Hi Jack, I saw this post and wanted to give you a few pointers.
First things first. What are the chances that the shopping center is willing to lease the space to you? Will you take over the lease and enter into an agreement with the shopping center, or will the current lessee sublease the space to you? Depending on the terms and conditions both strategies can make sense; however, I think it is important that you have an opportunity to review the lease.
Another important point to consider is, will you be able to acquire all relevant licenses to operate the bar. What track record does the bar have with local and federal regulators? Even though you will be operating the bar under new management and a fresh business structure, if some regulators have red-flagged the establishment, this could lead to trouble.
I am assuming that the bar has been in business for a while. Ask the owner (is the chain or a franchisee?) if he would be willing to open his books to you. Although you don’t plan to take over the business, having an intimate understanding of the bar’s financial track record can be a compelling factor to acquire the assets at a premium.
I’m not sure how big the space is, but ask if there is a chance that you can talk to some of the key employees. The manager or bar tender can be invaluable assets because they know their clientele and are probably familiar with important tasks such as marketing and resource management. Getting a key employee on board can give a head start.
Finally, putting a value on the assets is really not that difficult and probably the reason why the owner is talking to you. The assets are certainly more valuable in the eyes of a potential successor than if they are auctioned off by the piece. You can use this as leverage in your negotiations.
Once you are making some progress on these preliminary issues, you should sit down and develop a business plan. This will not only help you summarize the fundamentals for investors, banks, landlords, and regulators, but also provide you with the opportunity to compare your performance against your projections.
Unfortunately, the hospitality industry is widely perceived as an extremely high-risk industry so many professional investors will stay clear of investing in restaurants or bars. I think your safest bet is seeking out high-net-worth individuals.
We have an interesting article on our website on how you can do that. Please feel free to visit
http://www.insights.fastventures.com/is-bin/reviews/rev_06302008.html.
If you need further assistance, please feel free to contact me via our website and we’ll take it from there. Good luck.
Mark
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Jackson Steiner
http://www.JacksonSteiner.com
Advanced Document Design for entrepreneurs, intermediaries, and the financial services industry.
http://www.Publications.FastVentures.com
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