The Good, the Bad, and the Ugly

The Good -
We met with the current owners of the drive through coffee location that is pre-existing one block to the east of us on Pikes Peak Ave. The current owner is very motivated to sell, and is willing to owner-carry financing.

The location has high visibility from Pikes Peak, and easy access. US Bank recently commissioned a traffic study for Pikes Peak and there are 80,000 cars a day during typical business hours.

It is fairly spacious (more room than I expected).

The current owner is willing to upgrade the electrical from 110v to 220v to support a commercial espresso machine at his cost.

We could use this location to market/promote our walk-in location one block west (our current shop) with:
Lunch, free wi-fi internet, 500 sq ft private meeting room, live music events, etc. I believe operating the drive through would help us to build business at the main shop.


The Bad -
The facility has electrical power and phone, but no water or waste water. We would have to operate with fresh water tanks, wastewater tank, and pumps. This is not optimal, but they make equipment for this purpose for espresso carts and kiosks. It is readily available and not expensive ($750 for pump, water purification/softener, and tanks).

The coffee 'hut' is in minor disrepair. It could use some TLC, but the current owner is willing to do some of this work prior to the sale.

No on-site bathroom. Whoever is working would have to be given breaks to come to our shop one block west to use the bathroom. I was on submarines in the Navy, and I know how to pee in a bottle, so this would not be a big issue for me. Girls might have a problem with that, as might the Health Department.

Health Department typically requires a hot water heater and three compartment sink. Once again, these are manufactured for kiosks and carts and are readily available. I would rather talk them into letting us collect dirty dishes and take them to our current shop at the end of the day for washing. We will not have any 'for here' dishes, so it would be limited to steaming pitchers, spoons, blender pitchers, etc...

The Ugly -
The cart has the beginnings of an awning that a previous operator had started, but not finished. We would have to pay about $2500 for a professional awning/signage.

The current owner threw out a starting ballpark figure of $25,000 for a sale price, to include a big pile of garbage equipment already there. We indicated to him that 95% of the existing equipment is not usable (didn't feel like telling him it was total crap). I told him that $25,000 is unreasonable considering:
1. Not a fancy place, just kind of plain and in disrepair
2. No plumbing
3. Equipment package deal is worthless
4. I told him we are NOT buying a business, just a location for us to start a business. There is no existing clientele, as the place has not been in operation for 1 1/2 years.

More of the GOOD:
Owner agreed that it is just a location and not a business. Said he would significantly discount the equipment, or not utilize it altogether. Said he was motivated to sale and is willing to negotiate on price, as well as owner carry financing. He is going to schedule a meeting with the Health Department and determine what needs to be done to get their blessing, and we will proceed from there.

Speculation:
I believe we can purchase the location for $10,000 to $12,000 without equipment. I intend to propose $5000 cash down, and owner carry another $5000 to $7000 on two year payoff terms. It would cost us $5800 to outfit the place for operation. Based upon being open 8 hours a day, we would have to get 58 customers a day to break even. Averaging 15 customers an hour (feasible with 80,000 going by) our monthly gross sales would be $11,700 with net profits of $4000 (Gross sales less product cost, labor, operating costs).


So there it is in a nutshell, Nemo's Coffee 2!
I'll keep you posted on what we find out from the Health Department. I am hoping they would allow us to operate as is (after being fixed up/repaired). Hard plumbing and wastewater would cost around $10,000, so we do not want to go that route...

gotta get some sleep...
Take care,
JD