Should I buy in? (stock market, investment, economy)

[jimj]

Harry and 8snake, one thing I just thought of is a discussion we had about the landlord, I should have thought of this before and figured it in as well. This particular place has seen about 5 business's come and go and 2 were restaurants.
Now in these times you'd figure a landlord would be a little flexible and willing to negociate rents to keep a place occupied right? Not this one. I'm told she'd rather have it sit empty for years (it has) then negociate anything so that could be a sticking point if cash got real tight. Also the other thing the supply guy told me was they'd be lucky to be in operation in a year at the rate things are currently going....
I know most everything is down here now and I think people are hanging their collective hats on the fact we've always had a strong tourist season (we did last year even with gas prices) but I'm not so sure this year that it will happen.

[harry chickpea]

I've seen situations like that, where the landlord won't rent or maintain. It used to be if you had a prime bit of property, you just held onto it until the area built up and then sold it off at a huge profit. A lot of land that was the old drive-in theatres and golf courses was like this. The business could go in the hole, but the property value increase was enough to soldier on until the right buyer came along. Those situations are going to be a bit harder to find for a few years. In short, if this landlord won't negotiate with you, the possibilities for the restaurant are dead in the water. Find someplace else, or some other idea.

[jimj]

Originally Posted by harry chickpea

I've seen situations like that, where the landlord won't rent or maintain. It used to be if you had a prime bit of property, you just held onto it until the area built up and then sold it off at a huge profit. A lot of land that was the old drive-in theatres and golf courses was like this. The business could go in the hole, but the property value increase was enough to soldier on until the right buyer came along. Those situations are going to be a bit harder to find for a few years. In short, if this landlord won't negotiate with you, the possibilities for the restaurant are dead in the water. Find someplace else, or some other idea.

On that note I might have done just that! One of my other enjoyments is bagels (believe it or not) and as I was visiting a friend who owns a bakery we were discussing the current market place. She's in a shopping complex that also contains a bagel/sandwich store that's been in business for years and has it's bagels in most of the grocery stores in the valley as well as other commercial accounts. I mentioned to her that last year I'd thought of opening a wherehouse space where I'd make donuts/muffins/bagels for primarily a wholesale market since there's no one servicing places like gas stations,coffee stands etc anymore so they have to go buy the grocery store crud. She mentioned this particular bagel place was for sale and gave me the "back story" on it. It used to be a moneymaker and right now they're on the rocks. She's known the people for years, it's an older couple who are just plain tired and got drug into a very big legal/medical fight for a child and spent all the money the store made on personal bills instead of the store. Her opinion is that the store is very viable IF someone would run it correctly, put the time in and spend the $$ in the proper places.
She watches their foot traffic (out her front window) which she says is very good and since they've shortened their hours she's heard complaints from people wanting their product but finding them closed, and again they have their stuff in most/all of the grocery stores here which I know is not an easy thing to do.
They want somewhere around $250k for the business but I think I could get it for much less and no real estate, the building is leased.
Naturally I'd have to look at the books and see what commercial contracts they have and how long they're in force since those are worth something.

Thoughts?

[harry chickpea]

Bagels are an interesting market niche. They work especially well if the proprietor is Jewish, since there is a high correlation to ethnicity, and a subliminal feeling of place goes with the product. However, ethnicity isn't always required to make a product successful. Check this out:
Tortillas Blanco
I would not be surprised to see this little company start to grow to encompass the enter southeast market and national market. The owners are just plain nice people with a lot of energy, and have a great product at a premium price. I seem to remember that they sometimes give a course on business development at the local college. If you could take that course or talk with them, you could have a real heads up.

[jdrtx]

Originally Posted by jimj

I have an oppertunity to buy into a runing bbq restaurant. It has been open for about 4 years and "seems" to be doing ok though I've not looked at the books yet.
The owner is young (about 25 or so) and has made some mistakes causing some cash flow issues that my investment would fix not to mention I'd replace a paid worker lowering overhead. He bought things when he probably shouldn't have and expanded before he really had the cash to do so but at this point he's still making it though it's real tight for him.
We're talking about a $40k investment plus my time and since the 40k is in the market (it was $110k) I was thinking I'd rather bet it on something I control than on something where I'm just along for the ride. I also think that in a good economy there would be no way he'd let me in for that amount but that's my opinion.
I've wanted to open a restaurant for years but just never wanted to take the risk since 90% fail in the first year or two.
I'm retired and don't need the income from the $40k right now but am trying to look to the future. I've been a cook when I was younger, my wife has a degree from culinary school and has worked in several restaurants and my son is in culinary school now so we have some idea of what's involved. I think we could add some wisdom and knowledge he doesn't current have that would benefit this place highly.
Any suggestions?

Here is my advice:

Two words you should never see in the same sentence, BBQ shack and culinary school.

[jimj]

Originally Posted by jdrtx

Here is my advice:

Two words you should never see in the same sentence, BBQ shack and culinary school.

Oh I don't know, good place to learn safety and (what most eateries lack) sanitation as well as portion control and cost control right?

[jimj]

Originally Posted by harry chickpea

Bagels are an interesting market niche. They work especially well if the proprietor is Jewish, since there is a high correlation to ethnicity, and a subliminal feeling of place goes with the product. However, ethnicity isn't always required to make a product successful. Check this out:
Tortillas Blanco
I would not be surprised to see this little company start to grow to encompass the enter southeast market and national market. The owners are just plain nice people with a lot of energy, and have a great product at a premium price. I seem to remember that they sometimes give a course on business development at the local college. If you could take that course or talk with them, you could have a real heads up.

Well I guess it's a good thing I'm jewish then right?

[harry chickpea]

Originally Posted by jimj

Well I guess it's a good thing I'm jewish then right?

Mazeltov. Start with the bagels, then make some decent kuegel and tsimmes. The killer app would be what the Lebanese call (pronouncing it) Bat-lauowee. Batlawa. Like the Greek baklava only better. It'll pay you to try various variations. Oh yeah, put cardamom in the coffee.

Hey waitaminute, how did you plan to keep kosher in a BBQ joint? Oi (nk!)

[jimj]

Originally Posted by harry chickpea

Mazeltov. Start with the bagels, then make some decent kuegel and tsimmes. The killer app would be what the Lebanese call (pronouncing it) Bat-lauowee. Batlawa. Like the Greek baklava only better. It'll pay you to try various variations. Oh yeah, put cardamom in the coffee.

Hey waitaminute, how did you plan to keep kosher in a BBQ joint? Oi (nk!)

Shalom!
Well, I haven't met a kosher pig yet but ya know I can't resist good BBQ! I'd love to make bobka and I love to make blintz which are impossible to find up here. There's not a huge jewish population up here and unfortunately there's more anti-semites than jews so we keep pretty quiet.
I did find a pretty good jewish baking web site and have made a few things off of it and if I had the space I'd definately try and mass make some, if it worked that'd be fine if it didn't, well at least I tried.
One concern I have is the cost of raw goods. Flour went crazy a few months ago from about $10 a 50lb bag to $54 then back down to about $24 but that was that damn ethenol thing that caused a run on flour. Sugar is another concern that I'll have to check into...

[harry chickpea]

I think you may have a window of a couple of years on sugar, but after that it is likely to go sky high. South Florida has been a major, if not the major supplier of sugar in the U.S. There are literally miles and miles of sugar cane that grow around Clewiston and South Bay, most of it owned by one family run corporation that has been used to getting price protection from the government. Globalization has been a problem, and the corporation recently agreed to sell all the land to the south Florida Water District or some other conservation oriented entity. It was a stunner that no one expected, and it will take millions of acres of highly productive farmland out of production.

I can flat out guarantee that when the mill has shut down for a suitable length of time, and the price starts to rise from supply and demand, that the price of cane sugar will at least double. We saw the exact same thing with tomatoes after NAFTA was implemented. All the south Florida growers dropped out, and the price more than trebled in the space of a few months.