Greasy Spoon Cafe

[worsy]

Anyone experience of a greasy spoon. There is one for sale on the local industrial estate which opens 8-3 6 days a week and turns over 100k with GP of 80%. Obviously interesting to see what the net is, but wondered if anyone had experience of this type of business?

[sumo69]

GP of 80% (does that include direct labour?) is actually pretty high so it sounds promising - just a question of how much the rent and rates take from the 80K gross profit.

David

[V8mate]

That margin should allow for an improvment in the quality of the sausages.

Greasy spoon brekkies are always let down by nasty sausages.

Anyway, carry on!

[Hoofy]

In theory, it's quite a good idea as industrial estates are often situated away from corner shops. Plus you get a lot of parking space for passing traffic.

One thought that springs to mind - if it's so good, why's the owner selling up?

[worsy]

Lease is under 10k pa. The business is available for <70k. I wouldn't imagine that wages are particularly huge even if this was run on a hands off basis.
What the reasons for sale are, no idea.

Spoon is on a small industrial park with plenty of logistics companies, so lots of truckers.

[Frimley111R]

80% GP?!!

There's a thread on the TVS regional forum started by me about a local 'greasy spoon' and there are now 5 pages of it covering others in the area too. Well worth a look as the quality of these places seems to be rising all the time and they seem to be doing VERY well.

[worsy]

Frimley111R said:

80% GP?!!

There's a thread on the TVS regional forum started by me about a local 'greasy spoon' and there are now 5 pages of it covering others in the area too. Well worth a look as the quality of these places seems to be rising all the time and they seem to be doing VERY well.

Can you pm me a link please?

[Frimley111R]

Dunito!

[daemon]

worsy said:

Lease is under 10k pa. The business is available for <70k. I wouldn't imagine that wages are particularly huge even if this was run on a hands off basis.
What the reasons for sale are, no idea.

Spoon is on a small industrial park with plenty of logistics companies, so lots of truckers.

£100K turnover means VAT registration so assuming approx £60K is vatable you're loosing £10K in VAT?

Assuming you dont want to fry chips all day, you'll need at least 2 staff @ £6 per hour 40 hrs per week, so £25K in wages.

Even allowing another £10K per year, you're looking at a net profit of £35k ish.

Borrow £40K and pay it back over 5 years is repayments of £10K per year.

Sounds reasonably viable. Whys the owner looking out is what i would want to know. Very few people sell a viable business these days...

[Frimley111R]

daemon said:

Very few people sell a viable business these days...

You might be a bit (massively) wide of the mark there. People sell viable businesses every day, of all sizes. People sell because:

1. They want to retire
2. They want to do something new (perhaps get their Saturday's back)
3. They want to spend more time on leisure pursuits
4. They want to spend more time with family
5. They want to 'cash in their chips'
6. They have received a good offer

Etc.

You get the idea..

[worsy]

£1600 a week net of VAT. If it could turn a min net profit of 20k then it could be a decent spinner for the missus.

[TurricanII]

I'd want to check how long is left on the lease and ask them if they aware of any problems renewing the lease or if the rent is due to go up. The landlord might want them out to redevelop, or they may have opted to exclude 'security of tenure' from the lease.

[Thankyou4calling]

100 k turnover is 2k a week or around £350 per day. At an average spend of £5 that's 70 people a day. If you can obtain 3 years audited accounts then you can verify the turnover, if you can't, simple, park outside for a couple of days and count the people going in. If it totals about 70 you may not be far out. 80% GP sounds very high and I wouldn't bother asking why they're selling as you won't get the truth. A cafe can be a good little business though.

[Slurms]

80% GP is good, minimum for these kind of operations is always minimum 70% GP on everything.

It's after that where you'll start to find the costs ramp up.

Lease, business rates, staff are the next three big costs.

So you want to know the lease cost, number of years remaining and overall wage bill.

VAT is an important consideration because you'll find most of the items you sell in a Cafe will attract VAT but you won't be able to claim back a lot from suppliers.

[Laner]

Is there a Greggs opening up nearby? Do some more research and good luck. Agree with the sausage comment above.

[worsy]

There is a Greggs in town but not close by.

[Digga]

If the OP decides to take the plunge - and certainly the figures sound interesting - then an idea to consider is offering a delivery service on the industrial estate
for 'phone/fax/email orders for office, warehouse or workshop staff who aren't able to get out as easliy. The 'spoon on our industrial estate does this and I can see, from their delivery vehicles presence, that we're not the only office to utilise them.

[worsy]

Digga said:

If the OP decides to take the plunge - and certainly the figures sound interesting - then an idea to consider is offering a delivery service on the industrial estate
for 'phone/fax/email orders for office, warehouse or workshop staff who aren't able to get out as easliy. The 'spoon on our industrial estate does this and I can see, from their delivery vehicles presence, that we're not the only office to utilise them.

Yup. I understand that the area is serviced by mobile vans and this is the competition. Certainly worth a thought. Having looked at the menu, it appears they tend to push main meals at lunchtime. Homemade type stuff. Interesting to see whether they do any lines in fast food takeaway, sandwiches and pastries for example.

[Hoofy]

I did wonder if mobile vans would be an issue. I'd loiter around the industrial estate from 10am until midday just to see who turns up. (Where I used to work, the sandwich woman would drive in around 10am so you could buy mid-morning snacks as well as lunch.)

[Digga]

worsy said:

Digga said:

If the OP decides to take the plunge - and certainly the figures sound interesting - then an idea to consider is offering a delivery service on the industrial estate
for 'phone/fax/email orders for office, warehouse or workshop staff who aren't able to get out as easliy. The 'spoon on our industrial estate does this and I can see, from their delivery vehicles presence, that we're not the only office to utilise them.

Yup. I understand that the area is serviced by mobile vans and this is the competition. Certainly worth a thought. Having looked at the menu, it appears they tend to push main meals at lunchtime. Homemade type stuff. Interesting to see whether they do any lines in fast food takeaway, sandwiches and pastries for example.

We don't get vans round here, but it's simply a case that busy workers can't just pop to the cafe like drivers or reps can, so the cafe delivering to them works both ways.

If there are a lot of large businesses, you might also be able to bid for catering meetings and events.