ape1090
New member
Hello,
I am in the process of purchasing a coffee/esspresso drive thru and was looking for some advice from people that have experience in the business.
The drive thru that I'm looking at purchasing is a very small (mobile via flatbed trailer) specialty coffee/espresso deal with tea, smoothies, and limited food items. For the past two years they have averaged about $200 a day. It is located at the intersection of two busy roads and is surrounded by a number of LARGE businesses (500+ employees). Keeping in mind that the largest expense was payroll ($21,000) for the full time employees that were hired to work there, the profit and loss statement from the current owner says they made $7300 last year. Additionally, the current owner has also been trying to sell me on the concept that there was no time or money invested in marketing or advertising (basically they are trying to make the claim that they didn't reach out to surrounding businesses). The current owner said they originally invested somewhere in the neighborhood of $80,000 for the building and all of the equipment. They are asking $45,000 for the whole thing, equipment and limited inventory included.
I've got a few dilemmas here, first being that I think $45,000 is way too much for the business. The current owner is trying to sell me on the concept of being an owner operator, eliminating the $21,000 payroll expense. Additionally, I am trying to figure out if it is fair or not for the current owner to sell me on the concept that there has been no marketing or advertising efforts the entire time they have been in business. If I were to purchase the business, I would definitely invest time and money into effective marketing and advertising campaigns to gain customers from the surrounding businesses. and this would cost money.
Overall, I just think $45,000 is too much to ask for a suggested owner/operator business like this. In fact, I did the math, and for me to take out a $45,000 term loan to be repaid over five years, my loan payment would be somewhere in the neighborhood of $900-1000 a month. This is insane considering that would only leave me making about $1000-1200 a month after expenses are paid, and that is not enough to live on. I have done some research, and I've seen some other drive thrus that are basically the same thing, in very similar markets, producing the same cash flow (some even higher), that are priced MUCH lower than $45,000. I've found some for as low as $15,000 that are producing the exact same numbers. I've found one priced at $42,000 that is producing a little bit over double the sales revenue of the drive thru I'm looking at.
Overall, I think there is room for growth as the current owner is averaging 66 customers a day on a busy intersection with over 17,500 cars daily, but I don't think it is worth $45,000.
My question is, what do you think is a fair price for a business like this? And if you agree with me and think that it is over priced, how do I propose a counter offer and explain the owner my reasons without insulting them?
Thanks so much for any help!
I am in the process of purchasing a coffee/esspresso drive thru and was looking for some advice from people that have experience in the business.
The drive thru that I'm looking at purchasing is a very small (mobile via flatbed trailer) specialty coffee/espresso deal with tea, smoothies, and limited food items. For the past two years they have averaged about $200 a day. It is located at the intersection of two busy roads and is surrounded by a number of LARGE businesses (500+ employees). Keeping in mind that the largest expense was payroll ($21,000) for the full time employees that were hired to work there, the profit and loss statement from the current owner says they made $7300 last year. Additionally, the current owner has also been trying to sell me on the concept that there was no time or money invested in marketing or advertising (basically they are trying to make the claim that they didn't reach out to surrounding businesses). The current owner said they originally invested somewhere in the neighborhood of $80,000 for the building and all of the equipment. They are asking $45,000 for the whole thing, equipment and limited inventory included.
I've got a few dilemmas here, first being that I think $45,000 is way too much for the business. The current owner is trying to sell me on the concept of being an owner operator, eliminating the $21,000 payroll expense. Additionally, I am trying to figure out if it is fair or not for the current owner to sell me on the concept that there has been no marketing or advertising efforts the entire time they have been in business. If I were to purchase the business, I would definitely invest time and money into effective marketing and advertising campaigns to gain customers from the surrounding businesses. and this would cost money.
Overall, I just think $45,000 is too much to ask for a suggested owner/operator business like this. In fact, I did the math, and for me to take out a $45,000 term loan to be repaid over five years, my loan payment would be somewhere in the neighborhood of $900-1000 a month. This is insane considering that would only leave me making about $1000-1200 a month after expenses are paid, and that is not enough to live on. I have done some research, and I've seen some other drive thrus that are basically the same thing, in very similar markets, producing the same cash flow (some even higher), that are priced MUCH lower than $45,000. I've found some for as low as $15,000 that are producing the exact same numbers. I've found one priced at $42,000 that is producing a little bit over double the sales revenue of the drive thru I'm looking at.
Overall, I think there is room for growth as the current owner is averaging 66 customers a day on a busy intersection with over 17,500 cars daily, but I don't think it is worth $45,000.
My question is, what do you think is a fair price for a business like this? And if you agree with me and think that it is over priced, how do I propose a counter offer and explain the owner my reasons without insulting them?
Thanks so much for any help!
