28 - Listener Mailbag: Estimating Daily Sales and Buying an Existing Coffee Shop

Gjergj Dollani: Hey friends, welcome to the newest episode of Restrata Time. off, I'm excited to announce that the book grounds based on the Café Chocolate story. Basically, here ⁓ is from I started what were the conversations like, how I hired everybody, what are some of the things that I did, what I was looking for, how did I do the construction? I mean, it's it's basically every Alright, welcome friends. Today I will read a couple of emails I've received from different listeners. ⁓ as most of the listeners are either in the process of starting a coffee shop or are in the middle of the coffee shop or are thinking about it. So a lot of these ⁓ questions that I get are I'm sure they're very helpful to ⁓ a lot of ⁓ a lot of the listeners. So And and I know that I've I've put out a few of these episodes here and there, and they've been the the most popular ones because you know they deal with tactical stuff like you know how do I calculate this or how many cups of this. so so I think these are very helpful. Anyway, ⁓ I'll start with ⁓ an email from ⁓ Eric. And Eric says single step that I took to start and actually even close got fish out down so everything is all in this book. it's actually been now up on Amazon for about a week and and I was excited to see this morning that it was ranked ⁓ as the three selling book in ⁓ starting a business ⁓ category. So that was unexpected at ed and exciting. Of course that changes all the time and know I'm I'm hoping that it it stays at least in the in the top fifty books. that's that's very exciting. Anyway, ⁓ if haven't picked up the book, I if love the podcast and and you you kind of are drawn to the history of of Cafe Chocolat and you're in the process of opening your own coffee shop Hi George, I'm a listener of the Restray the Time podcast. I've found it very valuable. Thanks for putting it out. ⁓ it's probably no surprise that someone contacting you about this topic is considering opening a shop. Before I write too much or ask about some questions, I just want to see if you're still responding to this topic since it's been a couple of years you wrapped up the podcast. Anyway, if so, great. ⁓ one question I have is how do I estimate the number of tickets per day and how do I estimate the per ticket total? This clearly feeds into my business plan. I'm in a small slash midsized city on the front range of Colorado. So a totally different environment than DC. But still, ⁓ forgive me if you've covered this on the show as I've listened to a lot of them, ⁓ one after the other, so I need to get back and re-listen. ⁓ I think you'll find a lot of stuff in here, even kind of the conversations that you have with your loved ones, about you know the the journey that you're about to partake. So what doing something special, specifically only for the listeners of this podcast, I've put together a document ⁓ with, you know, fifteen things I wish I knew before I started the shop and closed it, that I think would It's ⁓ it's a amazing resource and ⁓ thanks again and have a great day. ⁓ okay, so my response to Eric was Kell, thanks for reaching out. ⁓ obviously I told him that I kind of slowed down on the on the recording part, but ⁓ to answer your question, it's a mix of art and science, and you won't know for sure until you open and see how it's tracking. Number of customers per day, one way to do it is go to the street slash location you'd like to open. come handy to to anybody who's who's interested and even wants to know are some of the main I have from from from this book so or from from the So you know if you buy it me a note delania gmail.com and ⁓ I will send you the list with the the the 15 things that I wish knew before I started. Okay. Get one of those people counter things and count how many people walk by at 8 a.m. on a Tuesday for about an hour. Do it again at 2 p.m. for another hour. Those two time slots will most likely be your busiest. If you don't plan to offer ⁓ soups, sandwiches, etc., if you ⁓ lunch, ⁓ the 12 to 1 time slot as well. Estimate that 5 to 8% of the people that walked by. ⁓ Now let's get on with the show. will walk into your shop. And and again, I I even think that's that's high. I think five to eight percent is is high. to be on the conservative side, I would probably estimate that y no more than about five out of a hundred people walking by your shop will actually walk into the shop. you can do one to two per one to four percent if you're thinking conservatively. ⁓ For price ticket, if your shop is coffee, tea, pastress, ⁓ I would look at six to seven dollar average per person. If you offer lunch, depending on the price, obviously, do it, ⁓ fifteen dollars per Again These are rough guidelines, ⁓ and you built you know better what pricing in your market is like. But I think overall the ones I put here are good to get you started. another way to skin ⁓ this is that you want to make sure ⁓ you a thousand dollars, over a thousand dollars in sales per day. So you can divide it by your average price per ticket, and that will tell you how many customers you will need. ⁓ get after it, good luck, ⁓ and let me know how you. progress. Anyway, so I I did follow up with with Eric. I was curious to see what ⁓ what he did. his response was ⁓ he a lot of progress, got the ⁓ organization started the L L C But the space that he found was ⁓ over two thousand square foot and and talking to other people in the industry he walked out of it because they also did say that that's way too big of a space for for a coffee shop. So so again, there's no right answer to this. I mean you can do all the research, you can do everything and then ⁓ kind of ⁓ decide at point that this is not the right time and not the not the right thing to do and and it sounds like, this is the the decision that was taken. So Alright, now let's go to an ⁓ So this one was was a little different. this one was from kasim, ⁓ he hello Jerge, me and my daughter are in the process of opening our own coffee shop. Like you both of us have no prior experience in the industry, and everything is new and exciting. So ⁓ excited learning for us. I was super thrilled to find out about your podcast, have binged all of them, and looking forward to new stuff. I hope a very I have a very specific question. While looking for a place ⁓ for our shop, I found that there are options to buy already functioning businesses ⁓ on bizbycell.com was wondering about the pros and cons of rent. Inventing a brand new location, remodeling it to our needs, buying equipment, etc., versus getting an already functioning business and adapting it ⁓ to our vision. I'm I'll be happy to hear your thoughts. ⁓ thanks for the podcast ⁓ and the advice. So it's funny because ⁓ I I'm kind of rereading this, so I'm sure I'll I'll I'll add a little bit more to the response that I gave him. I say, hi Kasim. Thank you for your message and for listening to the podcast. First off, it's great to hear you're thinking about opening a coffee shop. I do not have experience with buying an already operational business. I've looked at Biz Buy Sell and usually my question when I see stuff like this is why are they selling? The answer doesn't necessarily have to be a negative one, but the first thing I'd look at when I see a business making $500,000 a year of revenue and $150k yearly profit net, I wonder why sell it. You may be able to find a place where the owners are old and really can't take care of it anymore. Maybe that may make sense. But I do my due diligence. ⁓ I'll look into these things. One, figure out who is selling and why, what the revenue and profit margins are, what type of business it is, meaning what generates most sales, like drive-through, sit-down, downtown professionals. So you can figure out if there is a mismatch between their offering and location, who the landlord is and what the owner's relationship with the landlord is. ⁓ what is the relationship of the owners with a clientele ⁓ under new ownership quotation? Marks doesn't always have to mean we're better than the previous one. ⁓ there's tons of things to consider. The pros and cons. Obviously, a pro is that the business can be turnkey, meaning you need the keys and you can start. A con is that it's hard to put your vision on someone else's work. I hear people buy businesses there and do well, but I'd probably look at their financial history for the past five years, if they have it, to figure out what's ⁓ going on. Good luck to you and your daughter. ⁓ It's not easy. Best charge. Yeah, I've I've thought about buying I've I've thought about what the next step is for me personally from a coffee shop perspective. Whether I would start from scratch again or buy somebody's business and work with that. Personally obviously the easiest thing to do is buy a business that's already there. And especially like I said in the email, if it's just a a a couple that's retiring, they don't have anybody to give the business to, and they just want want to maintain kind of like an income in their retirement, there's ways to structure the deal ⁓ now where you can do seller financing and basically what it is is you put ten percent down, you pay them ten percent of what the cost of the business. Let's say the business is a hundred thousand dollars, right? And you agree on seller financing for the next five years where if they give you if if you give them ten thousand dollars up front, which is ten percent, then the other ninety thousand dollars you'll make payments to the sellers, obviously with some type of interest, over the next three to four years or whatever the the agreed ⁓ time is and then paid off that way which is obviously ideal I'm not sure how easy it is to get that type of financing, but I do hear of people all the time getting seller financing. Most likely you'll probably have to either get a loan or just put up your own money. One of the things to keep in mind when buying a business, you you don't want to pay more than two to three times not revenue, but profit right like the idea is if if you don't get your money back in three years then find something else that will give you your money back in three years or you know otherwise it just doesn't make sense because it's risky and and and the longer y time goes the more chances something may happen where you could kind of lose your business like like it happened to me right ⁓ now ⁓ I keep hearing that ⁓ biz sell ⁓ is a place where there's a lot of listings, but not necessarily the best place to buy just because everybody's looking at that business that you you just saw on Biz by sell and everybody is whether they n they know what they're doing or not is either making offers or or talking to the owner. So so the likelihood of you getting that deal is is is probably going to be very small. I think what you wanna do if you wanna buy somebody's business is just look around your area and see who owns them and if you see the owners being over, seventy years old, then maybe that's the person you wanna reach out to and even if they're haven't put it up for sale and be like, Hey, I really like your shop. I'd love to ⁓ take it off your hands if if that's something you're considering. I think that's probably the best way to to go about ⁓ buying ⁓ the business. Okay. All right, thank you and We'll see you again ⁓ soon.