What to do????

[attie]

I have been approached to take over the lease on a Seafood outlet in town that the tenant has had to walk away from due to ill health. He has left all the equipment behind, which the Landlord has taken possession off, and he [the Landlord] wants us to complete the remainder of the lease. There is no entry fee, he will maintain the equipment as far as repairs go but he will not give a new lease at this stage after the present lease expires in 18 months time. The reason being is that he has had a $10 million offer for the complex, but if the sale falls through he will consider a new 5 + 5 lease.
I haven't been able to get any figures except for the rent @ $3,000 a month [not bad] and $385 a year for water. I have also found out that an 8 tonne Xmas prawn [shrimp] order has been placed , so this is quiet a busy outlet.
It's a pretty good offer but it will be almost impossible to get staff and I don't know what happened to those who worked there. I also do not really want to go back to working long-long hours again, perhaps try and find a manager? It's hard to decide without figures. No doubt a good option for a younger person.

 

[kitchenelf]

My thoughts are - the best manager for a new business is the owner!!!!! If long hours are not what you want this may not be the job for you. Sounds like a decision that would have to be made too fast and those are the most dangerous!!!

It looks like a pretty good-sized place - no small operation!

Just my thoughts.

 

[Barbara L]

Another thing to consider about the possibility of having to work long hours is that your health has not been up to par in the last couple months. Are you feeling up to the long hard hours if it comes to that? Also, if I am not misreading this, if the owner sells it, you will have put all that hard work into it for nothing if the new owners decided to go a different direction with the building. Definitely put a lot of thought into this, and know that I am praying for you (for health and direction).

Barbara

 

[Uncle Bob]

Yo Attie...You're a smart enough guy to know what you want to do...can, and can't do...etc. FWIW...my first thoughts when I read your post...."out of the frying pan, and into the fire"......Also, don't rush, do your homework...time is your friend!!

Have Fun!!!

 

[pacanis]

It's hard to decide without figures?
IMO, it would be impossible to decide without figures. Big red flag.
In my opinion.

 

[pacanis]

And..... since the owner isn't willing to make any committment to you, in other words, you work it for 18 months and he sells it anyway to the interested party, why doesn't he keep it running and you manage it for him?

 

[Barbara L]

And..... since the owner isn't willing to make any committment to you, in other words, you work it for 18 months and he sells it anyway to the interested party, why doesn't he keep it running and you manage it for him?

That could work.

Barbara

 

[KissTC]

You should be contacting Fair Trading or if you have a small buisness advice group in Queensland contact them.

You can check buisness registration details on line...it's free.

As others have said...No books, no cooks!...Without books, I wouldn't have even bothered to take the photos.

It not just rent and water you need to know about. There is public liability, wages, electricty, income insurance etc, etc...8 ton of prawns isn't going to cover half your electricty.

IMO you should have a years worth of wages in the bank before you start.

I hope that is of help

 

[Adillo303]

So many things that I don't know. I have run a small business for a lot of years.

I am sorry, but, I have not been at DC long enough to know what you are currently doing for income. Would you have to quit a job? The only way to look at this is an 18 month run with a brick wall at the end. From what I have read, you seem to have the experience and knowledge to run the business. I agree with Kitchenelf in that it would not make sense to take it for a short term and then add another salary of a manager.

If the landlord is willing to maintain the equipment, does he want a cut of the profit? That part seems strange.

If I am correct and you have the skills and knowledge treat it like math homework. List all of the things that you need, put a price on them,make yoru best estimate of sales. subtract cost from sales and see if that amount of money is worth it to you. Figure in wear and tear on your body. I am not extremely knowledgeable in the seafood business, but, I know that it poiles easily. How much risk of that is there?

If this business is in your town, then someone has to know the prior operator of the business or an employee. Have a cup of coffee at a couple diners around thearea and ask questions. Something has tolead to someone involved there that can lead you to the owner. whether he has or will part with the books in another story and very telling as to wether you should od it.

Also Uncle Bob's advice is very sage. You already know in your heart if you are up for it.

AC

 

[attie]

All great responses and thanks for them, I do need to make up my mind quickly so let's see where we stand.
KissTC - I would be up for public liability only with the insurance, because the place is also airconditioned I estimate electricity at $800 max a week. I will have some figures but how up to date they are, time will tell. Wages should be around $2,500 a week, not including mine.

And..... since the owner isn't willing to make any committment to you, in other words, you work it for 18 months and he sells it anyway to the interested party, why doesn't he keep it running and you manage it for him?

Good thought, that is an option for sure.

.."out of the frying pan, and into the fire".....

Exactly Bob, I can handle the project but as Barbara says, my health is a problem, I'm still trying to come to grips after two serious batches of Cellulitis.
I'm thinking that sales would have to be over $15,000 a week to show a reasonable return. In this type of business we have a minimum markup of 100%, We play on the "Fish of the day", mine being Mackerel which costs me 90c's a piece and sells for $4.40 cooked.
OK then, I will wait for the Business Broker to contact me and then test him about managing the business.
Thanks heaps for the thoughts everybody

 

[attie]

So many things that I don't know. I have run a small business for a lot of years.

I am sorry, but, I have not been at DC long enough to know what you are currently doing for income. Would you have to quit a job? The only way to look at this is an 18 month run with a brick wall at the end. From what I have read, you seem to have the experience and knowledge to run the business. I agree with Kitchenelf in that it would not make sense to take it for a short term and then add another salary of a manager.

If the landlord is willing to maintain the equipment, does he want a cut of the profit? That part seems strange.

If I am correct and you have the skills and knowledge treat it like math homework. List all of the things that you need, put a price on them,make yoru best estimate of sales. subtract cost from sales and see if that amount of money is worth it to you. Figure in wear and tear on your body. I am not extremely knowledgeable in the seafood business, but, I know that it poiles easily. How much risk of that is there?

If this business is in your town, then someone has to know the prior operator of the business or an employee. Have a cup of coffee at a couple diners around thearea and ask questions. Something has tolead to someone involved there that can lead you to the owner. whether he has or will part with the books in another story and very telling as to wether you should od it.

Also Uncle Bob's advice is very sage. You already know in your heart if you are up for it.

AC

I know the business roughly AC, he was my opposition somewhat up until early this year, I sold more cooked fish than he did but he had a large lunch trade, a salad bar etc., and handled fresh seafood whereas I didn't.
I'm coming out of semi retirement to do this.
This is not an unusual problem here, not renewing leases, our town of 90K plus people is pretty well the fastest growing town in Australia so the Landlords are now cashing in on the boom times. They are selling their properties without tenants because there is more demand for empty buildings.

 

[KissTC]

I know it is only possible to make guesses without the books...so here goes -

If you made your $4 on average (the 40c is GST) per customer. Then you would need to serve 45 customers per hour, every hour for 12 hours a day seven days a week to make your $15k turn over.

Sure, most would get a drink and some chips etc. So say you made $8 per pax...You would need to serve 23 per hour 12/7.

I don't see a prob there with the traffic. Not sure if a 90k town could generate that amount, but you are there and I am not, so you know if it can.

I do however, see a prob with staff. Your $2,500 will only get you one full timer! Remember the average Aussie wage is $1,200 for a 38 hour week. On that you have to add holidays, super, compo insurance etc, etc. The general rule of thumb use to be (and might still be) treble the wage to give the true cost. So one full timer on an Aussie average wage, cost the employer $3,600 per week!

Now ask your self, how many staff (full time) are needed to average enough customers so that you can turn a profit?

You can't do it on your own...No human can serve 23 people 12 hours a day 7 days a week...for very long!

I think your best bet, if you have some cash, is to hire a business consultant to have a look at it. With out the books you really need a buisness expert / specialist to give an opinion. I don't know what they charge but I would expect it to be in 000's not 00's.

Sorry to sound so down about it...But I think you really need to give this a lot more thought.

 

[attie]

I hear what you are saying Kiss, but the award rates in the hospitality industry is about $600 a week, 60% of the workers here earn less than $50K a year, it's only the miners who earn the big money. Just the same, I could be light on.
Here's a few figures from our last business
Final year's sales were $350K, net profit $92K [on the books] One permanent and three casual staff, weekly wage bill $1,000 including extras. Not all orders are for a piece of fish by the way, some orders go $60/$80 and we averaged between 150 to 350 customers a day.
I've now got his figures and for all the extra workload his sales were above ours but his personal income was less. 2007/08 figures are not included but sales dropped by $44K from 2005/06 to 2006/07, not good if the trend followed through as I suspect. His wages went from $94K [$1800wk] to $68K [$1300wk] in the same period.
I love a challenge ----------

 

[Dave Hutchins]

attire Take a old mans advice. Enjoy your retirement. Forget about running a joint again. I had 45 years in the business and I would not take a million for my experence but it would take a act of G D to git me back in business, way to much stress.
Enjoy what life you have left go fishing, read a book do something you like

 

[sichuan dingdong]

having worked with owners of many startups, and few that did not bite them in the butt. i would advise you to hold out on this one. the buyout is unlikely in the near future and sounds like a pressure ploy. hold out for this one. if the option is not in place in the future it was no big loss to you and too much of a gamble for anyone without a huge capital safety net. imagine how you would staff and run the place with people who can afford to not make a profit in a year or two, if this works out in your mind go for it when it is comfortable for you.

 

[KissTC]

Acknowledged with thanks.

The figures I have which I have not been able to confirm as yet...Is award base rate for un-qualified entry level cook $16.13 per hour. That equates to $612.94 base rate @38 hours. Then you have to add penalty rates, holidays, sick days, super (don't forget super), workers comp...and don't forget your big days of trade, public hols = 3X time!

Also don't forget the little things...like tool allowance, laudry etc. Also the cost of tax withholding, accountant fees etc.

An un-qualified entry level is not going to do 300 pax for lunch!!

Mate, ten years ago I was offered $300 per day to flip burgers in The Alice...No prep, no clean, no nothing...Just flip. 2 days off plus perks. $1,500 per week...The catch? Nothing really, just had to talk to the bus drivers (CB radio) so that 50 burgers would be ready when the coach pulled in...and do maybe 3 or 4 coaches per day over maybe 5 hours.

Here we are ten years later and you are talking $1,300 to $1,500 per week with all the stress, ify book figures, trying to get staff etc, etc, etc...

Let him take his 10 mil !

Pack the car...may as well take ya misses too...and head west! I came down the track ten years back and then it was $300 to $500 per day then. You pull into any of those towns and say you are a chef and promise to stay for 3 months...You will get free board, food, petrol, elec etc and $300 bucks and even the bar maid will flert with ya!

I have no idea what they offer these days...But I reckon you gotta get at least $600 to $700 per day as a seafood chef anywhere on the track.

Up to you...But for what it's worth, I think you need an NT extended holiday!!!

 

[Bilby]

... or head even further west where we are very short staffed on hospitality workers of all levels/types!

For what my opinion is worth, to me it sounds that you want to do it but know that it isn't a sound decision. Ignore your heart and follow your head. Let them hire you as a manager as someone else suggested. Too many holes in this to be a sound business decision from my perspective.

 

[Adillo303]

OK - The time that the lease ends is not variable. You cannot count on an extension. I see the questions to answer this way.

. In the time left, can you make significant money?
. How long to start up?
. Why did his business decline?
. How much of the customer base is still "Out there"?
. Do you want / need the income.

Seems to me that you sold your business for a reason. Is the reason still valid?

In an earlier thread "Emergency call out" you told us of another similar business that you were going to mentor. Is that still going? would they be a competetor? I think that the manage it for the landlord sounds the most viable. Income commng in no liability and when it is over - throw it away. Possibly, you could negotiate a percentage of profits, if you did well in increasing business it might motivate the landlord to not sell and continue on.

AC

 

[Lynd]

I'm sure you'll make the right choice. It looks like a nice place but the fact that you could be working for nothing after 18 months would put me off.

 

[attie]

In an earlier thread "Emergency call out" you told us of another similar business that you were going to mentor. Is that still going? would they be a competetor?

They have settled in very well Adillo and they will not be a competitor, I've heard some good reports after their shaky start.
You people have given much sound advise here and I thank you