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Taqueria Mariposa-- Update post #109 (1 Viewer)

glumpy

breeze
(Originally titled "Buying a Restaurant")

I've been holding off asking for awhile because I didn't want to distract from the wonderful establishment tipsy has been putting together but it's gotten to where I could really use some help here myself! And make no mistake--it's nowhere near in that league but this is an exciting opportunity in its own right.

This would be 'my wife's restaurant'--or at least that's the inspiration that will make it take off. We're looking at an established pizza joint, with the prerequisite chicken wings. It's been in operation for 2-3 years as a hobby for someone whose primary career has taken off to where he doesn't have the time to devote to it. Leased space in a strip mall, take out only with the 'hot and ready' theme, some delivery for larger orders (maybe half a dozen or so school functions through the year so far). It is to this point breaking just better than even despite the owner being out of town a lot.

The purchase imo is of the equipment--top line pizza belt oven, dough maker, large prep area, good displays, drink display cooler, walk in cooler, etc. We would keep the menu intact for now but the goal is to go after a 2000-strong Latino market within a half mile of this place, with a couple particular service items (posole, burritos...). With my wife's connections and networking the advertising is already in force!

It would call for one additional piece of equipment--a commercial stove top and oven. There's just room enough to extend the vent hood and fire suppression to add one I think--have to confirm with the fire marshal, and my own company manages another strip mall so I can see what's involved with that before contacting them as well.

We would also like to add an ice cream freezer--that's a no brainer considering friends who make ice cream locally. One for 4-6 tubs, serving cups and/or cones only, rotating flavors.

The restaurant looks like a chain, smells like a chain, tastes like a chain.....but it's "not a franchise". I've got to contact the home company in this state to see just how that's possible. They are ordering foodstuffs from their source for delivery, using their logos and featuring their menu, honoring the same promotions I think. This unit is not advertised in online promos and not paying franchise fees that I've been able to find. We're assuming to maintain that for now at least and in any case it's built for pizzas. I don't know yet how controllable either temps or conveyor speeds are in the triple tier oven.

OK--that's the synopsis....What all am I missing? I've got the money put together for 40% down and the owner is willing to finance the remainder. That should leave enough for first couple months supplies though we may have to make use of a residential stove and oven which I already possess to get that ball rolling. I assume the management company is going to want to rewrite the lease and will have to talk with them about that hood modification. We intend to keep the core of the crew intact. I intend to compete insurance coverages. The centerpiece of the mall is a Krogers so there is the option of purchasing locally should that become either necessary or preferred.

I've also got an idea to talk to the management company about special events--it's just too perfect a situation not to park a cooker out front on weekends, maybe a tent event or the like. There is excellent traffic flow through there on weekdays--it's been an established restaurant alley for better than 35 years that I know of, having managed one of them in the early '80's. Some kind of weekend draw would be a plus.

 
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I didn't notice - have you and your wife worked in the restaurant industry for long?

And how's the food? I didn't see you mention that the food is amazing or anything.

 
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Restaurants generally have very low profit margins and require a lot of work. Theft by staff, turnover of staff, food cost and waste are things that have to be monitored constantly.

On the other hand, the fact that it's been in operation for 2-3 years is a plus, most fail in the first year or two.

Just things to consider.

 
The restaurant looks like a chain, smells like a chain, tastes like a chain.....but it's "not a franchise". I've got to contact the home company in this state to see just how that's possible. They are ordering foodstuffs from their source for delivery, using their logos and featuring their menu, honoring the same promotions I think. This unit is not advertised in online promos and not paying franchise fees that I've been able to find. We're assuming to maintain that for now at least and in any case it's built for pizzas.
I know a guy that once owned several local dominos and has since been in all sorts of financial troubles. Dont know all the details, but the story was that he stopped paying them and continued using their supplies and got in a good bit of trouble.

 
Theres an old saying "you know how to make a million bucks in the restaurant world? Start with two million."

Good luck.

 
Can you tell us who they are buying from? I think Fox Pizza for example does something like you are suggesting. They can supply everything but it is an independent restaurant for all intents.

Make sure you are on top of all your costs, especially food. Over buying kills a lot of people early on. On labor try to keep it around/under 30%, same with food. Mall settings sometimes have fees based on sales beyond the stated rent so be clear on that. Sounds like all the equipment is there might want to check for any service contracts/warranties especially those in need of renewal. Your biggest advantage and probably disadvantage is it's been open for 3 years. So the opinion is already formed for better or worse. Big grand re-opening is probably in order.

 
Restaurant business is just about the toughest business there is. Generally I cringe when a friend or client mentions that they want to go into the restaurant biz. It's just not easy.

No real tips other than good luck.

 
1. YOu need the "arrangement" in writing from corporate. If he's running a Little C's and has it branded as such but isn't paying them their tax then you are going to regret this.

2. You need to make sure the food is decent. In fact, it needs to be "good" or "very good." I imagine very few restaurants with very good food ever go out of business. Why? Because they have cash coming in that helps solve the problems created when a prime rib disappears from the fridge, etc. Have good food.

 
Theres an old saying "you know how to make a million bucks in the restaurant world? Start with two million."

Good luck.
This. Look up every pro athlete that has declared bankruptcy and I'd be willing to bet 99% of them bought a restaurant.
The main reason restaurants go belly up is underfunding. New restaurants can require as much as two years to catch on. You have to be ready for that. Our man here is over that hump. For better or worse the places rep is out there already and if it has been a bit better than breakeven without stringent oversight he is probably OK on that front.

 
I didn't notice - have you and your wife worked in the restaurant industry for long?

And how's the food? I didn't see you mention that the food is amazing or anything.
I actually had a career of sorts primarily in fast foods. Managed two units in a Roy Rogers chain until they were sold, then later managed several Wendy's. Worked in others on and off. Was looking at an opportunity recently again before this came up. My wife currently moonlights running special events and has worked in restaurants for years. We both have a lot of local support for this venture. I'm intending to keep my day job for insurance sake.

 
The restaurant looks like a chain, smells like a chain, tastes like a chain.....but it's "not a franchise". I've got to contact the home company in this state to see just how that's possible. They are ordering foodstuffs from their source for delivery, using their logos and featuring their menu, honoring the same promotions I think. This unit is not advertised in online promos and not paying franchise fees that I've been able to find. We're assuming to maintain that for now at least and in any case it's built for pizzas.
I know a guy that once owned several local dominos and has since been in all sorts of financial troubles. Dont know all the details, but the story was that he stopped paying them and continued using their supplies and got in a good bit of trouble.
Definitely going to have to talk with them. I understand it was a friend with franchise setting our friend up and don't count on that necessarily. Would be nice to keep the logo for now but expect it to take second seat before long--and frankly like my own pies better. I do like the hot and ready concept particularly for larger parties.

 
The restaurant looks like a chain, smells like a chain, tastes like a chain.....but it's "not a franchise". I've got to contact the home company in this state to see just how that's possible. They are ordering foodstuffs from their source for delivery, using their logos and featuring their menu, honoring the same promotions I think. This unit is not advertised in online promos and not paying franchise fees that I've been able to find. We're assuming to maintain that for now at least and in any case it's built for pizzas.
I know a guy that once owned several local dominos and has since been in all sorts of financial troubles. Dont know all the details, but the story was that he stopped paying them and continued using their supplies and got in a good bit of trouble.
Definitely going to have to talk with them. I understand it was a friend with franchise setting our friend up and don't count on that necessarily. Would be nice to keep the logo for now but expect it to take second seat before long--and frankly like my own pies better. I do like the hot and ready concept particularly for larger parties.
Don't underestimate the strength of good branding. Changing from Little C's to "Glumpy's Pizza" may be more of a challenge to keep the same customers than you think. If nothing else maybe post some signage for a month or two ahead of time letting them know that the name will change but the faces will stay the same.

 
I didn't notice - have you and your wife worked in the restaurant industry for long?

And how's the food? I didn't see you mention that the food is amazing or anything.
I actually had a career of sorts primarily in fast foods. Managed two units in a Roy Rogers chain until they were sold, then later managed several Wendy's. Worked in others on and off. Was looking at an opportunity recently again before this came up. My wife currently moonlights running special events and has worked in restaurants for years. We both have a lot of local support for this venture. I'm intending to keep my day job for insurance sake.
Fast food is different. Fast food is pure volume and location. Real restaurants need some customers, obviously, and they need a good location, but they also need actually good food. People will do just about anything for great food at a reasonable price. They'll endure bad service, a location with no parking, slow kitchens - seriously, almost anything if the food is great. Similarly, if the food isn't any good, none of the rest of it will make enough people come in to make the place profitable.

If you would eat there every day, I'd say it's worth considering. If you'd bring lunch in or go grab lunch somewhere else on days you work, I wouldn't touch it with a ten-foot pole.

 
The restaurant looks like a chain, smells like a chain, tastes like a chain.....but it's "not a franchise". I've got to contact the home company in this state to see just how that's possible. They are ordering foodstuffs from their source for delivery, using their logos and featuring their menu, honoring the same promotions I think. This unit is not advertised in online promos and not paying franchise fees that I've been able to find. We're assuming to maintain that for now at least and in any case it's built for pizzas.
I know a guy that once owned several local dominos and has since been in all sorts of financial troubles. Dont know all the details, but the story was that he stopped paying them and continued using their supplies and got in a good bit of trouble.
Definitely going to have to talk with them. I understand it was a friend with franchise setting our friend up and don't count on that necessarily. Would be nice to keep the logo for now but expect it to take second seat before long--and frankly like my own pies better. I do like the hot and ready concept particularly for larger parties.
Don't underestimate the strength of good branding. Changing from Little C's to "Glumpy's Pizza" may be more of a challenge to keep the same customers than you think. If nothing else maybe post some signage for a month or two ahead of time letting them know that the name will change but the faces will stay the same.
Yeah, I don't know if I'd eat at Glumpy's Pizza

 
What do you need to know?

Robert Irvine's phone number when things start going upside down. Good luck!

 
Restaurant business is just about the toughest business there is. Generally I cringe when a friend or client mentions that they want to go into the restaurant biz. It's just not easy.

No real tips other than good luck.
Only mistake I ever made in my life was opening a restaurant in 2006. Hardest buck I ever had to work for and even though I was able to sell it 18 months later (it's still open), the damage caused by it all won't be done with for another year.

 
Appreciate ALL comments so I'm jumping a little bit.....expect to get yanked here at work again soon and then back later. NCC I'll pm you with name but not making it public yet since nothing's official--maybe you've heard of them; I had not.

Restaurant business is just about the toughest business there is. Generally I cringe when a friend or client mentions that they want to go into the restaurant biz. It's just not easy.

No real tips other than good luck.
OK--if truth be known I have always said that I do not like managing restaurants. Special events is another story but the restaurants I've been involved with were more convenience than special, a drive through instead of a destination. Hopefully the difference here is that there is a really animated market for what we're about to do, it seems.

Are any of the cooks or any of the managers that will run the place latino?
My wife's Latina. That's where the excitement comes from because she and I to a lesser extent are already well known in that market locally. We are getting swamped with calls. Can't lie--that's what makes this exciting.

I fully expect the sides to steal the show.

 
I work in franchise development and know a good bit about how franchises work. If you find out its a franchise or licensee, shoot me a PM. I may be able to help interpret the business relationship for you.

 
I work in franchise development and know a good bit about how franchises work. If you find out its a franchise or licensee, shoot me a PM. I may be able to help interpret the business relationship for you.
I will be contacting them pretty quickly and then fill in the gaps. It's not a franchise I was familiar with, and my understanding is that the owner had a friend who is a franchisee and helped set him up. I don't think the name has been as much a draw as the market, particularly given that it's not largely visible from the street--it more relies on local customers. The best thing is that the 2000-strong market we're targeting passes by every day. I need a sign on that street-facing back door. (memo for action)

 
Glump - where are you located again? May help the suggestions. Thanks
RTP NC.

This is not a Little Caesars despite the slogan btw.
Not sure I have contacts there. Up here in NY/LI and SC as well, but I can ask. Might know someone who could assist in reaching the Latino/Hispanic community.
OH! Make no mistake--we are already reaching the Latino community! :)

eta: they are also asking that I produce my bbq chicken, so setting up a weekend cooker outside is a priority!

My wife is well known in the area and sought after for events

 
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Glump - where are you located again? May help the suggestions. Thanks
RTP NC.

This is not a Little Caesars despite the slogan btw.
Not sure I have contacts there. Up here in NY/LI and SC as well, but I can ask. Might know someone who could assist in reaching the Latino/Hispanic community.
OH! Make no mistake--we are already reaching the Latino community! :)

eta: they are also asking that I produce my bbq chicken, so setting up a weekend cooker outside is a priority!
If you are going to stick with pizza and do your on pies, the cooker may end up being a distraction. Maybe go with a "Glumpys BBQ chicken pizza" offering instead. I only bring this up because restaurants that try to be everything to everyone often end up being not very good at anything. It's usually better to stick with the primary premise.

 
Good buddy of mine lost 800k on 2 pizza restaurants, and worked his butt off for 3 years. Don't do it. And don't drug test the pizza delivery guys, you will never find one that passes. And expect teenagers to be no-shows almost daily.

 
I work in franchise development and know a good bit about how franchises work. If you find out its a franchise or licensee, shoot me a PM. I may be able to help interpret the business relationship for you.
I will be contacting them pretty quickly and then fill in the gaps. It's not a franchise I was familiar with, and my understanding is that the owner had a friend who is a franchisee and helped set him up. I don't think the name has been as much a draw as the market, particularly given that it's not largely visible from the street--it more relies on local customers. The best thing is that the 2000-strong market we're targeting passes by every day. I need a sign on that street-facing back door. (memo for action)
If the friend who was a franchisee helped set him up with a business using the marks and system of the franchise, but wasn't a master franchisee, it may be very illegal. Only the franchisor can grant the right to the marks, system, manual etc. I'd be very careful.
 
I know nothing about running a Restaurant outside of what I have learned from the semi scripted show Restaurant Impossible.

However from a pure business aspect, it should come down to the books in the beginning. Did the current owner keep impeccable records for expenses and revenue? Do they know exactly how much of each item is sold per month?

Make sure you do a ton of due-diligence on the books. If the records are not perfectly kept, that is a huge red flag that the "break even" notion might not be true.

======================

As a side question, which stems from my ignorance of this particular business, is about the Latino market you are going after.

You keep referring to the "2000 strong" number, and yet all I think of when I see that is how small a group size that is to make any real difference on the bottom line. What is the typical % penetration for a specific demo in this type of business per month? It can't be that big at first glace, unless there is literally zero other restaurants that cater to a Latino group.

 
Glump - where are you located again? May help the suggestions. Thanks
RTP NC.

This is not a Little Caesars despite the slogan btw.
Not sure I have contacts there. Up here in NY/LI and SC as well, but I can ask. Might know someone who could assist in reaching the Latino/Hispanic community.
OH! Make no mistake--we are already reaching the Latino community! :)

eta: they are also asking that I produce my bbq chicken, so setting up a weekend cooker outside is a priority!
If you are going to stick with pizza and do your on pies, the cooker may end up being a distraction. Maybe go with a "Glumpys BBQ chicken pizza" offering instead. I only bring this up because restaurants that try to be everything to everyone often end up being not very good at anything. It's usually better to stick with the primary premise.
We intend to keep a limited menu but really looking at some play as well. A cooker setup would be an occasional advertisement.

I guess my biggest point to that comment was more the early returns of the advertising--she's just putting the word out.

 
I know nothing about running a Restaurant outside of what I have learned from the semi scripted show Restaurant Impossible.

However from a pure business aspect, it should come down to the books in the beginning. Did the current owner keep impeccable records for expenses and revenue? Do they know exactly how much of each item is sold per month?

Make sure you do a ton of due-diligence on the books. If the records are not perfectly kept, that is a huge red flag that the "break even" notion might not be true.

======================

As a side question, which stems from my ignorance of this particular business, is about the Latino market you are going after.

You keep referring to the "2000 strong" number, and yet all I think of when I see that is how small a group size that is to make any real difference on the bottom line. What is the typical % penetration for a specific demo in this type of business per month? It can't be that big at first glace, unless there is literally zero other restaurants that cater to a Latino group.
Good books, and I've got them complete I think. First person I talked with about this venture was my friend who manages books professionally, as well as having been involved in a startup of her own. Given my responsibilities otherwise I've asked her to consider handling that aspect for me.

I don't have the numbers for penetration as you describe. There is a complementary business 5 miles further which caters to this population and has done very well for as long as I remember. The local population which we are a part of is very tight knit and supportive. I am counting on my wife's connections here.

 
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Glump - where are you located again? May help the suggestions. Thanks
RTP NC.

This is not a Little Caesars despite the slogan btw.
Not sure I have contacts there. Up here in NY/LI and SC as well, but I can ask. Might know someone who could assist in reaching the Latino/Hispanic community.
OH! Make no mistake--we are already reaching the Latino community! :)

eta: they are also asking that I produce my bbq chicken, so setting up a weekend cooker outside is a priority!
If you are going to stick with pizza and do your on pies, the cooker may end up being a distraction. Maybe go with a "Glumpys BBQ chicken pizza" offering instead. I only bring this up because restaurants that try to be everything to everyone often end up being not very good at anything. It's usually better to stick with the primary premise.
We intend to keep a limited menu but really looking at some play as well. A cooker setup would be an occasional advertisement.

I guess my biggest point to that comment was more the early returns of the advertising--she's just putting the word out.
Heck you know I'd love to see you go cooker full time. To be honest pizza is a bit played where as good BBQ is another thing altogether.

 
I work in franchise development and know a good bit about how franchises work. If you find out its a franchise or licensee, shoot me a PM. I may be able to help interpret the business relationship for you.
I will be contacting them pretty quickly and then fill in the gaps. It's not a franchise I was familiar with, and my understanding is that the owner had a friend who is a franchisee and helped set him up. I don't think the name has been as much a draw as the market, particularly given that it's not largely visible from the street--it more relies on local customers. The best thing is that the 2000-strong market we're targeting passes by every day. I need a sign on that street-facing back door. (memo for action)
If the friend who was a franchisee helped set him up with a business using the marks and system of the franchise, but wasn't a master franchisee, it may be very illegal. Only the franchisor can grant the right to the marks, system, manual etc. I'd be very careful.
This scares me. Even if on the up-and-up I could see where the offer might be rescinded when the friend pulls out. It's not something I'd seen before.

 
I work in franchise development and know a good bit about how franchises work. If you find out its a franchise or licensee, shoot me a PM. I may be able to help interpret the business relationship for you.
I will be contacting them pretty quickly and then fill in the gaps. It's not a franchise I was familiar with, and my understanding is that the owner had a friend who is a franchisee and helped set him up. I don't think the name has been as much a draw as the market, particularly given that it's not largely visible from the street--it more relies on local customers. The best thing is that the 2000-strong market we're targeting passes by every day. I need a sign on that street-facing back door. (memo for action)
If the friend who was a franchisee helped set him up with a business using the marks and system of the franchise, but wasn't a master franchisee, it may be very illegal. Only the franchisor can grant the right to the marks, system, manual etc. I'd be very careful.
This scares me. Even if on the up-and-up I could see where the offer might be rescinded when the friend pulls out. It's not something I'd seen before.
Just answered your PM. You are right to be cautious.

 
Restaurant business is just about the toughest business there is. Generally I cringe when a friend or client mentions that they want to go into the restaurant biz. It's just not easy.

No real tips other than good luck.
Only mistake I ever made in my life was opening a restaurant in 2006. Hardest buck I ever had to work for and even though I was able to sell it 18 months later (it's still open), the damage caused by it all won't be done with for another year.
I'm still paying for my sins from buying a restaurant in 2000.

 
Pizza has to be a tough business... very, very price-sensitive, and if you're in a strip mall, you're going to have to sell one helluvalot of pies just to cover the rent.

 
I don't have any experience with franchises, but I do have experience running a restaurant. Pizza too. Not from an ownership level though. Not knowing where you are and what the books look like... I would be concerned.

With the right business plan i think restaurants can have a better success rate than they do. I don't like what I am reading about this plan though.

 
I've said this here more than once. I worked in the industry for years. My wife still does.

The last thing I'd ever want to do is own/start a restaurant.

 
OK back on board. Pizza is a tough business and this one is not a big name player. That's actually not the target--we fell into the deal to begin with so were not necessarily looking for this, though there are ongoing outside factors which have had us doing some career CYA. The restaurant seems to be holding its own with what we think is streamlined ownership involvement. We looked at the deal for some months without moving before the price was cut. At this point--pending confirmation of the actual inventory--it's the equipment that we would be purchasing. Since that equipment is designed primarily for pizza, and that pizza is paying the bills, we would intend to maintain it while building a market into what we think/hope are more lucrative directions.

Big flag is that non-franchise situation. We ultimately don't intend to keep it but not sure about losing the identity that quickly.

Big plus is that it has succeeded to this point largely with walk-in traffic. It does not have a prominent facade.

Another concern is the lease arrangement and restrictions, and to do what we need there will be some minor upfits.

It's built for pizza so that is expected to be a continuing part. Doesn't hurt that it's the only pizza place in a major restaurant corridor.

Our target though is elsewhere, and we think that the pizza will become secondary if successful.

Our intention is to offer a pretty targeted menu, appealing to select people often--not everyone all the time.

So at this point it's still groundwork. I'm meeting with property management soon, probably this week. I've got to address a letter to owner requesting contacts for franchise info if we are to maintain the existing relationship. (or not--but it's got to be on the table before we jump). Contracts/proposals of course have to be written. If there are identity issues then the whole advertising/menu board has to be changed. We'll have to see what the lease costs, and any changes--and I've already learned that there is a $1000 fee just to apply.

Building this list the thought just struck--If we run across too many issues and/or go with delivery we're actually almost set up already to run it from another site. This has been an inspiration but might not be the final answer--just what's the existing storefront worth? Everyone's pushing to fast track this but it sure doesn't need to be from our angle. The one thing which I was pretty much pushed to resolve is done--we've got capital to start. Never enough of course!

 
Get your wife some bolt ons and turn it into a breastaurant. J/k

Good luck if you follow through

 

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