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HELP! Considering buying a Pizza shop, what do you think about this purchase price? HELP! Considering buying a Pizza shop, what do you think about this purchase price?

08-25-2014 , 10:25 AM
Calculating your profit with you running the place is making a mistake. You need to calculate it including the cost of what it would take to replace you. And that includes you managing the general manager you hire to replace you. If you work 10 hours a week reviewing their books and making sure nobody is stealing from you, that's an expense as well. Your time isn't free.
HELP! Considering buying a Pizza shop, what do you think about this purchase price? Quote
08-28-2014 , 05:55 AM
I wouldn't suggest buying a turnkey pizza shop unless you know the business and have opened one from scratch. And I wouldn't suggest doing that unless you've run an independent pizza shop and are a legitimate "pizza guy." As in, somebody who can handle the pies and oven on his own through a busy Friday night. That's the most crucial position and the most expensive laborer by far, and even when you get business rolling to the point where you can hire a good pizza guy, you're still going to be the primary backup for a good while.

You need to know 100% of the operations from making dough to mixing sauce to every salad on your menu to what thickness all of the meats and cheeses are sliced at. And when you need to make the dough ahead of time to meet demand without waste. And you'll have to train others to do it. There are hundred small jobs and menu items you need to be a master at yourself.

Keeping up with supply is a job by itself, when inexperienced you'd make a lot of mistakes resulting in running out of things and spoilage.

45 hours a week isn't happening. I opened two places with an experienced owner, and we were both there 80+ hours a week for the first few months. The day started 2-3 hours before opening for 12-hour days. It's not a McD's franchise type thing where you can hire an experienced manager and delegate operational control. It's your menu, your system, and you're the only hope for any kind of consistency.

I'm not saying it can't be done, but it's a tremendous amount of work and I'd highly recommend spending at least 6 months as an actual pizza guy/shop manager before considering it.

If you were talking about a dollar store or boardwalk t-shirt shop then maybe, but there's a lot of expertise needed for a successful pizzeria. It's not rocket science but there's a lot going on.
HELP! Considering buying a Pizza shop, what do you think about this purchase price? Quote
08-28-2014 , 01:09 PM
I have been in retail for over 10 years now. I think $320K is quite high for a pizzeria with the kind of returns you mentioned. Just strictly speaking from a business perspective, you want to re-coup your initial investment in 2 years. By this logic, with the numbers you mentioned and how much you are slated to bring in (max 100K/yr while working intimately at the pizza shop), I would say $200K (perhaps less to give you some wiggle room) would be my max offer for this business.

You got a lot of good advises on here. I would just add, if you decide to go forward with this venture, that you try to sign an extension to the lease (for at least another 5 years, preferably 10 years extension on favorable terims) to ensure continuity. In the event that you decide to sell the business down the road, potential buyers or investors would be more inclined to buy your business if you have a long term lease, as opposed to a short term lease. Landlords are funny about renewing leases, and it is not uncommon for LLs to increase the rent when they see you're doing well, or in some extreme cases, would not even re-new the lease at all.

$320K is a lot of money. If I have that much disposable cash, I would look into investing in a business with property included. That way, when you're ready to sell your business, in most instances, the value of your property generally increases with time.

GL on what you decide to do!
HELP! Considering buying a Pizza shop, what do you think about this purchase price? Quote
08-28-2014 , 04:39 PM
As others have advised, do not buy the business unless you know the operation inside out. Profitability is highly dependent on expenses and it's extremely difficult to control expenses if you don't know how much everything cost. You have to be able to literally visualize the moment a customer hands you a $1, how much does it gets sliced before it hits your profit column.

Good luck.
HELP! Considering buying a Pizza shop, what do you think about this purchase price? Quote
08-29-2014 , 04:53 AM
If possible its a good idea to go and have a quiet look at the business and location, maybe sit nearby in a car for a few hours during a busy time and just observe what's going on, what's new in the area etc.
HELP! Considering buying a Pizza shop, what do you think about this purchase price? Quote

      
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