coffee shop purchase

[wag]

considering purchase of three shops and roasting co, sale are good, could be better but net is way down. 1.1mil sales but net is 30k with owners salary at 90k, but they are working!!. Rent seems high 17.50sq ft avg. payroll looks ok. One of the stores is 15%net the other is 13,last is 4% and roaster is 20%, before the owners pay. I think it should do 200k net including general manager fees.

What do you think

bill

 

[ElPugDiablo]

If the payroll looks good, where do you think you can trim to get you to 200K?

 

[wag]

good question!! one of the shops is less than year old, I thing it needs a much larger gross. the other shops are on a year to year lease and seem to have been hammered on rent increases,I think 700-900 to much per month in two stores is one major problem. Is a net of 48k on sales of 370k normal for the coffee biz. I would think 18-22% would be avg.
Bill

 

[ElPugDiablo]

check your PM

 

[hoser]

I would think that their margins are way low or overhead way high. All I can tell you is that we have a 50% margin of profit at years end on our operation.

 

[Muddycup]

I agree, I don't like those numbers costs are running to high.
on 1.1 million you should have a $300,000 net aprox.

The other question is a year to year lease, does this mean that they are not locked in? unless you have at least 5-10 years left on an iron clad lease with no more than a 3% increase per year then the stores are worthless.

A retail business is only worth the time left on the lease, secured

if there is less than 5 years left that will not give you enough time to make back you investment and make money.

 

[Muddycup]

The store you mentioned at 370,000 should be netting aprox 100,000 per year!

 

[dant]

Geez, that's like 27%. Meanwhile I'm hoping for 15% this year on over 400K in sales. What are we doing wrong? Or rather, what should we do different?

If you don't mind me asking, how would you break down the percentages one should have for 1) labor, 2) cost of goods sold, and 3)rent/operating expenses? I realize this will vary between operations, as one shop might spend more on labor and less on COGS if they do their own baking or whatever. Still, I'd appreciate getting some general feedback.

 

[Muddycup]

this is a tuff questions not knowing your operation:

lets see, here are some numbers: lets say you are a basic coffee house, pretty busy, good location, reasonable rent, serving all beverages and lite food, no cooking and quick lite food items and baked goods.

gross - $1000 a day = $30,000 month
rent $1500 a month
Labor $6000 this is two fulltime staff for all hours you are open. if you keep things simple then 2 will do if not add another $3000 for another staff person.
food cost 33% = aprox $10,000

gross net - 12,500 per month about 40%

minus utilities, phone marketing etc.... these costs should be relatively low.

so your food cost could be to high, or you have to many people working, you may want to look at streamlining production.

just some thoughts

 

[MRSRoasting]

For each patron what is the avg. dollar amount spent? How many people do you plan on coming through your facility in a day? How would I figure out how many people it would take to make my place profitable? Have me thinking!