offline Puzzolento

  • Registered User
  • Posts: 349
  • Location: South Florida
Re: The Inevitable Happens
« Reply #7 on: March 03, 2010, 12:58:38 PM »
Sage advice.

It's not the first place I've seen; I'll point that out. It's the first place I've seen that interested me enough to get me into my truck.

Offline thezaman

  • Lifetime Member
  • *
  • Posts: 1899
  • Age: 61
  • Location: ohio
  • I Love Pizza!
    • lorenzos pizza
Re: The Inevitable Happens
« Reply #8 on: March 03, 2010, 01:40:47 PM »
a simple rule is 20 times weekly income is a fair asking price. the rent is reasonable. if you are willing to work 7 days a week all shifts you can make money. if you can charge a fair price for your product you could net 15 to 20 % , before your salary. ask to see all food vendor receipts add them multiply by 3 that is a start on sales ,that is high at 33% food costs. also look at all of his utilities. 4500.00 can be profitable if fixed expenses are not out of line.
 and i do have one issue, respect your employees i have 35 of them and it is as hard to hire a dish washer as it is a good cook, so they are all very important in running you business . there are different ability levels and if you can match jobs with ability,you will have a happy work force.

Offline Puzzolento

  • Registered User
  • Posts: 349
  • Location: South Florida
Re: The Inevitable Happens
« Reply #9 on: March 03, 2010, 03:10:01 PM »
Quote
a simple rule is 20 times weekly income is a fair asking price.

That makes the asking price zero, since this place closed two weeks ago and has no clientele. I think the only value left is the equipment.

The total figure for rent, water, gas, power, Internet, phones, and trash is about $1700 at its peak (highest gas consumption). I have not checked this via receipts and checks yet.

Thanks for the info. Very good to know.


Offline thezaman

  • Lifetime Member
  • *
  • Posts: 1899
  • Age: 61
  • Location: ohio
  • I Love Pizza!
    • lorenzos pizza
Re: The Inevitable Happens
« Reply #10 on: March 03, 2010, 03:31:50 PM »
i thought you said that the store averaged 650.00 per day, must of read it wrong, sorry .

Offline Puzzolento

  • Registered User
  • Posts: 349
  • Location: South Florida
Re: The Inevitable Happens
« Reply #11 on: March 03, 2010, 03:37:09 PM »
I'm too lazy to check what I wrote. Here is what I SHOULD have written: the income WHEN IT WAS RUNNING was in that range, according to the owner.

Sorry about that.

Offline Mo

  • Registered User
  • Posts: 210
Re: The Inevitable Happens
« Reply #12 on: March 03, 2010, 04:48:05 PM »
I'm too lazy to check what I wrote. Here is what I SHOULD have written: the income WHEN IT WAS RUNNING was in that range, according to the owner.

Sorry about that.

At $650 a day I can see why they shut down...




Offline Puzzolento

  • Registered User
  • Posts: 349
  • Location: South Florida
Re: The Inevitable Happens
« Reply #13 on: March 03, 2010, 05:02:42 PM »
Tiny place. Smaller even than Otisburg.

Offline Mo

  • Registered User
  • Posts: 210
Re: The Inevitable Happens
« Reply #14 on: March 03, 2010, 05:08:45 PM »
I don't know man. You say you can get in for cheap, but once you start using equipment, bringing in food and paying employees you're going to be spending money pretty quick. If that equipment is as old as you say then expect it to fail as soon as you start putting it under the stress of daily production.

I wouldn't even look twice at it unless you thought you could double that take from the outset.

My opinion, of course.


Offline TXCraig1

  • Registered User
  • Posts: 12687
  • Location: Houston, TX
Re: The Inevitable Happens
« Reply #15 on: March 03, 2010, 05:15:19 PM »
I think the real story here is that this guy wants out of a lease, and he doesn't want to sell the equipment piecemeal. I suppose the lease would not be a problem if I incorporated and the business died with no assets, but that seems like a cheesy way out.

You should incorporate to protect your assets from 3rd parties (read lawsuits), but it probably won't do you any good on the lease as you will almost certainly be required to sign a personal guarantee (PG) with no history. I've taken over quite a few leases in the past couple years (office space - not retail), and I've been able to negotiate very favorable terms. In all cases at a lower cost/sqft and with a much shorter tenor than the tenants that walked. I bet you can do the same - probably a couple months lease free to get you going as well. As you said, it's hard to find new tenants right now, and lease space is as perishable as it gets. If you can negotiate a deal that gets the current lessee off the hook, he should just hand you the keys as he likely has a $80K liability as it stands. Talk to both the lessor and the lessee and be sure you understand all the dynamics before you do anything.

Don't plan on borrowing any money from a bank unless you have the assets to put up a PG.

GotRocks is exactly right that you need to be very thorough in dilligencing why they closed and understand why it will be different for you. Talk to everyone including their landlord, banker, vendors, neighboring businesses, and customers if possible. Look at their invoices. Look at their payroll. Look at their taxes. Look at their bank deposit slips. You also need to really take your time in understanding what the cash flows looked like when they were open and what you expect them to be going forward. Don't forget to accrue for things like repair and maintenence. If you're wearing the rose colored glasses, take them off before doing this. The last thing you want to do is go into a business not understanding the cash flow. Get help with this if you need it.

I think Mo raises another great point. Say everything goes well and you net 10% on $650/day. Running a restaurant is a lot of work for $24,000/year.

Craig
« Last Edit: March 03, 2010, 05:17:37 PM by TXCraig1 »
Pizza is not bread.

Offline Puzzolento

  • Registered User
  • Posts: 349
  • Location: South Florida
Re: The Inevitable Happens
« Reply #16 on: March 03, 2010, 05:17:14 PM »
It's hard to believe the mixer still runs. I don't know how long a pizza oven will run before it has to be scrapped. This one could use two stones. The refrigerated equipment looks pretty good.

I can't believe these guys put out the entire Jerry & Joe's menu from this little place. They told me they cooked the pasta at home. I can't see how that's possible. You'd think it would turn into mush.

My ideal menu is thin pizza, Sicilian, rolls, cheesecake, and soda. If I had to make salads, subs, and forty pasta dishes, I'd go crazy.

Offline TXCraig1

  • Registered User
  • Posts: 12687
  • Location: Houston, TX
Re: The Inevitable Happens
« Reply #17 on: March 03, 2010, 05:18:54 PM »
I can't believe these guys put out the entire Jerry & Joe's menu from this little place. They told me they cooked the pasta at home. I can't see how that's possible. You'd think it would turn into mush.

The health department might have something to say about it as well...
Pizza is not bread.

Offline Puzzolento

  • Registered User
  • Posts: 349
  • Location: South Florida
Re: The Inevitable Happens
« Reply #18 on: March 03, 2010, 05:19:53 PM »
You meant "$650/day," but the point stands.

Whoops, you caught it.

I wonder how much pizza a Blodgett two-deck oven can produce in a twelve-hour day.
« Last Edit: March 03, 2010, 05:22:24 PM by Puzzolento »

Offline GotRocks

  • Registered User
  • Posts: 255
  • Location: up to my butt in snow
  • Trying to get financing sucks!
Re: The Inevitable Happens
« Reply #19 on: March 03, 2010, 06:24:32 PM »
Quote
They told me they cooked the pasta at home. I can't see how that's possible.


The health department might have something to say about it as well...

Yup, that is the first thing that popped into my head too, The H-D should have been all over that during there inspections! Now, if I was an inspector, I would have looked at the menu, and asked how they did Pasta if I did not see anything to cook it with at the location. But from other stuff I have seen take place in FL, it really doesn't surprise me either.
What has me wondering is why they did not get a single-burner stockpot stove or even a wal-mart special turkey fryer burner to use on-site. Anything other than cooking food for a restaurant at your home, then transporting it to the restaurant. Maybe you should talk to the county health inspector and ask to see their inspection notes on this place, Maybe this place got a bad reputation due to a food-borne illness outbreak (very possible) and you would need to work even harder to get past that with your customer base.
That info may be available online through the county website. You need to know, and you can use all this info for a bargaining chip too.

Old equipment;
Don't discount all equipment just because of it's age, I would be more concerned about refrigeration than the ovens or a mixer, Although I have never seen or heard of a "Hoover" mixer until now. So I have nothing to say either way about that.
I'll tell you something though, the Mixers that Hobart produced in the 1930's are 10X tougher and will outlast anything they currently produce! The spot I would like to get into has 2 Hobart exposed-motor 60Qt mixers included in the lease. Hobart quit producing that style because they were not generating service calls, they would only get to see a customer once, and never hear from them for service after the sale because those things were so tough.
if you oven or mixer goes down, you lose sales, if your coolers go down, you lose sales and your inventory!
Old ovens & stoves;
I have worked with commercial stoves and ovens that were at least 80 years old, and again they outperformed anything built in the last 40 years. The pure heft of the steel & iron of older units made them far superior to what is out there now.

Do some research, take another look, and see where you are then.
A skinny cook is not to be trusted!