Thread: Purchasing an existing business?

I wouldn't even begin to make on offer until you get him interested in the idea of selling, you will need to see his Financial Statements,

I won't pretend to know anything about the restaurant business, but I have to ask, what do you expect the profits as a % of sales to be?

Spliting profits of 10% (assuming its even that high) 4 ways is 20-25K per year

what type of salary would you be making?


if profits are high enough, perhaps the business will finance its self , like buying his business with his own money

I purchased an existing 500K in sales business this past summer, and the purchase is financed by its profits. my downpayment was 10K

you have to see the financials before you can even think of making an offer.

What is the loyalty to the owner, do people come to the restaurant because he owns it or because the food is fantastic. and will they keep coming back after he's gone

@ XavierYZ Thanks for replying.

I absolutely agree with you about talking to the owner reviewing financials, etc. Then make an offer.

Profits will pay the loan, I have a decent salary this is more of an investment and experience. The 2 partners that run the joint will be paid as employees.

Concerning loyalty, it’s difficult to tell but the fact that the Chef is the new owner will definitely help. We will focus on reeling in new customers as well as keeping the old ones.

S

I think having a group of partners could be advantagious especially in the restaurante biz. I see you have some experienced partners but is there going to be a money man. Alot of times in deals like this there is atleast one partner who has deep pockets who can post cash if thing start getting alittle rocky. Will you be able to weather the seasonality of the business financially. Most restaurants dont make alot of money in Jan/Feb and make alot during the holidays.

Based on those numbers I would put the cash flow somewhere around 200k+- depending on liquour sales+ the building. That would put your take home at 50k not including the dept service that would be somewhere around 5K-10K/mo for the business + whatever you negotiate for the real estate depending. If you are comfortable with the risk to reward then I think it could be a great experience/ investment.

On a side note I have come across alot of successful restruantours and many of them work with a group of guys and purchase/ open several restaurants and bars. I believe this is the best way to go allowing you to spread your risk as well as increase your earnings. That way if one restaurant begins to see a drop in revenue the others can still support growth. Either way good luck

Hi Pete,

Thanks for the encouragement. December and February are actually good months. Valentines day is the best single day of the year, that evening cost me 150$, multiply that by +100 plates. but you are absolutely right about January and the unreliability of sales.

What do you mean by dept service?

S