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 is this restaurant opportunity an opportunity?

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nyczoo

  • Total Posts: 23
  • Joined: 12/28/2005
  • Location: spokane, WA
is this restaurant opportunity an opportunity? Wed, 12/28/05 4:25 PM (permalink)
Hello. I have a chance to pick up a full service restaurant for $80,000.00. $5000 down and owner contract for 15 years at 7%. The price includes the business and property. It has been doing $130,000 per year while it has had no real food quality and poor management. That was just for breakfast and lunch. The equipment is in good shape but old. it seats 75 people and has good parking. It is located on a highway that is designated a Scenic Byway so it gets traffic off of the interstate. The average daily traffic count is 3300. I would say it is much higher than that in the summer and much lower than that in the winter. It is located in a town of 2500 people and is 5 miles away from a town of 10,000. There is one good restaurant in the area but it is only opened at night and many people feel that they are too high priced and that their food quality has fallen over the years. I have worked in many restaurants over the years from being a waiter to cooking to management.

If I do this I am doing it on a shoe string. To the point that I will have to spend everything I have to open it up. I do know good food and I have a good reputation in the area and the area is screaming for someplace good.

I am curious what you think out there given the fact that I am on such a tight shoestring and keeping last years $130000 in sales in mind. It was doing breakfast and hamber and other sandwiches for lunch.

I have a voice in one ear screaming for me to do it and one in the other ear saying that I am going in to this way too thin on cash. I do have another income that I can make from 2 to 3 grand a month but it is very labor intensive so I know that I will have to give "some" of that up.

Well what is your take folks? Thank you.
 
#1
    nyczoo

    • Total Posts: 23
    • Joined: 12/28/2005
    • Location: spokane, WA
    RE: is this restaurant opportunity an opportunity? Wed, 12/28/05 4:42 PM (permalink)
    I guess the question is... How stupid is it to go into the restaurant business on a shoestring? Oh yea...he said that the first payment isnt due until March. He is getting out becuase inherited a bunch of money and doesnt have to work ever again.
     
    #2
      nvb

      • Total Posts: 468
      • Joined: 12/5/2004
      • Location: dfhbgmhmy, MN
      RE: is this restaurant opportunity an opportunity? Wed, 12/28/05 5:34 PM (permalink)
      When I bought mine I had around three months operating expenses in the bank and still worried daily that things could go south. Two years later I still have those three months in the bank and have never had to use any of it. But every month is a new month. I'd say to get some longer shoe strings before jumping.
       
      #3
        UncleVic

        • Total Posts: 6025
        • Joined: 10/14/2003
        • Location: West Palm Beach, FL
        • Roadfood Insider
        RE: is this restaurant opportunity an opportunity? Wed, 12/28/05 6:09 PM (permalink)
        Sounds like a good deal. But the shoestring part is not good... Especially if you want to pay your employees off the start. Also, you'd want to get a lawyer to check for leins (tax, bank, etc) that may bite ya in the arse... Then that cooler THAT WILL BREAK, or that fryer that wont fire up... I'm a firm beleiver in the laws of Mr. Murphy... Oh, and then there's all them start up fees like inspections, trasfer of ownership, deposits on utilities... The list goes on and on... Either way, Good Luck!



         
        #4
          roossy90

          • Total Posts: 6695
          • Joined: 8/15/2005
          • Location: columbus, oh
          RE: is this restaurant opportunity an opportunity? Wed, 12/28/05 8:40 PM (permalink)
          Where is this place?..The State and nearby city if you dont want to indulge the location directly...
           
          #5
            markolenski

            • Total Posts: 307
            • Joined: 3/7/2003
            • Location: Chula Vista, CA
            RE: is this restaurant opportunity an opportunity? Wed, 12/28/05 9:31 PM (permalink)
            the biggest reason for business failure is undercapitalization.
             
            #6
              bassrocker4u2

              • Total Posts: 534
              • Joined: 11/12/2003
              • Location: new holland, PA
              RE: is this restaurant opportunity an opportunity? Wed, 01/11/06 8:17 AM (permalink)
              before an honest opinion could be made, more info would be required.
              i guess if youare looking for a push..the hey, go for it!
              but many things you should consider first!...like....
              how many on the payroll? what is weekly payroll and food cost and general overhead. add this, add your payment starting in march, and then look at the 'now' weekly sales. that will give you a goal of how much you gotta improve in just 2 short months. on thing, you cant raise the prices, no matter how bad the food cost since you already exclaimed poeple think its already too high. alot of factors are at play here. you dont have a budget for advertising, so how are you gonna reach people to tell them you have taken over?
              then.....all this considered, you havent even factored in your on income needs. perhaps, you can chop labor and take on a position or two and make personal income that way.
              but the most worrysome fact so far, is the low sales. you could possibly make it if you had only one employee, but with a full staff, you would need much more sales to pay their salaries and profit a few dollars for yourself. i would think seriously about that town close by, and try to get some fixed catering gigs for extra revenue. many possibilities, btu it sure wont be easy. didnt mean to ramble, but these are all the things i would be thinking if it were me..
              good luck.
              but on the other hand, the property and building should be worth the total cost, right? i mean you could always find someone else to buy, if it didnt work out....
               
              #7
                garryd451

                • Total Posts: 699
                • Joined: 12/28/2004
                • Location: dowagiac, MI
                RE: is this restaurant opportunity an opportunity? Wed, 01/11/06 2:37 PM (permalink)
                quote:
                Originally posted by markolenski

                the biggest reason for business failure is undercapitalization.


                I must agree with Markolenski, You need more capital.

                You are buying a place with good equpment but old! Old means it will need to be repair, refurbish or replace as time goes on, will You be able to do this with the capital You now have and still pay your employees?
                 
                #8
                  Z66 Butch

                  • Total Posts: 198
                  • Joined: 11/8/2005
                  • Location: Emporia, IN
                  RE: is this restaurant opportunity an opportunity? Wed, 01/11/06 3:59 PM (permalink)
                  Thats not saying that you could not take out a business loan to get started. If it looks like a good deal and you know your potential customers you should know what to do!

                  Butch
                   
                  #9
                    Scallion1

                    • Total Posts: 418
                    • Joined: 7/20/2004
                    • Location: Yonkers, NY
                    RE: is this restaurant opportunity an opportunity? Wed, 01/11/06 5:49 PM (permalink)
                    quote:
                    Originally posted by Z66 Butch

                    Thats not saying that you could not take out a business loan to get started. If it looks like a good deal and you know your potential customers you should know what to do!

                    Butch


                    My impression, base on my own experience and observing others, is that you don't have much of a chance to get a loan for opening a restaurant, especially if you've got no track record. Loans, you know, are funds that banks are only too happy to give to people who don't need them.
                     
                    #10
                      garryd451

                      • Total Posts: 699
                      • Joined: 12/28/2004
                      • Location: dowagiac, MI
                      RE: is this restaurant opportunity an opportunity? Wed, 01/11/06 6:15 PM (permalink)
                      As I understand it, You have enough money to buy the whole place inclucing land, building and equiptment. If this is true, try to get a loan for operatering money for a year. Put that money in the bank, if you don't use it, keep it for future equptment, remodeling or a addition. If you do need it, in the next year, then You have it.
                       
                      #11
                        bassrocker4u2

                        • Total Posts: 534
                        • Joined: 11/12/2003
                        • Location: new holland, PA
                        RE: is this restaurant opportunity an opportunity? Thu, 01/12/06 8:02 AM (permalink)
                        with the property included, you should be able to take out a mortgage
                        simply on the worth of the real estate. i would consider living there(maybe in a camper) to save personal overhead, as money will be tight.
                         
                        #12
                          bassrocker4u2

                          • Total Posts: 534
                          • Joined: 11/12/2003
                          • Location: new holland, PA
                          RE: is this restaurant opportunity an opportunity? Thu, 01/12/06 8:05 AM (permalink)
                          i would worry about the small gross sales. look at years gone by and see what sales were generated then. the amount you listed is smaller than that of my mom and pop place, without any staff. rule of thumb is about 60 thousand in sales per employee. thats very low end...i would prefer 80. that means you can pay you, and half of someone else....
                           
                          #13
                            Burgerman1

                            • Total Posts: 51
                            • Joined: 10/8/2005
                            • Location: Mount Holly, NC
                            RE: is this restaurant opportunity an opportunity? Fri, 01/13/06 1:50 PM (permalink)
                            $80,000 for business, property and equipment?? This isn't a bad price, I would wonder why.

                            How old is the equipment? Is maint & repairs going to be a problem?

                            What is the value of the property now, has it been appraised and who paid for the appraisal?

                            Town of 2,500. Not a lot to pull from, but with little competition you could have a good market.

                            Open breakfast and lunch. Opportunity to open at night, thats good.

                            3300 traffic count...actually this is low. However the quality of the traffic count is more important that the actual number. Is this traffic passing from one point to the other? Are there houses close by that these people are passing to? What's within a 5 mile ring of the location?

                            Shoestring...things have been done that were even more stupid.

                            The mathmatics of this deal seem to be somewhat good, but its really hard to say without mroe infomration.

                            HB
                             
                            #14
                              nyczoo

                              • Total Posts: 23
                              • Joined: 12/28/2005
                              • Location: spokane, WA
                              RE: is this restaurant opportunity an opportunity? Thu, 01/19/06 10:36 PM (permalink)
                              Sorry for the silence...been away from the compuer.

                              The guy inherited a couple of million bucks and doesnt want to be in the restaurant business anymore and I happened to have stumbled into him at the right time and place.

                              This is a highway in central Washington state that runs up to Grand Coulee Dam and on up to Canada. It was just designated a Federal Scenic By way. There is a lake two blocks away and several more within miles. It is a popular hunting fishing and vacationing area in the summer time.

                              I figure heck..even if I just clean it up and build a track record for a year or two I can sell it and something on it. Or even turn a quick buck if any of you are looking for a place. :-)

                              Im going to start with breakfast and lunch and see where it goes. I am open to all of the words of wisdom that I can get.
                               
                              #15
                                nyczoo

                                • Total Posts: 23
                                • Joined: 12/28/2005
                                • Location: spokane, WA
                                RE: is this restaurant opportunity an opportunity? Thu, 01/19/06 11:53 PM (permalink)
                                Oh ya. I meant to say that I went ahead and went through with the deal.
                                 
                                #16
                                  garryd451

                                  • Total Posts: 699
                                  • Joined: 12/28/2004
                                  • Location: dowagiac, MI
                                  RE: is this restaurant opportunity an opportunity? Fri, 01/20/06 12:23 AM (permalink)
                                  quote:
                                  Originally posted by nyczoo

                                  Oh ya. I meant to say that I went ahead and went through with the deal.


                                  Good luck!!!!

                                  I think You got a good iodea, to start with breakfast and lunch only until You get everything running the way You want it to.

                                  I still think at some point You will want to start doing dinner time too!!

                                  Again, Good Luck and Best wishes!!,

                                  Garry
                                   
                                  #17
                                    6star

                                    • Total Posts: 4388
                                    • Joined: 1/28/2004
                                    • Location: West Peoria, IL
                                    RE: is this restaurant opportunity an opportunity? Fri, 01/20/06 2:33 AM (permalink)
                                    I am going to wish you all the luck in the world. (I am afraid you may need it.) I am pretty sure I know what town this is in, and from what I have read about the town, the town is trying almost too hard just to get tourist traffic to come thru and stop in their town (and they have been having problems with their big attraction). If I am correct, you know exactly what I am talking about. I hope that under your guidance, your restaurant will be the draw that this town sorely needs. Again, lots of luck!
                                     
                                    #18
                                      Jimeats

                                      • Total Posts: 3175
                                      • Joined: 8/15/2005
                                      • Location: Ipswich Ma
                                      RE: is this restaurant opportunity an opportunity? Fri, 01/20/06 6:28 AM (permalink)
                                      Good for you I'm glad you did it. This is one of those things if you did'nt do it you would be kicking yourself in the butt for years to come. It's a tough business but remember to always leave time for your self it is very important to have time off and get a new perspective on just how things are going. Buona fortuna ciao Jim
                                       
                                      #19
                                        enginecapt

                                        • Total Posts: 3486
                                        • Joined: 6/4/2004
                                        • Location: Fontana, CA
                                        RE: is this restaurant opportunity an opportunity? Sun, 01/22/06 9:33 AM (permalink)
                                        What and where is it? I'd like to stop for a meal on my next trip between Stanwood and Spokane.
                                         
                                        #20
                                          nvb

                                          • Total Posts: 468
                                          • Joined: 12/5/2004
                                          • Location: dfhbgmhmy, MN
                                          RE: is this restaurant opportunity an opportunity? Sun, 01/22/06 8:14 PM (permalink)
                                          Best of luck to ya!
                                           
                                          #21
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