Need advice

[Aiming4thegreen]

Hey everyone, this is my first post. I wanted to get some advice on a possible investment. I'm looking at a small snack/cafe in a corporate building in nyc.  It's basically a walk in closet that sells drinks, snacks, light breakfast and lunch. The owner is asking 19k, the rent is 150pm including utilities. The only overhead is the food.  He claims to make anywhere between 150-300 a day depending on the season, weather etc.  I was planning to see the store in action during the week since I won't take his word for it.  Any ideas or advice would greatly be appreciated. Thank you

[pbkmaine]

Are you going to run it or are you going to hire someone to run it?

[Aiming4thegreen]

It's going to be a joint deal between me and my fiance. I'm still going to work full time and help out when I can. We planned on hiring her mom to run it for about 200 a week. She's retired so to give her something to do. My fiancé will also be there to help out if needed.

[pbkmaine]

In New York City these things can be profitable, especially if you offer a "deal" that includes a sandwich, can of soda, and a piece of fruit or chips. Price it a bit less than the one down the block. I have coworkers who walk 10 blocks to pay $1.00 less for a "deal". What you need to research is where you can get quality supplies for the lowest cost. Also, how to predict demand to minimize waste.

[Aiming4thegreen]

Thanx for the replies... We are figuring not to have a extreme menu for breakfast and lunch to minimize waste. We can always take the food home. There doesn't seem to be a lot of places to grab food in this location. The current menu seems pricey I mean $4 for a soup?  I plan on revamping the menu a bit with prices that are low but not to low to maxiumize profit. Restaurant depot seems to be the best place for candies and stuff.

[arebelspy]

Hey everyone, this is my first post. I wanted to get some advice on a possible investment. I'm looking at a small snack/cafe in a corporate building in nyc.  It's basically a walk in closet that sells drinks, snacks, light breakfast and lunch. The owner is asking 19k, the rent is 150pm including utilities. The only overhead is the food.  He claims to make anywhere between 150-300 a day depending on the season, weather etc.  I was planning to see the store in action during the week since I won't take his word for it.  Any ideas or advice would greatly be appreciated. Thank you

150-300 gross or net?  Big difference.

If gross, better find out how much the net is (i.e. after all food costs).  If that's net, why is he selling something that makes ~80k/yr for 20k?  Even if you paid someone 40k annually to run it, selling it for six months of earnings seems low.

Disclaimer: I know nothing about that business.  But there are several red flags I'd be investigating.  Get his financials and tax records for the last few years ASAP.

[Aiming4thegreen]

The 150-300per day is gross. He said the food can run up to 700 a week if its really busy. It's a cash business so the financials are only going to show break even numbers or a lose. That's why I wanted to see the place in action, can't take his word for it.  The reason he is selling is that be has other business's and his girlfriend runs it for extra money. He says he's looking to buy a hous rand needs a down payment.

[matchewed]

So no paper trail to prove that he makes what he makes. Just take his word for it...

A cash only business should still have some accounting to it, a general ledger for the business that you could browse, and he has to pay some taxes (it's NYC damn near everything is regulated).

The fact that this guy needs cash fast is as much of a red flag as anything especially if he has more businesses and pulls in 80k alone with one.

[arebelspy]

It's a cash business so the financials are only going to show break even numbers or a lose.

This says one of two things:
1) It doesn't actually make money, or
2) The guy is lying about his income to the federal government.

If he is a liar and willing to break the law to do so, why would you think he isn't going to lie to you?

I don't deal with people like that.  When I come across a real estate opportunity and examine the person's tax returns and they've claimed way more in expenses than is being represented in the transaction (i.e. they're trying to show higher profits in their sales pitch, but the numbers don't line up with their official reported numbers), why would I deal with them?   I can't trust them to be straight with me.

Get the financials.  That's the true measure of both the character of the seller and of the profitability of the business.

[Aiming4thegreen]

Hey guys, thank you all for the replies. I'm going to take all your advice and not bother with this deal. Kinda figured it was shady I just needed a few opinions. The funny thing is that I saw another crave tonight and this guy didn't have any financials either. Im finding all the shady characters lol. We have decided to just start the business from scratch and take our time... Thanx again everyone