I want to buy a bar.............

[dapplegrey]

....an existing bar that has been pretty well established and moderately well known. It has been going down hill for about 2 years now since the owner died and his wife (widow) seems to not be personable nor engaged in running the business. There is a strong community presence and a low key feel that seems to attract a very diverse cross section of patrons.

It is also a restaurant and live music venue, decidely unfancy, but inviting. The menu could use some tweaking and there is an adjacent building that would make an adorable coffee shop/boutique gallery. This is a long standing desire to work and own this little concern and my daughter is interested as well. The bar is ok as it is, but I would like to phase in some improvements as I go....

There are some negatives. The wiring looks to be a little 'creative' and maybe the roof needs to be repaired. The present owner has been making some noises that she wants out and has made some inquiries. My husband, a RE broker will investigate the land records and such to see what the deal is regarding the property value and such other niceties. I have not worked in this industry for quite awhile but it appeals to me and I am generally a 'finisher' when I start something.........and this project has been gnawing at me for awhile.

some questions:

a) the equipment, fixtures etc., to include the computer system, kitchen appliances, tables, chairs stools are in passable condition but not new by any stretch.......how much of an asset is this for the seller and how do you feel about these items as a bargaining point?

b) the real property would be part of the overall investment, does this make it easier to finance?

give me some stuff to chew on and I will have more questions...........so glad to have found this board, btw:)

[emwise1]

It sounds like you are discribing the place I work!!! Which the boss would like to sell. (I don't think she knows how to go about it. I have pointed her to a reputable business attorney with a complete list of questions, but she hasn't gone.)

While on the subject of buying a place like this- how is it valued? I know it needs to be professionally appraised. I know that you put a value on the stock, the existing fixtures (that are not new and fully depreciated), the liquor licence has a dollar value, and you take into account any debts. - the question in my mind is how do you put a dollar value on Goodwill??

Is the place you are looking at in N CA??

[dapplegrey]

no..........it is on the east coast.;)

I am not sure there is too much goodwill that the owner has garnered..........the staff is good and friendly. I would say the place would be a good investment because it is in a historic district and the area is growing faster than wildfire and has been for the last 30 years.......I would be reluctant to start a business with rented property really.

[Cheek]

a.) the true value of the equipment may be very low and not worth much, but their value in their ongoing contribution to the functioning of the bar may be high. For instance, if someone was to sell you just those tables and chairs, etc, you'd probably laugh(in the condition you described), However, go and try to stock a bar with new tables/chairs and you will see that the old may not be so bad. Some of the equipment such as kitchen equipment and the like will maintain there value for a long time as a negotiable asset as long as it is in good working condition.

Overall I would see this as a strong bargaining poin. You should definitely stress the age and condition of the equipment and the need for updating, especially if the bar is in decline. It sounds like it may need a makeover and you will want to make your own changes anyway.

b.) Not necessarily. You should probably look at this as two individual purchases. One for the assets(goodwill, equipment, liquor license), the other for the property. The two will be seperate but at the same time, the bank will bind the asset purchase to the property. If the bank looks at the decline in business it may be unwilling to loan for the property, since the property payment is primarily dependant on the business success. You may be able to prove otherwise if you have other means of income and collateral and not alot of debt.

This sounds like a heck of a deal and to top it off the current owner is ready to get out. That seems like it could really work in your favor. I hope you can find a way to make it work, good luck

[dapplegrey]

I have no debt, own 2 residential properties that total about 1m and own a mortgage of about 300k.

My idea would be to make more profit centers using the present infrastructure, such as specialty coffees and maybe a takeout/pizza operation. The location is good. Near the courthouse and financial/legal district.

also I would like to work in some local art into the mix and redecorate as I renovate.

[dapplegrey]

oh and thanks for the response cheek!!!!:)

[David]

Your husband should be able to use other business's to do a fair market appraisal.

The equipment that we have in this business looses it's value in only a few years. But. if it has been maintained and is in good working condition, use it until it fails. This way, you'll be positioned to buy new or newer equipment as time goes on.

Like always said "you can't win the lottery if you don't buy a ticket".