buying a restaurant

Discussion in 'Professional Chefs' started by jvspenc, Jul 26, 2004.

  1. jvspenc

    jvspenc

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    We are in the process of trying to buy a restaurant. We have no recent appraisal just a county property statement for the property value and the word of the accountant company for the value of the equipment. We are being told two different stories on whether we need to get an appraisal before we go to the bank. Anybody have any information on this?
     
  2. mezzaluna

    mezzaluna

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    Hello and welcome to Chef Talk.

    The welcome forum is for introductions only. I will move your question to a forum for professionals (the "Chef Talk" forum), where it will attract the attention it deserves.

    Please make yourself at home here at the Cafe, and return to the Welcome forum so we can give you a proper welcome! :)

    Regards,
    Mezzaluna
     
  3. kuan

    kuan Moderator Staff Member

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    You will probably need an appraisal and here's why. The bank will not simply give you an unsecured loan based on your dreams of what it could be in the future. The loan has to be for "collateralizable assets. Now if you have "other" assets, then you can just get a loan based on those assets.

    Kuan
     
  4. jvspenc

    jvspenc

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    Well, here's a little more the original question. We don't know about getting loan so do we pay in full for an appraisal that we may never use? Or do we use the county tax assessment to got to the bank and let them order an appraisal at that point with a better possibility of getting the loan? I's guessing if the bank orders an appraisal and doesn't simply say no that at least we have a shot for the loan. Right now we are in serious doubt in even getting a loan. Does this make anymore sense to anyone? We have come to the conclusion that we need an appraisal we just need to know when to pay for it.
     
  5. kuan

    kuan Moderator Staff Member

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    1) Do you have a broker?

    2) I assume you're going to apply for a commercial loan. In that case the bank will order an appraisal and you'll have to pay for it. Banks do not do unsecured loans. Period.

    OK. Back to square one. :)

    1) Go to the Small Business Association (SBA) homepage and look at 504 and 7(a) programs. They're different kinds of loans. 504 programs provide long term loans to small business for the acquisition of fixed assets like buildings and land. 7(a) programs are designed to help small businesses with working capital.

    2) Make sure your business plan is up to date and complete. If you need help locate your local Small Business Development Center. (SBDC) Locate your local SBDC even if you don't think you need help. You will need help.

    3) Once you've found your local SBDC, look for a SBA Certified Development Company or CDC. You will need to go through them to get your loan. They're your pipeline to the SBA loan center in Sacramento. Even though most of these are not for profiit, you may have to pay a fee.

    4) You're not done. You will need more $$$. You might decide that it's just easier to raise money privately. If it's below the de minimus amount you don't have to register with the SEC. Some people have borrow cash and pay in kind. In the case of restaurants this would be meals.

    Don't forget to get good legal counsel.

    This is all I can provide. Oh yeah, one other thing. Go to the SBA website and downloand form 4 and form 1244.

    That, is really all I can give you.

    If you want help making your restaurant profitable you can hire me. I'm cheap.

    Good luck!

    Kuan
     
  6. jvspenc

    jvspenc

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    Thanks for the information! I'll look into it.

    We are also talking about whether I should be sole owner and have my husband be an employee to take advantage of the women's programs...or if that is a pointless decision before going to the bank. I haven't done too much research on that part. I don't know if we can get any help before going to the bank or not from the women's groups.
     
  7. peterthebaker

    peterthebaker

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    A few months ago I started working at the bakery department of a small independent grocer. When I started we had 90% of our product come ready made from other sources. We had a countertop electric convection oven. A little one that held 4 12x18 pans. We also shared a small electric oven with two ceramic decks 21x21x5 each with the pizza guy. In the early morning, we used this mini pizza oven to make bread and rolls. He has his refrigerator all to himself now. I understand we may get his oven and he'll get a bigger one that can do 3-4 pizzas at once instead of two.
    We went "big time" about a month ago... the place spent $1,800 on a commercial refigerator that we didn't have to share. We got an oven that takes 4 18x24 pans. I was told this cost about $2,000. We got a 12 qt countertop stand mixer. I saw this in a catalog for $1,000. All in all, my estimate is they spent $8,000 equipping a small "in-store" baking department.
    The owner is a woman. Her funding to purchase this stuff came as a grant/loan only available to women business owners. It also came with the condition that the expansion employ at least 50% female employees. I'm one of two employees in the bakery. My co-worker being female got promoted to full time. She's been there longer and has more experience. I don't think they even considered hiring a man when I got the job, they were suprised that a 40 year old man would take a 27 hour a week part time job for $8 an hour, but I did.
    I worked 7am-noon or 1pm Tues-Sat. When she was part time, my boss worked 8am-2pm on Sunday, 7am-1pm on Monday. She doesn't like to get up, so she worked 9am-2pm on the days I was there. I did get two extra hours on her days off, so now I'm up to 29 hours vs. her 40 hours.
    While it may very well have been a good deal for the owner, I have to say I feel a little snubbed. I figure I'm gaining experience. I have plans to move on in the fall. They probably will miss me for a day or two. Just be aware that being too woman oriented may effect the moral of my employees.
     
  8. chef wil

    chef wil

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    Our kitchen is owned/operated by a woman. I am the chef and ONLY male in the department other than an occasional dishwasher but they are usually female. It's worked out great for me there as my wife heads the front of the house and our o/o is usually gone by 2:00 or so. The breakfast cook, other wait staff and my sous are all women too. I know that our o/o has tapped into special grants and low cost loans over the years for new equipment and the like. I really feel that if the people involved are mature and aren't sexist then the decisions in that kind of situation can make everyone a lot happier and wealthier.