Hey everyone,

for those of you who are business minded or have one of your own, your feedback would be greatly appreciated.

i was looking into buying a chinese take out (kinda like a Panda Express). It is located in a in a more hispanic part of town. In a shopping plaza with a grocery store, dollar store, shoe store, laundromat, and one or two fast food mexican restaurants.

The owner (seller) has given me these details.

Lease = $1700 month
Daily gross (avg) = $450 a day (all cash biz)
2 employee operation (including cook).
Restaurant comes with ALL equipment, counter displays, freezer, fridge, stoves..etc.

*owner is selling cause he has other biz, and wife ran this one. now she is ready to deliver a baby any minute now. it was bought from original owner, as a result of retirement.

Asking price is $45K negotiable (would put $20K down, and finance rest). Based on these numbers (could be OVER $100K a year), does that seem like a prosperous business venture? But since, there are NO solid books, cause its all cash, this is hard to verify. All I can say is that I have never ran a restaurant, or cooked professionally before. However, I do LOVE good food and that have worked in food service industries when I was younger (i.e. smoothie store and bagel shop). I can also expand to offer different variety of foods too.

Thanks for any feed back from those who own businesses or know of people in this line of work.

 

You'll have to look at hidden costs also.

1. cost of replacement equipment
2. cost of raw materials (food)
3. employee(s) salary
4. health insurance
5. advertising
6. utilities

Your $100k quickly shrinks to under $70k, and that's being optimistic. That being said, if those numbers sound good to you then go for it. However, you can only place value on a proven commodity. Proven meaning, there has to be books for it. I would use that as a strong bargaining point for the purchase price of the business, seeing as to how they keep no books (I don't see how this is possible?)

Our office accepts cash also, but there's always a paper trail. And even if not, there should be deposit slips, records, and so forth going into the business' bank account.

Whatever you decide, owning your own business can be very rewarding but extremely stressful at the same time. Employees add stress, period. Be prepared to put in alot of long hours yourself.

Good luck!

 

If I could make $100,000 with a business in 1 year, I would NOT be selling it for $45,000. I would hire someone to run it rather than sell for that price. The numbers don't match. Also, find a bank that will give you $20,000 to buy a business that has no books.

 

I have a friend with a restaurant - she has to be there all the time to keep stealing and grift to a minimum, and her landlord is an ass, and its a lot of work to keep successful, and this is on a main drag in a college town, with a steady stream of customers. Restaurants seem like a lot of effort to me.

 

u have pm

 

It all depends on customer traffic. Some Chinese fast-food restaurants here are extremely profitable because of jammed traffic; but some are totally dead. Location, location, location! And quality of the food too.

 

[QUOTE=khuezee,Oct 31 2006, 02:21 PM] Hey everyone,

for those of you who are business minded or have one of your own, your feedback would be greatly appreciated.

i was looking into buying a chinese take out (kinda like a Panda Express).

 

http://www.restaurant.org

try reading some info on that

 

I agree with the above posters. I work with restaurants for a living. Restaurants sell anywhere from 4x to 20x their annual NET income.

All cash business means he cannot prove his monthy income (restaurants income.)

If for some reason you are still interested, do your homework. How many other chinese take out places are in the neighborhood? How many other restaurants are there? Etc etc.


My advice, dont take it. Buying an already running restaurant reduces your success rate from 3% to 1%. If blackjack was a 1% chance of winning game, would you play?

 

How did he do? If you don't wanna answer publicly, please shoot me a PM. Thanks!