Can a low investment, weekend only place work?

Poppa's PTL Club · Posted: Sep 09 2008 Post subject: Can a low investment, weekend only place work?

I have a possible opportunity to purchase a small restaurant operation (they are selling hot wings now). The investment is minimal (it is around the price of the equipment) and assuming the renewable yearly lease at the end of this year ($1600/month...DIRT CHEAP).

I am thinking about doing this if I could make it work on a Friday night, Saturday and Sunday only place. The current owner has other restaurant locations and has found it impossible to get a good manager for the location and it is taking up a lot of his time; that's why he's looking to sell it off at such a low investment (about $15k). I would have to buy an approved smoker (I'm pretty sure I can't get the health dept to OK my DPP Fat 50).

He said he is making about $2000/month (he loses money Monday through Thursday) at the place now, but the time he has to invest in it is so disproportionate that he is looking to get out of this location only. He's willing to open his books up to me if I'm serious. I would maintain the wings (he's making money at it), but would add BBQ. It would also give me a health dept approved kitchen, so I could ramp up the catering a bit.

I am aware that I would have to give up any off time on the weekend, but I have family members who have offered to work with me, so I would have a pretty good base of people to work with me. I'm not discounting the time investment I'd have to put in here.

I've said I wouldn't get into the restaurant business, but this is such a small investment and I could probably get it back by selling the equipment, so I wouldn't be putting a lot of capital at risk (I wouldn't have to borrow much, if any, to do this).

What am I missing and what should I think about before I make a decision?
_________________
I likes to eat 'da pig!
Acts 11:5-9

BBQMAN · Posted: Sep 09 2008 Post subject:

One of my biggest questions would be why would an owner "with other locations" be looking to sell THAT particular one?

I'm not really buying the bad manager disclaimer. If the location was a money maker, I would think that finding a resposible manager wouldn't be that hard to do.............

Another factor (to me) is that to build a customer base continuity of operating hours needs to be maintained. In other words why weekends only, and if so what is the draw to this location in the first place?

We had a lot of lean years before establishing a great following at the market we participate at. But we were always there trying to make it work, and have done well.

A lease of $1600 a month plus utilities, insurance etc. will probably turn into $2,000 a month, not including payouts for labor.

So you will need to net at least $500.00 a weekend to break even.

I'm also wondering what 15K buys you? That's a lot of used equipment.

Do you have some pics of this joint, and the surrounding area?

Probably the key to having this be a success will be...............................offering sweet slaw! Razz

All kidding aside, best of luck to you Poppa!

Sounds like an interesting opportunity, keep us posted.
_________________
BBQMAN
"I Turned A Hobby Into A Business".
Providing "IMHO" Since 2005.

Poppa's PTL Club · Posted: Sep 10 2008 Post subject:

I have known this guy for a long time and I pretty well trust him. We hold a Bible study breaksfast there on Saturday mornings and I've actually cooked the breakfast for the past few months there on a volunteer basis (he wouldn't say it, but he was losing money on giving us the space for 2 hours on Saturday morning, so I offered to cook for free).

The management thing makes sense to me because he is operating on a pretty thin margin. He is making money now because of the low manager's salary. He's had several other worker's there, but he's had some problems with employee theft and finally found a manager he trusts, but she's just not up to the task (she doesn't treat employees or customers well and is just kind of abrasive). He's had so much trouble getting someone at his price that he can trust that he won't fire her. He's looking at taking his most current location to $1m in sales per year, so he just wants out of this one hopefully to someone he can trust.

As far as the equipment goes, I'll try to give you a rundown (estimated from memory):

three deep fat fryers
large griddle
commercial walk in freezer
refrigerated sandwich ingredient station (like a buffet)
four commercial freezers
reach in commercial refrigerator
ice maker
soda machines
cash register system
seating
racks for storage (several)
hood
I know there's more (cookware, etc), but I thought I would just list the big stuff)
_________________
I likes to eat 'da pig!
Acts 11:5-9

Poppa's PTL Club · Posted: Sep 10 2008 Post subject:

Also, the $2000 is an approximate gross profit. he is grossing just short of $300k/year. As I said, he is willing to open the books and that is an absolute must before I would get any more serious with him.

Remember that place here in GA that was selling but made a big point of saying that he would not give up the books and that you shouldn't go discuss it with anyone at the location? I still can't believe that somebody was dumb enough to buy that place.
_________________
I likes to eat 'da pig!
Acts 11:5-9

Pit Boss · Posted: Sep 10 2008 Post subject:

I understand that you're gonna keep wings on the menu...that's your choice...but you're also going to make this into a BBQ joint...at least that what it sounds like. This is completely different than a wing shack. You're not buying his business so why are you concerned with looking at his books?

If I was buying an established business, then his bookkeeping might be important. It sounds like to me you should be more concerned about what you're paying for all that used equipment. If you didn't know, used equipment isn't really worth a lot. You're doing this guy a favor simply by offering to purchase everything on site. He doesn't have to pay for the labor to clean the building out nor does he have to spend the time marketing the old stuff while trying to unload it. If he did it that way, he'd probably be lucky to break even. Be sure to keep that in mind when writing him the check.

The lease doesn't sound too expensive, but you also need to remember you're only planning on opening three days/week. That is a short period of time to make things happen.

Ok, so he was losing money four days every week. Why is that? Will this location not support the business? Find out what the problems were as to why business was so bad. That, to me, would be much more important than seeing the books on a business that you aren't buying.

It sounds like you've already figured out his $2,000/month GROSS profit. He was doing most of the work himself! That profit would have certainly gone to a better manager had he found one...probably the $2,000 PLUS whatever the other manager was making. That in essence means there would have been ZERO profit at this location.

I personally don't have a problem with a restaurant that's open limited days per week. But do your homework FIRST!

Best of luck. I'm sure we'd all like to see you do well.

Jay

Poppa's PTL Club · Posted: Sep 10 2008 Post subject:

OddThomas · Posted: Sep 10 2008 Post subject:

BBQMAN · Posted: Sep 10 2008 Post subject:

I know you will have family help (previously mentioned) but at start up and for quite a while thereafter you will be there the days you intend to be open.

Keeping your day job sounds to be a good idea.

That being said, get ready for ZERO days off for the next year or so (or until you can hire an underpaid surly manager).

You mentioned "not an industrial area". What type of area is it (I asked this earlier).

For weekends only, is there enough traffic or nearby residential area to support it?

How about folks looking for takeout to bring home?

High visabilty signage?

How do you intend to promote the new menu/ownership?

Speaking of equipment, an OH or SP will also set you back a pretty penny. Will the local HD appove your DP with a screened in enclosure?

I'm asking myself some of these same questions involving the ice cream shop we are due to be at just shortly......................
_________________
BBQMAN
"I Turned A Hobby Into A Business".
Providing "IMHO" Since 2005.

Poppa's PTL Club · Posted: Sep 10 2008 Post subject:

Thom Emery · BBQ Fan Joined: 13 Oct 2007 Posts: 340 Location: Indio Ca

Brother couple of questions
What will you give up by being there and not out on the weekend?
Do you have the energy to tackle this?
Is your wife on board?

It is kinda funny but we are looking at a Mon though Fri place across
from the County Court House/County Offices complex
The lunch crowd in the area is huge
_________________
Thom Emery
Past President California BBQ Association
www.BBQThom.com

Pit Boss · Posted: Sep 10 2008 Post subject:

kingconsulting · Posted: Sep 11 2008 Post subject:

Does anybody know of a place that has a fenced in BBQ? I did see one in Washington when I was on vacation this summer. Didn't get a chance to stop by and chat while I was there.

If I could do that here I could save at least 20k. I might take a trip to the HD and find out.
_________________
Robert King
DP 70
WSM
New Braunfels El Dorado

Jerk Pit Master · Posted: Sep 12 2008 Post subject:

I've seen a few here in FL. They typically have a seperate building usually screened in the rear with a stick burner. Porkies BBQ in Apopka FL is one. As you go through the drive thru you'll see it and the large stacks of firewood.

BZArcher · Posted: Sep 13 2008 Post subject:

There's a couple places around here that have fenced in smokers. I wasn't able to figure out what the one shop was using (too high of a fence!) but the other had a fenced in area with what looked like a Klose on a large trailer going as well as what looked like a Lang cooker.
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Weber 22" Kettle
Double Drum Smoker - Jolly Green Giant

Harry Nutczak · Posted: Sep 13 2008 Post subject:

On the topic of HD regulations;
Most states use the federal food code as an outline of their own code, they can tighten regulations per state, county and city. But they cannot loosed code beyond federal guidelines.

Up here in the land Snow, Cow-pies, & beer farts it is fully acceptable to use a cooker outside with no screening or roof over the cooker as long as the food is properly cared for and stored inside when the cook is done.

Any part that touches food must be sanitized before the next use and the cooker must be made tamper-proof when you are & are not currently cooking in it.

I will be fine with the DPP by adding locks on the door hold-downs, The Stumps will need a hasp or a cable with a lock so the door cannot be opened. A screened chimney cap may also be added to keep the small critters out ( read; bats )

So, you may be able to cook outside with zero issues from your HD, it would be best to outline you operating procedures and include sanitization of the cooker and making it tamper proof when not in use before speaking to them about this.
_________________
Just remember that the toes you may step on during your climb to the top will also be attached to the a$$es you'll be forced to kiss on your way back down!

jimbo · Newbie Joined: 13 Dec 2007 Posts: 54

HD can also change their little minds at any given time to. At one inspection they can over look things but come back a month later and say that does'nt go. I been there and had it happen. They get a new boss and then they change how tough they get on regulations. Word of warning about using equipment thats not got a sanitary rating like NSF, they can shut you down if they want to push that on you. Might as well decide to do it right if your planning on making a living at it. I know that you might have already made an investment in a cooker thats not but it isn't worth upsetting the lives of employees and your own family because you didn't spend a few extra dollars or take some more time to look for a deal on some used euipment thats set up for that. If money is that tight your probably getting in the wrong business to. there will be lean times on start up that you'll be digging into your pocket to keep it running till your WELL established. Most small restaurants don't make it because they don't have a good marketing plan and capital to invest in that part of the business.

BBQMAN · Posted: Sep 13 2008 Post subject:

Sound advice jimbo!

Here (Florida) the cookers don't need to be NSF rated, but you are correct some areas require it.

The exception to that is if you are running a commercial operation selling food to other retailers as a wholesale operation. Then the equipment is required to be NSF rated.

I did my homework before investing a pile of cash in my mobile unit for the same reasons you listed.

You can bet my paperwork was stamped and approved by the state before any cash changed hands...........................
_________________
BBQMAN
"I Turned A Hobby Into A Business".
Providing "IMHO" Since 2005.

Pit Boss · Posted: Sep 14 2008 Post subject:

Here are the rules for North Carolina:

15A NCAC 18A .2613 BARBECUE PLACES

The following standards shall be followed in the application of the restaurant sanitation requirements of this Rule in

the grading of establishments preparing barbecue:

(1) Barbecue Pits:

(a) Barbecue pits and barbecue machines shall be enclosed in a room protected from the

weather, dust, flies, and animals. The room shall be kept clean and free of garbage,

rubbish, and other miscellaneous storage.

(b) Floors shall be constructed of easily cleanable concrete or equal and graded to drain.

(c) Floors, walls, and ceilings shall be kept clean.

(d) Water under pressure shall be provided in barbecue pit rooms for floor cleaning.

(e) Barbecue pit rooms shall be properly ventilated by ducts, doors, or equal in order that

smoke and fumes may be removed.

(f) Spits, holders, or racks shall be cleaned daily.

(2) Barbecue shall be chopped or processed in a restaurant kitchen or in a room meeting the requirements of sanitation specified for restaurant kitchens

jimbo · Newbie Joined: 13 Dec 2007 Posts: 54

[quote="BBQMAN"]Sound advice jimbo!

.

The exception to that is if you are running a commercial operation selling food to other retailers as a wholesale operation. Then the equipment is required to be NSF rated.

Where I'm from it not only needs the NSF type rating but it has to be USDA rated for business that do resale of your food products and selling wholesale. There's a whole list of things to do when you get into that.

Harry Nutczak · Posted: Sep 14 2008 Post subject: