Wanting to purchase a coffee house

camoflauge

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Jul 3, 2007
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I know there''s a lot of info missing, but i really don''t know what to look for or what i need to ask.

Here''s the \"ad\" : DEPOT COFFEEHOUSE & Gift Shop. Established business, fine dining potential. Restored Train Depot, 2400sq.

Our local coffee house is for sale, asking price is $325,000. I know this seems high-it used to be a train depot and was completely remodeled. the building is in a great location-seems to be fairly busy, has a gift shop area and a back room, they serve a simple lunch, and it also has a music recording studio-which i wouldn''t know what to do with right now. all the equipment comes with it-the only thing that doesn''t is their current gift merchandise because they don''t want someone to be stuck with their \"merchandise\".

sales are estimated at $160,000 per year-i know this isn''t 100% current, but owner estimated $400-600 per day. i''m assuming that is gross income.

i need to make enough $$ to keep biz running and also to make my house payment and utilities-to the tune of $1500. I would be looking to make this a full time career.

i do love coffee, really love the gift shop idea as i make a lot of candle/bath & body, etc. type stuff and already have a lot of places lined up to order wholesale from.

also, i know of this couple and the only reason they are selling is that they have a # of other businesses and are extremely well off. they are looking to reduce some of their \"responsibility\" because even if they have a manager, they are still responsible for the business. i don''t suspect any \"foul\" reasons for selling as they are selling another biz also.

what else do i need to know, what do i need to ask, and what will i need to know in order to get a loan?

btw, town is approx 3500 in a good tourist town-it is the only coffeehouse in town, and has lunch which draws a good crowd-is mostly easy sandwhiches.

I know there are a ton of ?''s i need to ask, but not sure even where to start!!!

Thanks!!!!
 
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camoflauge

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Jul 3, 2007
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thanks cafemakers-that was helpful.

but, i still need a list of questions i should ask and what i need to know. i guess maybe a person should call a lending bank and find out what they would need to know before giving a person a loan.

i know i need to look at the financials, but how does one determine if the business income is enough to warrant the asking price? i have 2 of my own businesses-but i started them and they are just small, at home type jobs. i've never bought a business before.

is there some sort of resource on here or the internet that would help?

Thanks in advance for any help!!!
 

ElPugDiablo

New member
Jul 16, 2004
991
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Hartford and New Haven, CT
camoflauge said:
I know there''s a lot of info missing, but i really don''t know what to look for or what i need to ask.

Here''s the "ad" : DEPOT COFFEEHOUSE & Gift Shop. Established business, fine dining potential. Restored Train Depot, 2400sq.

Our local coffee house is for sale, asking price is $325,000. I know this seems high-it used to be a train depot and was completely remodeled. the building is in a great location-seems to be fairly busy, has a gift shop area and a back room, they serve a simple lunch, and it also has a music recording studio-which i wouldn''t know what to do with right now. all the equipment comes with it-the only thing that doesn''t is their current gift merchandise because they don''t want someone to be stuck with their "merchandise".

sales are estimated at $160,000 per year-i know this isn''t 100% current, but owner estimated $400-600 per day. i''m assuming that is gross income.

i need to make enough $$ to keep biz running and also to make my house payment and utilities-to the tune of $1500. I would be looking to make this a full time career.

i do love coffee, really love the gift shop idea as i make a lot of candle/bath & body, etc. type stuff and already have a lot of places lined up to order wholesale from.

also, i know of this couple and the only reason they are selling is that they have a # of other businesses and are extremely well off. they are looking to reduce some of their "responsibility" because even if they have a manager, they are still responsible for the business. i don''t suspect any "foul" reasons for selling as they are selling another biz also.

what else do i need to know, what do i need to ask, and what will i need to know in order to get a loan?

btw, town is approx 3500 in a good tourist town-it is the only coffeehouse in town, and has lunch which draws a good crowd-is mostly easy sandwhiches.

I know there are a ton of ?''s i need to ask, but not sure even where to start!!!

Thanks!!!!
If the town's population is 3500, I don't think you have the demographic to support a shop. You need to define fairly busy.

How long has the business been there? If it is less than a year, then maybe, just maybe, it is worth looking into. If it is over a year, personally I would not even consider it. Otherwise, $400-600 per day is a miserable failure of a 2400sq ft coffeeshop. Also, is $325,000 business only or is the building included. If it is business only, they are out of their #@*$ing mind. # = f. Here is a very gross generalization. A $500,000 coffeeshop will gross you no more than $100,000 before tax, most likely $70,000. Using 2.5 times ebitda, a fair price is in the $180,000 range. This shop is doing $160,000, a third of $500,000 and they want $325,000? You should ask them to justify that crazy asking price.
 
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camoflauge

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Jul 3, 2007
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If the town's population is 3500, I don't think you have the demographic to support a shop. You need to define fairly busy.

ok, our town is fairly small, but we are also 100 miles from anywhere big-such as starbucks, etc. we don't have a walmart, kmart, target, or any of those kind of stores. we are also a hunting/fishing haven. we have lots of tourist type people-all year round.

How long has the business been there? If it is less than a year, then maybe, just maybe, it is worth looking into. If it is over a year, personally I would not even consider it. Otherwise, $400-600 per day is a miserable failure of a 2400sq ft coffeeshop.

it has been open about 5 years i think. i "think" (and this is just my opinion) these people run about 4-5 other money making businesses that they don't have any creative ideas left for this one.

the whole reason for this "coffee house's existence" is the guy that opened it up is a multi-million $$$ cattle rancher/sells etc. he opened this as a place to "dine" his customers. he also has a recording studio in the building. he records for many "christian" type singers. well, he has purchased another building to completely dedicate to the recording. Since he has 4-5 other businesses, he has decided to get rid of 2 of them to concentrate on the other ones. His wife does the books on all the businesses and with everything it is too much work to do, plus make any management decisions on the coffee house, etc.


Also, is $325,000 business only or is the building included. If it is business only, they are out of their #@*$ing mind. # = f.


this price includes EVERYTHING except their limited gift shop merchandise-which doesn't bother me because i have quite a few vendors i can wholesale from, plus, i make candles and other craft things that i can fill the gift shop part up with. EVERYTHING being all the shelving, fridges, coffee equipment, basically any inventory with the coffee/restuarant business. It also comes with all the equipment and room dedicated to music recording-which could come in handy if a person was to offer musical entertainand i'm sure if i was really serious, if i wanted i could include the gift merchandise in the asking price. I believe they own the land the building is located on too-i'd have to double check for sure though.

and yes, the asking price is out of line-but 1 thing that makes it so expensive is that this guy took an old train depot and completely "restored" it-not just remodeled. it does not look like a train depot though as far as the inside is concerned. although, there is a possibility of taking the "train depot" theme further if desired.



Here is a very gross generalization. A $500,000 coffeeshop will gross you no more than $100,000 before tax, most likely $70,000. Using 2.5 times ebitda, a fair price is in the $180,000 range. This shop is doing $160,000, a third of $500,000 and they want $325,000? You should ask them to justify that crazy asking price.

I'm guessing that this means that i should probably not purchase this at the full asking price-unless the "restored" train depot somehow adds to the worth.

well, i guess i'll just sit on this for a while, doubt anyone else is going to want to pay the $325,000 asking price either. according to the owner, he has $361,000 just into the restoration. that's just crazy. why would you spend that kind of $$$? maybe if you were turning it into a museum or something.

Thanks for all the help. If anyone else has any advice please feel free to offer it.
 
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