With the banks being very tight right now, we have a oppurtunity to get owner financed for our new BBQ restaurant. Anyone have any suggestions or concerns with "Owner financing". This property is anchor position in a strip mall. Property was ran as mid-range italian concept previously. Property includes everything that was in property when in operation including full bar, we would be leasing property for $5,000 a month first year 6,000 secound and 7,000 third year. Just kinda thinking out loud right now. We have grat BP and owner wants us in there, obvioulsy he needs someone in this property to attract more tenants. He is owner of approx. dozen large hotels in wisconsin area and runs a few restaurants as well. NO major work is needed, just needs different decor, and cleaning. Equipment needed is Smoker, and new fryers. Please post with questions for me and or suggestions.
Join Date: Feb 2003
Location: Wichita, KS
Posts: 1153
What are you getting for the $5000 lease? It's impossible to offer input without more information. You said "owner financing", then mentioned a "lease". Which is it? Are you buying or leasing? Make sure you aren't going off the good will of the owner believing your payments are purchasing something. Even with an owner financed sale, there should be a sale contract, and you should know how much of each payment is going toward the principal on the property, and what is going toward interest. What interest rate is the owner charging you to finance the purchase?
What he is offering: He acts as bank for our capital and equpiment needs. Approx. $60,000 loan from him and his partners.
We will also get 40,000 from local city development agency as a loan.
The Lease: Building includes everything from silveware to tables, fryers, ovens ranges, bar, numerous refrigerators , walk in's, dishwasher, large industrial water softner, food racks,glassware etc. . You could walk in and open a restaurant with whats in this place in weeks. Equipment was used for 1.5 years and building hasnt been used for one year.
Lease Terms: 3yr with 4th and 5th year option, and first right to refusal on anchor position of strip mall.
1st year 5,000 a month including Cam charges
2nd year 6,000 a month including Cam charges
3rd year 7,000 a month including Cam Charges
There is approx 5300 sq ft of building
We will be paying utilities and grease pickup, trash is covered by landlord.
Rent is about half of what owner originally was asking a year ago.
Small amount of work will need to be done, painting and decor and installing commercial smoker and new fryers. Also will need a good cleaning.
I feel that we will have 25% of our sales will be alcohol. We do live in Wisconsin where most customers will set in a bar for one to two hours before eating dinner on weekends.
Join Date: Jun 2008
Location: Orlando, FL
Posts: 232
Hi Dace,
How many seats will you have, and what are you projecting for your average cover? Also, 25% liquor sounds high to me, but I'm not really familiar with your market.
Some comments on your pro forma....
Where is direct labor? If it's in direct COGS, I think your COGS is way too low. You have Direct COGS as 30% - that would be food cost + direct labor cost. Impossible.
What is startup payroll? Is that mgr salary?
$4,800 for sales & marketing payroll? !?!!? Wow! Is that one guy at $58k? I think you're overreaching to open with that person on staff. I would add them later, and at a more reasonable starting salary ... $30k plus bonuses. Remember, you're a startup!
A&G payroll - is this your GM? Plus office ass't? How many bodies, and what is their pay. Remember, you're a startup - start low.
Insurace is way too low. You'll have liability + property + liquor. I'd say at least $1,500/mo. And, where is work comp exp?
Payroll taxes are calcing incorrectly.
If you're not doing delivery, I'd scratch vehicles. If you're going to have one, don't forget to add auto insurance.
Supplies are too low. This will be your operating supplies - smallwares, paper exp, utensils, china, glass, etc. I'd say more like $600-700 per month.
Missing - cc merch fees, legal & prof fees, employee benefits, and comps.
I would take deprec off for purposes of proforma - or at least move it below the line.
I would suggest breaking out your sales number to food, non-alc bev, and alc bev, and for COGS, show cost for each, and a separate line for labor.
Regarding your building lease - is it an assignment, or a new deal? Make sure that any assumed equip is your property, not the building owner's.
Finally, I think you'll need more than $100k for startup. That may be enough for buildout, but don't forget about working capital (for the period between opening to break-even).
Laina Shockley
Ethos Vegan Kitchen
Last edited: February 7, 2009 5:48 PM by lshockley
Not sure where you are from in Wisconsin. But in Fond du lac Area most Supper club format restaurants have a very high volume of alcohol sales. We have numerous places that are mostly burger joints that have fish fry on friday that have full bars and what I said happens every weekend night. People hanging out in groups drinking before dinner and after dinner. Not sure why you are saying that A BBQ restaurant would be any different. We would be the only KCBS Award winning,True Slow smoked BBQ restaurant in 60 mile radius. Can you please expalin why BBQ wont bring in these sales?
How many seats will you have, and what are you projecting for your average cover? Also, 25% liquor sounds high to me, but I'm not really familiar with your market.
Some comments on your pro forma....
Where is direct labor? If it's in direct COGS, I think your COGS is way too low. You have Direct COGS as 30% - that would be food cost + direct labor cost. Impossible. This is only FC and BC
What is startup payroll? Is that mgr salary? THIS NEEDS TO BE REMOVED
$4,800 for sales & marketing payroll? !?!!? Wow! Is that one guy at $58k? I think you're overreaching to open with that person on staff. I would add them later, and at a more reasonable starting salary ... $30k plus bonuses. Remember, you're a startup! This is our payroll for cooks and servers
A&G payroll - is this your GM? Plus office ass't? How many bodies, and what is their pay. Remember, you're a startup - start low. This is My wife and I's salaries
Insurace is way too low. You'll have liability + property + liquor. I'd say at least $1,500/mo. And, where is work comp exp? I will do more research and increase if needed
Payroll taxes are calcing incorrectly. Will check into this as well
If you're not doing delivery, I'd scratch vehicles. If you're going to have one, don't forget to add auto insurance. We will not be doing delivery but will do catering
Supplies are too low. This will be your operating supplies - smallwares, paper exp, utensils, china, glass, etc. I'd say more like $600-700 per month. Will raise to 500
Missing - cc merch fees, legal & prof fees, employee benefits, and comps. Still reasearching these fees
I would take deprec off for purposes of proforma - or at least move it below the line. Thank you
I would suggest breaking out your sales number to food, non-alc bev, and alc bev, and for COGS, show cost for each, and a separate line for labor.
Regarding your building lease - is it an assignment, or a new deal? Make sure that any assumed equip is your property, not the building owner's. What do you mean? The way I understand it is that everything that is in the building is owned by the landlord, We have in intent to lease that anything we bring into building is our property.
Finally, I think you'll need more than $100k for startup. That may be enough for buildout, but don't forget about working capital (for the period between opening to break-even). We will have no real build out, this property could open as a restaurant in weeks after cleaning and inspection only thing we will change is adding smoker, and two new fryers, and painting two purple walls. All lights and tables and layout works great for us.
