May be buying an existing coffee shop

[motenkjr]

I've been lurking and reading on this forum for quite a while now but need some help if it's possible. I am in the process of looking into a coffee shop that's located in a mall. So far I've visited the area and the shop and it seems ok. The interesting part to it is the mall doesn't have a real food court. It has a Mexican restaurant, an Italian restaurant, a Great American Cookies, and the coffee shop. It has four 4-seater bistro style tables as far as seating goes. My questions are is there anything in particular that I should be on the lookout for or ask about. The owner is willing to do owner financing. I'm not sure if that makes a difference or not. Thank you all in advance.

 

[John P]

A few questions, and how you answer may give you your own insight as well.

Why a coffee shop?

What is your expertise in coffee/espresso?

Is this a chain, or can you change everything as you wish?

Why the mall vs. an independent location?

Why is the owner leaving?

Failing or ???

... The proof is in the financials.
...

Things you should ask or look for:

Ask for tax records before talking further.

Are you taking over an existing lease? Is there a provision for this in his current lease? Is this a good lease?

Secure your own financing first so he doesn't have that as a negotiating tool.

Definitely don't agree to anything at this point. Whatever number he says, whether is "too high" as far as you're concerned. In the end, should you be serious, have a professional broker the deal. buyers often overpay because they attach emotion.

 

[motenkjr]

1) I have always enjoyed getting people together over good food and drinks. I feel like if I'm going to do something I might as well enjoy it and the satisfaction of making a person's day better with a place to relax and/or get a nice drink+ is my ultimate reward.
2) I worked the coffee bar at a friend of mine's restaurant three to four nights a week for a little over a year. Other than that it's just enjoying a lot of coffee and loose teas.
3) This is an independent shop so I can do whatever I wish. I wouldn't really consider it if it were a chain because of the restrictions and ridiculous fees involved.
4) in this mall there isn't much in way of eatery so not much competition and it's supported very well by the surrounding communities and cities. Later a stand alone would be in the mix hopefully.
5) She went into it as the financial part of the business with a "friend" of hers that also has a business in the mall. Both of their businesses picked up and the shop was left to be run by the two part timers there. She doesn't want it to go down the drain. So the story goes.
6)they have only been in business for 6 months and are starting to see small profits. I'm waiting on financials to confirm or refute this.

Thank you you for giving me things to keep in mind. I wasn't really sure what the pros and cons to owner financing were but it did make me feel a little more confident in the business since she was willing to finance. The lease is up for renegotiation and is set to go down since she took over a lease for the previous business there. Again thanks.

 

[PinkRose]

Since they've only been in business for six months, it would be nice if the current owner could hire you to run the place so it doesn't go down the drain, instead of putting it up for sale. Then you could see if you can handle it, and you wouldn't be taking the risk of wiping out your bank account.

 

[motenkjr]

Thanks Pink, I never considered that. I guess that's where talking with others come into play.

 

[CoffeeLovers]

@motenkjr Yes, you have to investigate the circumstance why the previous owner wants to leave the place. Maybe the rent or the space is not enough or it is not doing well. If you can find any other place to begin with coffee stalls somewhere outside the mall, do it rather than taking the risk of an abandoned place.