Good Busines or not?

Suarez

Its a food kiosk based in London..Selling for £17,000...

Lease
12 months signed and rolling (this is normal for kiosks) “Rolling” means it will always get renewed as long as you pay rent. If you don’t pay rent and they find that you are causing problems they will not renew.

Takings (average)
-It takes £1400 - £1800 per week. However at busy times we have achieved £2300 per week with flyers distributed to passing trade

Rent
£1320 per month (we had the rent reduced at the last renewal)

Net Profit per week (average)
£310 - £350 per week AFTER WAGES! Sales can be increased by simply distributing flyers outside Piccadilly Circus

Basic Financial Information
Sale Price is £17,000 is including fixtures and fitting/all equipment AND RENT DEPOSIT of £5,170 which is held with Trocadero . So you are really only paying £12,830 for the business.

How is the new sale price of £17k broken down? (all equipment below is 1yr old)

Kiosk (including water system) £10,500
Ice Cream Machine £5,000
Blendtec Blenders x 2 £700
Crepe Machine £250
Hot Dog Maker £300
CCTV System x4 cameras £450
Fridge £100
Other Assets £50
Stock £500
Annual Rent £5,170

chalkie99

Well, I am the world's biggest cynic so usually reckon that most businesses are for sale because they are not working out -but - quick thoughts:

Lease
12 months signed and rolling (this is normal for kiosks) “Rolling” means it will always get renewed as long as you pay rent. If you don’t pay rent and they find that you are causing problems they will not renew.

Takings (average)
-It takes £1400 - £1800 per week.Lets call it £1500 then. However at busy times we have achieved £2300 per week with flyers distributed to passing trade

Rent
£1320 per month A fair chunk of the takings (we had the rent reduced at the last renewal) Why? Because it wasn't working out and no-one else was queuing up to take it on?

Net Profit per week (average)
£310 - £350 per week AFTER WAGES! Sales can be increased by simply distributing flyers outside Piccadilly Circus So why don't they always do that then? Do the authorities allow it/charge for it?

Basic Financial Information
Sale Price is £17,000 is including fixtures and fitting/all equipment AND RENT DEPOSIT of £5,170 which is held with Trocadero . So you are really only paying £12,830 for the business.

How is the new sale price of £17k broken down? (all equipment below is 1yr old)

Kiosk (including water system) £10,500
Ice Cream Machine £5,000
Blendtec Blenders x 2 £700
Crepe Machine £250
Hot Dog Maker £300
CCTV System x4 cameras £450
Fridge £100
Other Assets £50
Stock £500
Annual Rent £5,170 How is annual rent £5170 and yet £1320 per month?

Sounds to me like someone has realised it isn't working out and wants shot of it. But, like I said,I'm a cynic.

Suarez

The annual rent is a deposit. The current owner has stated that they don't have the time to put into the business and they're relocating.

The takings are £78,000 pa and the rent is £15,840...Maybe this is too good to be true..

Mistral001

Is there some way you could watch the kiosk for parts of the day for say a week and try to work out what actually the kiosk is making. Maybe I have been watching too much TV, but is there a cafe across the road where you could spend a few hours ordering cups of tea and watch out the window?

How often do they get supplies etc. I presume there is not much room in the kiosk for supplies so they must bring them in at least once a day and that will be usually first thing in the morning before they open, so maybe a trip just before opening time would provide some good information - and at closing time as well if they take unused supplies home at night..

somethingcorporate

If it is making such a decent margin why are they selling?

paddyrg

All equipment is under 1 yr old? So there is no trading history of over 12 months? This means they've enjoyed the summer peak tourist season (let's face it, Londoners don't visit trocadero) and the winter might be a total dud. Juast bear it in mind!

bris

Ice cream machine, crep machine, this tell me it's a tourist and summer business. Sales will be down to a trickle, odd hot dog here and there. On this basis you get about 4 good months a year.

Doesn't mean it can't be adapted though, if allowed, a good proper coffee machine and panini grill could bring in winter trade. Good coffe is in high demand and profit is high. If you do a bit of barista training people will go out of their way to buy a coffee from you.

As is I would leave it, but adapt it for the winter months and a good location will pay it's way. It's very important that you sit and watch the foot fall passing though, if it's off the beaten track then you would need a good rep to get them to come to you.

Pennywise

It needs to be VAT registered if turnover is £78k p.a., so you lose £13k of that to HMRC, leaving net sales of £65k. OK you will be able to reclaim some input VAT on expenses, but not much.

GP maybe 60%, so that's £39,000, less rent, £16k, leaves £23k, less insurance, power, advertising, water, other overheads, say £5k, leaves £18k profit BEFORE any staff wages.

So if you did everything yourself, i.e. no staff, you'd get £18k for your time and effort. That's not much more than stacking shelves and is a poor "wage" for London, not to mention business risk, etc. If you were going to employ someone to run it, their wage will take up most of the profit, leaving you bearing risk for little reward.

Sadly, not worth the money. For those overheads and the equipment they've bought, it's not taking anywhere near enough sales to make it a viable business.

paulwf

First thing - you shouldn't be paying for equipment at original price. The warranty probably won't transfer to you and you've no idea if it has been serviced and maintained properly. Even if you do get the warranty this will only be most likely for a year so if the equipment is 11 months old that's not much use.

What about all the other bits and pieces that you'll need? Are these included? I'll bet you'll have to spend a couple of thousand to get it the way you want it. If you want to rebrand perhaps more. It all adds up quickly...£10 for a printed tshirt, 5 of those for a member of staff is £50 gone just like that.

texranger

dont forget you taking this over so you will need a new traders licence from the local authority and i dare say in London this will not be as cheap as other authorities

coupleuk

1. nothing mentioned about business rates.

2. rolling lease does not mean you keep it for ever just by being nice and paying the rent - it also means they can kick you out with very little notice. rent increases can also hit you at short notice.