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Permalink Reply by Jay Caragay on September 24, 2011 at 2:24pm

Why not try to negotiate a flat rent instead of triple net?  There is no law that says you must put together a triple net lease.

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Permalink Reply by olivier dutil on September 24, 2011 at 5:26pm

Well it is not really my choice to tell you the truth it is a great location , and awesome opportunity for us , but at the right price and the problem is that we are dealing with a billionaire corp that are renown to been money shark , So when the first approach us the deal was more then delightful but closer and closer we are get to sigh the lease more and more get slowly added to the deal. witch transform a great opportunity to a possible disaster. so i just want some number so i can show them on Monday that this dealer wouldn't be as good as they think!!

 

thanks

 

olivier

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Permalink Reply by nick placakis on September 25, 2011 at 7:23am

Olivier,

 

My experience with resort areas tend to show a higher % rent to gross income than non resort areas and I am speaking of the North East which is where we have a shop. We are only open about 4 months a year and our rent is about 20% of our gross which under normal circumstances we would never allow. However, because our season is shorter, other numbers in the formula change such as payroll expenses. So although our rent is a higher percentage when we look at our year end numbers, our payroll and utilities and even insurance run lower. Remember that the volume we are doing in those 4 months is higher than if I was in a good year round location. The numbers are just different so you need to figure out what level of profitability would make it worth your time and energy and see if your projections would put you there. Keep in mind most people project higher numbers than they usually do so I would say allow AT LEAST a 10% buffer that you may be overestimating

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Permalink Reply by olivier dutil on September 25, 2011 at 11:40am

Thanks Nick , this location is quite special since it will be only is forth winter of operation.And we would be the only coffee shop in the resort. But the resort is only at 2 km from the town that is aready over saturated with coffee shop. The location is right at the base at the main and only gondola! there is about 150 room hotel in resort that its . There is only a fancy restaurant and a wine bar at the base. The resort it self had Daily average of 1300 skier last years . I predict that 10 % so 130 will stop by the shop at a 10$ average ticket(average at my current shop). witch make a average of  1300$ so far at 20% rent well i plan to break even at 1450$ i don't know if my number are under estimate  but every thing sound pretty good to me.

 

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Permalink Reply by nick placakis on September 25, 2011 at 4:34pm

are you anticipating rent to be about 32k for the 4 months you are there? by your numbers you feel you will be grossing about 145k for the season. If that is the case and you can keep payroll under 20% and COG no more than 35% then you have some numbers that can help you determine if it is worth your while. Always remember that 10% overestimation of your expected daily ring. Let me know if I am giving you back accurate numbers based on what you have anticipated so far.

 

Nick

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Permalink Reply by nick placakis on September 25, 2011 at 4:41pm

can you tell me exactly how you figured $1450 to be the breakeven point for you?

 

thanks,

 

Nick

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Permalink Reply by olivier dutil on September 25, 2011 at 5:23pm

Well the way I calculate the Breakeven is pretty easy

first i have to say that the minimum  open hours are 13 hours per day so about 15 hours including closing and opening at to staff minimum at the time it 30 hours worked per day.

The set up of the shop is Gelato,cafe, sandwich, Bakerys Deli and some grocery item(Landlord wants it) so with all that together the food cost will be at around 40 to 48%(witch is very high and so because of the grocery item )every is made from scratch every morning at precent location then move to the next witch overall labours should  be at 30% with all that add up to 98% with the rent well there is not much to live of.

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