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Offline Poniel

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Business Loans
« on: October 05, 2016, 02:46:47 PM »
Hello All

I am wondering how you people here who have started a pizzeria how you got your initial funding. I am sure there will be a diverse range of answers. I am extremely ignorant in understanding anything about business loans. Is there anyone here who has got a loan for this and what requirements there are for such a thing. Maybe some of you had investment or maybe inheritance or even just saving for ages. I am very curious so would really appreciate some stories of personal experience.

Many Thanks

Pon

Offline dflip

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Re: Business Loans
« Reply #1 on: October 05, 2016, 07:50:30 PM »
It takes $ to make $.  Wish I had a better answer.

Offline Ovenray

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Re: Business Loans
« Reply #2 on: October 06, 2016, 06:31:52 AM »
There are a few crowdfunding platforms available: https://www.google.nl/search?q=spain+crowdfunding&oq=spain+crowdfunding&aqs=chrome..69i57.4695j0j7&sourceid=chrome&ie=UTF-8

I never started a pizza business but I did start a business in equestrian equipment once and while totally different from a pizzaplace I guess the initial preparation can be similar. First thing to do is to investigate the most likely area and location to setup such a venture, with an eye on competition but also with an eye on the highest ratio of potential customers vs the rental costs, some area's are much cheaper than others but most likely will also generate less traffic than more expensive locations. From there on you start setting up your 'business plan' as no bank will grant you a loan without one. A business plan is not for the faint at heart as there is a good amount of knowledge required to set it up properly so its best to seek the appropriate help for such a task. A bank will investigate such a plan in great detail and will grant you a loan or not according to the outcome. If the outcome says your business will be viable the bank will allow you the loan but that is easier said than done, you will have to prove to them (via your business plan) you will be succesful once begun.
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Offline TXCraig1

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Re: Business Loans
« Reply #3 on: October 06, 2016, 07:14:54 AM »
No bank (in the US anyway) is going to loan money to a start-up restaurant no matter how good your business plan is.
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Offline Ovenray

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Re: Business Loans
« Reply #4 on: October 06, 2016, 07:36:35 AM »
No bank (in the US anyway) is going to loan money to a start-up restaurant no matter how good your business plan is.

Over here in the EU things seem to work a little different perhaps, and from country to country anyway.

Btw, do you have any reference to back up such a statement ? To me the US seems rather big and quite diverse considering all the states/area's/banks etc. to be so limited as far as financials go.
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HarryHaller73

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Re: Business Loans
« Reply #5 on: October 06, 2016, 11:21:06 AM »
Over here in the EU things seem to work a little different perhaps, and from country to country anyway.

Btw, do you have any reference to back up such a statement ? To me the US seems rather big and quite diverse considering all the states/area's/banks etc. to be so limited as far as financials go.

Accessing bank issued small business loan in the US generally requires first fronting one's own capital and risk first.   Without cash, one will need to use personal credit and/or borrow from family/friends.   Once they open a business  bank account and show net positive cash flow, they have no problems tapping small business bank loans.  There are alternatives via the private debt market, private investors, VC capital, but that usually also requires a combination of cash flow track record, pedigree, or experience, etc. 



Offline Gianni5

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Re: Business Loans
« Reply #6 on: October 06, 2016, 12:42:39 PM »
Craig is right that banks Won't lend money for a start up restaurant.
I opened a restaurant with 2 business partners so we are all 1/3 owners. We all used home equity lines of credit for our initial investment. Then we were able to lease the majority of our equipment (if you have good credit its not that difficult to do). We were able to secure a small business loan but only because my father was one of the partners and he has 40+ years of running a profitable restaurant and has some financial strength. We originally tried to get a loan without my father and they looked at my other partner and I (we were both 27 at the time) like we were crazy. I think we got turned down by 7 or 8 different banks. We were both homeowners and had several years of experience in restaurant management and a good business plan but no bank wanted anything to do with us. This was in 2007 before the recession in 2008 and it's even more difficult now.
   I'm curious what makes you want to open a restaurant. Do you have experience in management or in the kitchen?  It's a rough business. High labor costs, food costs, overhead. It's all I know and you can make money but I'm convinced there has to be an easier way. I started because I fell in love with food and being in the kitchen but now I'm lucky if I spend more than a couple of hours a week cooking.

HarryHaller73

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Re: Business Loans
« Reply #7 on: October 06, 2016, 02:48:33 PM »
I was fortunate to find partners that shared a similar vision to me. I had a chunk of change saved, however, and there was some compromise but when you have partners that's how the cards tend to fall.

There may be some ways to save startup costs (an existing restaurant with low key money,) or a streamlined operation, but I'm of the opinion it's impossible to do a mom and pop shop in today's world.

Generally speaking, most new small food and hospitality startups fail within 3 years.  However, outside of the prohibitive rent markets in the larger cities, pizzerias actually have a higher rate of success than many other types of food startups because of extremely high margins.  But it requires alot of work.  Since the recession, people have gotten into the  pizzeria business as a means to generate quick cashflow, and often a temporary stop until they tap credit again.  This is common in the suburbs of NYC where pizzerias can change ownership quickly.  But the turnover has little to to do with lack of profits, it's just excruciatingly  hard work.  Pizzerias have offered cash stripped people  a means to generate cash quickly and has saved many people.  This was true during and after the great depression within Italian neighborhoods in NYC and also during the economic stagnation in the 60's and 70's, when pizza businesses actually flourished.   It's a common story of folks in NY/NJ who faced foreclosures and borrowed from family and ran a pizzeria after the recession.   After they're paid back, they usually just sell the business.  Pizzerias have been a savior for families in distress over the years.

 
« Last Edit: October 06, 2016, 03:16:30 PM by HarryHaller73 »

Offline waltertore

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Re: Business Loans
« Reply #8 on: October 06, 2016, 04:03:31 PM »
We opened a mom/pop shop here in Reno with 25k.  The space was an existing pizzeria and the sinks, hoods, restrooms, were in place.  Inside is 1,200 sq ft with indoor seating for 30 and 20 on the patio outside(about 600sqft).  I had my own ovens and a lot of the equipment.  We are a mom and pop shop like I grew up learning in and do barter for our payroll, acupuncture, laundry, window cleaning.  1 good day pays the rent.  I open/sauce/run the ovens make every pie/dough and my wife runs the register.  It is just pizza/calzone/salad.  No subs, pasta, booze.  Our staff consists of my wife, me,  1 full time paid non disabled employee that helps with the pizza topping/prep work, a couple volunteers, and a couple on call paid people.  We also have 7 employees with disabilities that work part time doing dishes, serving, busing, cleaning, folding boxes, and such.  We are only open 12-2 Tues-Fri and 5-8 Tue - Sat.  I work about 45-55 hours a week and we are making a very healthy income.  After only being open 9 months the publicity and business has been incredible.  I don't know how anybody can make it back where I grew up just outside of NYC with a pizzeria unless you are open all the time. That means letting go of things and like Anthony M. I could never do that. 
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Offline Poniel

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Re: Business Loans
« Reply #9 on: October 06, 2016, 04:16:43 PM »
Thanks so much everyone for your responses so far.

I have always in the back of my mind dreamed of having my own place where I can simply sell my food. I am in no way in a position where a bank would dream of giving me a loan even if i had a business plan made by God himself as I have never had any credit cards or whatever else makes one look legit in that sense. I traveled a lot and got from pizza chef job to pizza chef job and making money with gigs as a musician so nothing on my profile that makes me at all credible for a loan. But I do have what people have said a gift for flavour and I dream about opening a small pizzeria somewhere busy and making a name from quality. So this post was simply a curiosity in the ins and outs of beginning with something like this. As you said "dflip" it takes money to make money which will always be my problem. At the moment I can only dream and get better and better at my craft> I was thinking of somehow starting real small with a wood fired pizza oven on a trailer or something....

Thanks again people,. All your comments have been really helpful.

Pon

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Offline Don Cornicone

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Re: Business Loans
« Reply #10 on: October 08, 2016, 04:01:34 PM »
I want to figure how to ask this without crossing any personal lines....but income.  So I was talking to a guy starting a restaurant in town and he was speaking generally but made it sound like you can't make any money with a restaurant usually.  Like it takes 3-5 years to turn a profit  and then it didn't sound like you were making much.   Saying his friend has a place and it produces only 1000 a month, but has opened several places etc.  So would say 50k profit be unrealistic for a pizza place?  I think for me that would be a good amount and worth the work, even if it took a few years...so long as it was not just breaking even in the mean time..  but if it is like 30k it would not be worth it for me to ever dream of switching over from what I do, unless it was after the house was paid off and I didn't have bills.  I will say he was talking about after an expensive build out and everything having at least 100k in debt.   I would rather go cheap as a take out and build up to a small sit down place.  I'd like it to be small....like me my wife, and kids when old enough, then one or two hired hands....as of course I would force the kids with slave labor :)  So not asking what anyone makes but what are realistic profit potentials.  I know there are lots of variable, and there is no guarantee of anything, i'm just curious as to what is even realistic to shoot or dream for.

Offline TXCraig1

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Re: Business Loans
« Reply #11 on: October 08, 2016, 05:21:28 PM »
Btw, do you have any reference to back up such a statement ? To me the US seems rather big and quite diverse considering all the states/area's/banks etc. to be so limited as far as financials go.

Banks in the US don't loan money to start-ups period. Even with a big personal balance sheet and your personal guarantee,  you probably aren't going to get a loan. They will be happy to loan your your own money back, but that's it. Even having positive cash flow isn't going to get you a loan. 3 years of positive cash flow maybe. Banks don't take risks.
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Offline waltertore

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Re: Business Loans
« Reply #12 on: October 08, 2016, 06:40:54 PM »
I want to figure how to ask this without crossing any personal lines....but income.  So I was talking to a guy starting a restaurant in town and he was speaking generally but made it sound like you can't make any money with a restaurant usually.  Like it takes 3-5 years to turn a profit  and then it didn't sound like you were making much.   Saying his friend has a place and it produces only 1000 a month, but has opened several places etc.  So would say 50k profit be unrealistic for a pizza place?  I think for me that would be a good amount and worth the work, even if it took a few years...so long as it was not just breaking even in the mean time..  but if it is like 30k it would not be worth it for me to ever dream of switching over from what I do, unless it was after the house was paid off and I didn't have bills.  I will say he was talking about after an expensive build out and everything having at least 100k in debt.   I would rather go cheap as a take out and build up to a small sit down place.  I'd like it to be small....like me my wife, and kids when old enough, then one or two hired hands....as of course I would force the kids with slave labor :)  So not asking what anyone makes but what are realistic profit potentials.  I know there are lots of variable, and there is no guarantee of anything, i'm just curious as to what is even realistic to shoot or dream for.

I can tell you that if you do not have something to make you stand out and or be in a ridiculously busy location it can be very difficult to make any money on a small pizzeria even with family free labor.  The first thing to do is determine how much money you need to be satisfied and go backwards from that to see what kind of volume you would have to do.  Most people that open restaurants never realize the volume needed to make them profitable will never happen with their model.  We are making plenty of money as compared to our last jobs and only open 9 months.  I know the entire business from dishwashing to making pizzas, ordering, etc.  Without this it would have been a train wreck.  We found a spot that only took 25k in repairs/equipment to get the doors open.  Build outs make no sense to me as we are too old to ever get ahead of that.  A great location, small as possible, simple, great quality, and above all consistency coupled with great customer service, will result in success.  Walter
« Last Edit: October 08, 2016, 06:45:42 PM by waltertore »
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Offline parallei

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Re: Business Loans
« Reply #13 on: October 08, 2016, 06:48:54 PM »

Offline Don Cornicone

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Re: Business Loans
« Reply #14 on: October 08, 2016, 10:22:19 PM »
Thanks.  I would want to go small and cheap.  I am a contractor so I could do a lot of the stuff myself.  Especially in this region....I would not be required to hire it out.  I wouldn't open up till I thought my pizzas were superb.  I try as many places as I can and I see so many pizza places that start with a good idea and open up.  Its like they bypassed the ...learning to make pizza...stage.  Just went right into business chasing the dough.  Cool places, good ideas and concepts, but it surprises me how blah most pizza is around here, and even other areas I get to try.  To me its like art....I want to make my mona lisa before I try to sell my paintings as art....whats the point if I'm just sloppin paint on a canvas and making some money, I want something people recognize the effort in, ya know.  Something special.    It represents me, like my accomplishment.  I work for myself now, so I think there is that aspect ingrained of...this represents me and my name, so it needs to be done well.       
I was thinking of serving pizzas in the nude to stand out....but I haven't checked insurance on that yet.  I think for one....a real quality good pizza with flavor would stand out in this area.  I like Neo...but I'm still debating weather or not that would take in the midwest central region.  Or if it would be to "different" for folks, therefor "wrong".  And I can't figure out how I could ever make take out very successful with Neo.   Rent is cheaper here than big cities, but I also wonder about eventually trying the pop up thing, test the waters.....see if Neo could take in this area, etc.   
If that doesn't seem promising, I will just hire a few super attractive waitresses and hope they never quit!

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Offline waltertore

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Re: Business Loans
« Reply #15 on: October 09, 2016, 12:39:47 AM »
Thanks.  I would want to go small and cheap.  I am a contractor so I could do a lot of the stuff myself.  Especially in this region....I would not be required to hire it out.  I wouldn't open up till I thought my pizzas were superb.  I try as many places as I can and I see so many pizza places that start with a good idea and open up.  Its like they bypassed the ...learning to make pizza...stage.  Just went right into business chasing the dough.  Cool places, good ideas and concepts, but it surprises me how blah most pizza is around here, and even other areas I get to try.  To me its like art....I want to make my mona lisa before I try to sell my paintings as art....whats the point if I'm just sloppin paint on a canvas and making some money, I want something people recognize the effort in, ya know.  Something special.    It represents me, like my accomplishment.  I work for myself now, so I think there is that aspect ingrained of...this represents me and my name, so it needs to be done well.       
I was thinking of serving pizzas in the nude to stand out....but I haven't checked insurance on that yet.  I think for one....a real quality good pizza with flavor would stand out in this area.  I like Neo...but I'm still debating weather or not that would take in the midwest central region.  Or if it would be to "different" for folks, therefor "wrong".  And I can't figure out how I could ever make take out very successful with Neo.   Rent is cheaper here than big cities, but I also wonder about eventually trying the pop up thing, test the waters.....see if Neo could take in this area, etc.   
If that doesn't seem promising, I will just hire a few super attractive waitresses and hope they never quit!

 I spent the last 8 years outside of Columbus and my Smiling with Hope Bakery at Newark High School served the exact pies I sell here.  It was a very hard sell and I had to dumb down to $7-10 dollars for an 18" cheese pie.  Here I get $20 with nothing but thanks.  The midwest was a big disappointment for me foodwise other than the bigger cities and even then one had to know where to go or the food was pretty bad. I base my food rating on my roots growing  up just outside of NYC.  Here in Reno our pies are greatly received and a large with all the toppings( offer 9) costs  $40.  We get lots of SF, LA, SACTO, and world travelers, that enjoy good food.  Lots of NY/NJ/PA/CT transplants that also will pay top dollar for our pies.  A group from SF was in tonight that regularly eat at Tony G's places and said ours stood as tall as any of his.  Our social cause and quality of the pies have been a big hit.  To stay in the Midwest we would have to sell a ton of pies cheap to make a living.  Here we don't have to work so hard.  Location, location, location, is critical to success as Ohio proved to us.   Walter
« Last Edit: October 09, 2016, 10:56:44 AM by waltertore »
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Offline Don Cornicone

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Re: Business Loans
« Reply #16 on: October 09, 2016, 12:11:22 PM »
Sounds like it..thanks for the responses.

Offline TXCraig1

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Re: Business Loans
« Reply #17 on: October 09, 2016, 12:49:28 PM »
:-D :-D :-D

Commercial banks that is - investment banks are a different story.
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StateofMind

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Re: Business Loans
« Reply #18 on: December 27, 2021, 09:43:12 PM »
Banks absolutely will lend money to a startup restaurant assuming you have a solid business plan and collateral. I did it with our first restaurant with an SBA loan. We have since paid it off and are working on another SBA loan for our 3rd restaurant. We also used crowdfunding through Kickstarter for our first place.
« Last Edit: December 28, 2021, 11:57:11 AM by StateofMind »

Offline parallei

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Re: Business Loans
« Reply #19 on: December 27, 2021, 10:28:42 PM »
....... We also used crowdfunding through Kickstarter for our first place.

I'll never provide funds to someone that way again! :o  Gave a few hundred bucks to Walter that way, and then he will not tell me what type of pepperoni he uses. :-D :-D Never again.

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