What is a Deli worth?

Hi All,

I was wondering if anyone has some formulars to determine what a deli is worth and how deals are constructed in that venue.

Thanks,

G

By Peachcreek (Peachcreek) on Friday, July 18, 2003 - 04:49 pm: Edit

What I would pay: 65% of the last years' gross sales as the top asking price. That is to buy the business, equipment, licenses, stock on hand, etc. The real estate or lease is another componant. If you are buying into a business that leases space, then you get the right to buy their lease as part of the asking price. Real estate in your part of the country? I dunno.

By Mbw (Mbw) on Monday, July 21, 2003 - 12:53 pm: Edit

Keep in mind that businesses are falling left and right. Near new equipment can be purchased cheaply online or at a local auction.

I have a VERY different take on life so MY info may not jive with the rest of you here BUT!!

#1 Buying a business is like paying for the chance at losing even more money. Very few exceptions exsist.

#2 "Good will" is worth squat and needs to be re generated in MOST places (unless you are in a tourist town and then you can sell crap AND be rude year after year and never lose any money.) but I digress.. Anyway most places want to sell you there GOOD WILL. Most sellers expect you to pay for their past losses and THAT is why the $80,000 price tag is there, GOOD WILL has NOTHING to do with it. Pay for equipment only, and work up.

#3 “Picking the carcass” When that don’t sell they fold. This may give you a landlord with an empty space full of equipment, a huge amount of money owed by the past tenant and no clue. This landlord will be happy to add the equipment to the lease or sell it to you at market rate. They win and you win too.

Of course “When you find true love go for it drunk or sober” Forget WHERE I heard it but it is true for this industry too. If you want a space it is worth paying for.

PS $80K is the average price of a deli here in San Francisco as far as I can tell. $15K, $35K and even $145K for a sandwich shop in the right place. Deli prices are ALL over the map.

Good luck!

MBW

By George (George) on Monday, July 21, 2003 - 02:44 pm: Edit

Thanks to all.

FYI and to give a better perspective It is next to several very large public beaches and a large marina with about 200 boats and 5 commercial day and half day fishing boats, and there are several "Town Facility" type of places with about 75 employees in the winter and 250 in the summer. It's also right at the junction of where a 6 lane highway turns into a parkway and there is absolutely incredible traffic flow. The deli is clearly visible from the road and marina and there is plenty of parking. There is no other deli within 5 miles.

They do and average or 2 to 3 K a day during the summer months and it drops to about 800 a day in the winter. On labor Day, Memorial day, 4th of July and the local Fireworks day they do about 15 to 20K in the 3 day weekend (if it's sunny). About 60% of the business is eggs sandwiches and coffee in the am.

That said all the equipment was there when I used to live above it back in 1978, it’s a tiny store with a basement that has two sump pumps constantly running

Thanks,

G