restaurant start up questions

**black88lx** · 05-17-2007 06:58 PM

heys guys im new to this site and i have some questions, im 21 years old and my name is anthony. I will be coming in to some money from a lawsuit and i want to do something that i have always wanted. Im young but i want to open an italian restaurant and pizzeria. my father has owned an italian rest. and pizza place for 20 some years. i grew up in the rest. industry and have worked for other restaurants besides my familes. The restuarant i worked at for 4 years was bought by another guy and turned into dump, it was like a cheap diner by the time he was finished with it. It used to be a fine italian dining.. Well long story short, a year later it went bankrupt. its now sitting and the court wants to sell. sell sell. they were asking 550.000 then 475.000 now its accepting offers. the restaurant is full of equiptment and ready to go, besides cleaning and inspections, updating, landscaping. ect. I dont know where to start exactly, i have my father to help me but he is in N.C. and i live in PA. So its limited help. Now with my settlement lets say i end up with 30,000. What do i do next and who can help. thanks guys, i look forward to hearing some replies.

**Paint and Air Sportz** · 05-17-2007 07:22 PM

With only 30,000 its a long shot to get a bank loan for 300,000$ and your not geting anything more then 10% down. And with that youll need an impecable credit score.

**dosrotties** · 05-17-2007 10:31 PM

law suit not sure I want to be your friend. Anyway, never fall in love with the Deal. Sounds like you have some fond memories there. Just be carefull.
Resturant biz to me is always a gamble, but maybe you can pick up old clientel with a we're back concept

**akula** · 05-17-2007 10:46 PM

Originally Posted by black88lx

heys guys im new to this site and i have some questions, im 21 years old and my name is anthony. I will be coming in to some money from a lawsuit and i want to do something that i have always wanted. Im young but i want to open an italian restaurant and pizzeria. my father has owned an italian rest. and pizza place for 20 some years. i grew up in the rest. industry and have worked for other restaurants besides my familes. The restuarant i worked at for 4 years was bought by another guy and turned into dump, it was like a cheap diner by the time he was finished with it. It used to be a fine italian dining.. Well long story short, a year later it went bankrupt. its now sitting and the court wants to sell. sell sell. they were asking 550.000 then 475.000 now its accepting offers. the restaurant is full of equiptment and ready to go, besides cleaning and inspections, updating, landscaping. ect. I dont know where to start exactly, i have my father to help me but he is in N.C. and i live in PA. So its limited help. Now with my settlement lets say i end up with 30,000. What do i do next and who can help. thanks guys, i look forward to hearing some replies.

It's called a leveraged buyout (LBO), I can talk you thru it if you're still on this forum? you here?

**akula** · 05-17-2007 10:48 PM

Originally Posted by Paint and Air Sportz

With only 30,000 its a long shot to get a bank loan for 300,000$ and your not geting anything more then 10% down. And with that youll need an impecable credit score.

it's not 30k

the loan will be secured by the restaurant it self ("restaurant" meaning all the available assets on the B/S)

**steven.ruddell** · 05-18-2007 01:26 AM

Before I consider investing the 30k, I would look into creating a business plan to expand and improve the business. Run the financials on it and prove to the bank that it will be profitable. Just a thought

**Young Spark** · 05-18-2007 07:11 AM

Akula beat me to it... but it is called a LBO, http://en.wikipedia.org/wiki/Leveraged_buyout --- it'd probably be the best method in my opinion, but my opinion doesn't necessarily mean its the absolute best way, do some research and your sure to get the best results

Good luck...

**jasaunders** · 05-18-2007 07:42 AM

Keep in mind with a LBO, the more you take in debt for the transaction, the higher your interest payments are going to be. You need to make sure you can handle the interest payments on $300k.

**Young Spark** · 05-18-2007 07:46 AM

^^ That is true Josh, that's why its always smart to develop a business plan that'll help stay away from them debts.

You want more assets, less liabilities.

**black88lx** · 05-18-2007 03:36 PM

yeah guys im still here and im interested in hearing about the leverage buy out and what exactly that is. I would like to make a business plan but i dont know where to start. I searched a couple sites like sba.gov and others on how to make a business plan, but i wish i had a layout or something that took me step by step how to make it. like on MS word, you can make a resume and they give you a resume that you just replace with your own information. .. Is there anything like that available? And lastly the lawsuit is agains the product manufacturer. BIG RED. ,, they sell things at pepboys and the lke. anyway i bought a come along on jan 15 in the morning and later that afternoon while using it, the safety lach mechanism failed as well as the rubber grip handle slipping off, which brought my fists that were gripping the handle come back and hit me in the left eye, resulting in emergency surgery. Whcih led to me having to get my corned reattached. I was an ugly thing,,,, i bought another come along two days ago the exact same one, so i could have the box for the lawyer, guess what the handle comes off this one aslo, so its definately a safety issue with their product that needs to be addressed.

**AllyWinsley** · 05-24-2007 02:08 AM

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**akula** · 05-24-2007 03:16 AM

Originally Posted by black88lx

yeah guys im still here and im interested in hearing about the leverage buy out and what exactly that is. I would like to make a business plan but i dont know where to start. I searched a couple sites like sba.gov and others on how to make a business plan, but i wish i had a layout or something that took me step by step how to make it. like on MS word, you can make a resume and they give you a resume that you just replace with your own information. .. Is there anything like that available? And lastly the lawsuit is agains the product manufacturer. BIG RED. ,, they sell things at pepboys and the lke. anyway i bought a come along on jan 15 in the morning and later that afternoon while using it, the safety lach mechanism failed as well as the rubber grip handle slipping off, which brought my fists that were gripping the handle come back and hit me in the left eye, resulting in emergency surgery. Whcih led to me having to get my corned reattached. I was an ugly thing,,,, i bought another come along two days ago the exact same one, so i could have the box for the lawyer, guess what the handle comes off this one aslo, so its definately a safety issue with their product that needs to be addressed.

this conversation is not working

do you want to discuss the structure used to buy a business, or something else?

**zoobie** · 05-24-2007 10:41 AM

Hope you'll get what you need here at the forum. There's a lot of things to do to get started and you'll take the risk, too. You need a lot of research. That would be a great help. Best of luck!

**ltressel** · 05-24-2007 10:55 AM

Hi Black,

I'm assuming for the price of this place at 400K+ that it's a pretty big place. Understand that a huge place like this you will need a reliable front of the house, and I'm thinking that you got yourself for the back of the house. Buying into its physical premises is one thing but the full operations will be very tasking.

One-you would have to think about your purveyors. These are the people that will provide you with the goods to run your restaurant- food supplies, napkins, drink service, condiments, etc. Most of them, will not deal with giving you 30 days to pay them off. They will want Cash on delivery.

Two-guaranteed that most of your food line up in your menu would be a hit or miss. Meaning you will stock up on your ingredients that would possibly spoil because your consumers will not take a liking of some items in your menu but you still have to have in your pantry. There will be months of tweaking your food line up before you find a strong menu.

Three-be prepared to have all of your licensing in check. Getting them and keeping them are two different stories.

You're not a rookie at the experience that's a given. Restaurant is a mix of a lot of heart (passion) but also business sense. Make sure you know that a restaurant will not see profit within its first year-you'll be very blessed to see something come back in its second year.

I say this because we are also in the process of putting one together this summer. Opening the doors for it probably early next year. Initial monetary investment is 100K but this is a take out joint with 3 tables at the most.

Just food for thought---

LT

**restaurantconsultant** · 05-28-2009 09:55 AM

Originally Posted by black88lx

heys guys im new to this site and i have some questions, im 21 years old and my name is anthony. I will be coming in to some money from a lawsuit and i want to do something that i have always wanted. Im young but i want to open an italian restaurant and pizzeria. my father has owned an italian rest. and pizza place for 20 some years. i grew up in the rest. industry and have worked for other restaurants besides my familes. The restuarant i worked at for 4 years was bought by another guy and turned into dump, it was like a cheap diner by the time he was finished with it. It used to be a fine italian dining.. Well long story short, a year later it went bankrupt. its now sitting and the court wants to sell. sell sell. they were asking 550.000 then 475.000 now its accepting offers. the restaurant is full of equiptment and ready to go, besides cleaning and inspections, updating, landscaping. ect. I dont know where to start exactly, i have my father to help me but he is in N.C. and i live in PA. So its limited help. Now with my settlement lets say i end up with 30,000. What do i do next and who can help. thanks guys, i look forward to hearing some replies.

You have to start with a business plan. This will cogently identify the basis for future investment. It will also frame your goals and keep you steady. The Foodservice industry as you know is full of pitfalls and obstacles. Like any business venture, knowing is half the battle, so get in gear!

In many ways, this economy could not be better for starting a restaurant. Costs are down, lessee contracts are favorable and dining styles have greatly changed to offer easier formats for operators to work in.

Systems, controls, marketing, and partners that are invested in the same goals as you are is tantamount to your success. Begin this process with a strong background in food and beverage or get help from Consultants that are experts in the field. Try fcsi.org or other trade associations for some ideas.

Best of luck...