How much is too much? - Posted by Quizmos

Posted by brandoncbsre on January 19, 2009 at 07:36:13:

I live in a town of about 10,000 people. We have a Pizza Hut that has been ranked number 1 in the WORLD in sales several years…you read that right. We also have a Papa Johns, Hungry Howies, Pizza Forum(small local chain and a small mom and pop like yours. He is only open Fri-Sat and maybe Sun. It is a 2-3 hour wait on Fridays. If the product is that good and people are willing to view it as a limited product you should be fine keeping it the way it is now. I ssume you have a real job as well from the post. Dont sell yourself short…people in small towns can be VERY loyal.

If you really want to look further into this…try to manage the property and sell from there first. Pitch the idea to the owner. Allow him to leave it up for sale while you are working for him. His motivation may be to leave town and you may help him meet this goal.

This would allow you to test drive the idea without putting too much of your arse in the grinder.

Good Luck (I never order from Pizza Hut, the little guys make better pizza)

How much is too much? - Posted by Quizmos

Posted by Quizmos on January 18, 2009 at 14:26:54:

I have a small pizza buizness in a rural tourist town of about 1000 people. This is definately the edge of the market, and I manage to remain open by limiting my hours of business. People expect and look forward to my being open. For two years we have been a tremendous success. Now, I have learned that another restaurant in town is planning on putting in an oven and doing pizza full time. He has a full bar and a game room. No way to compete with that.

There is a restaurant on the main highway (and many people stop there without ever coming into town. He is selling, but the cost is almost $2 million. He does have a bar and gas station that is part of the business. Am I crazy thinking I might buy his place and offer my pizza there? I just need to figure how to afford a $2 million dollar mortgage. I have very little to put down, but this seller may be motivated. Any advice?

Re: How much is too much? - Posted by David Barnett

Posted by David Barnett on January 19, 2009 at 18:04:26:

My full-time job is being a business broker.

I always tell my buyers “don’t disqualify yourself, let the seller do that”

Evaluate what the business is worth to you and make an offer. Don’t be afraid to be really aggressive on price and heavy on seller financing. Most first offers on businesses are 55-70% of asking price. 99% of business sales in Canada (and around 90% in the US I believe) involve vendor take back. Sometimes as high as 50% of the selling price. In some industries, like cash restaurant businesses with shoddy bookkeeping (unreported sales) the vendor take back can be as high as 70%.

Towns that are not near major metropolitan communities and don’t have a lot of immigration are always buyers markets when it comes to businesses. Be aggressive if you want this, they may not have many interested parties.

David Barnett
Sunbelt Business Brokers
Moncton, NB, Canada