Dilemma. Any help appreciated.

DubTony

I'm looking at an empty unit in the south Dublin suburbs with the idea of opening ... wait for it (and some of you will think I'm out of my mind) ... a convenience store. Before I go any further I should say I've over 20 years in the business and currently own and run a not so busy store outside Dublin, so I'm no novice.

The empty unit has a delapidated convenience store right next door. This store is on the market at the moment (on the QT it seems) and I've spoken to the guy. He's vary vague about what he wants for it, i.e. he's looking for offers. But in my opinion any amount of money would be too much to pay given that it's needs major refurbishing. Based on the current turnover, any prospective buyer would really need to simply take over the guys problem as it could not support any amount of borrowing. I spoke to a symbol group yesterday about the empty unit and simply asked if they'd finance a fit-out. They've to get back to me but I'm not hopeful of a positive reply. Rest assured this is unlikely to be be an all singing, all dancing, juice bar and omellette shop, but your standard convenience store serving a mainly local population. The area has one major supermarket, another also delapidated convenience store, a couple of petrol stations and in my opinion seems to be undershopped.

I've watched this site for years knowing that the present store would never live up to expectations (bad staff, poor stock, mostly absent owner) and it looks like I was right. The stores are just off a very busy main road in a densely populated area with plenty of car parking and a complimetary business next door. There are a few schools within walking distance, and I've always felt that a decent bit of smart marketing would make this a winner.

Here's my dilemma. At present I'm trying to get out of where I am. I'm fighting a losing battle with a competitor and am talking to some people in the hope of getting out, if not with cash in my pocket, then at least cleanly. If I can't do that, the landlord will be looking for a new tenant anyway. (I'm sorry I can't go into any more detail here). I know the possibility of getting a job is slim at the moment and I guess I'm trying to keep my options open.

Anyway, I could take the empty unit and fit it out to a very nice and very acceptable standard, and hope the guy next door goes away and that nobody puts a similar business there, or I could make the guy a very insulting offer, which just might be accepted given his circumstances, and hope that the nobody puts a similar business in the empty unit.

I know this post is all over the place, which reflects my thinking at the moment. Maybe I am mad to even consider this at present. Has anyone any thoughts on this? Even questions would be appreciated to help me think a bit deeper about this and maybe clear the fuzziness in my head. Thanks.

Bandara

DubTony wrote: »

I'm looking at an empty unit in the south Dublin suburbs with the idea of opening ... wait for it (and some of you will think I'm out of my mind) ... a convenience store. Before I go any further I should say I've over 20 years in the business and currently own and run a not so busy store outside Dublin, so I'm no novice.

The empty unit has a delapidated convenience store right next door. This store is on the market at the moment (on the QT it seems) and I've spoken to the guy. He's vary vague about what he wants for it, i.e. he's looking for offers. But in my opinion any amount of money would be too much to pay given that it's needs major refurbishing. Based on the current turnover, any prospective buyer would really need to simply take over the guys problem as it could not support any amount of borrowing. I spoke to a symbol group yesterday about the empty unit and simply asked if they'd finance a fit-out. They've to get back to me but I'm not hopeful of a positive reply. Rest assured this is unlikely to be be an all singing, all dancing, juice bar and omellette shop, but your standard convenience store serving a mainly local population. The area has one major supermarket, another also delapidated convenience store, a couple of petrol stations and in my opinion seems to be undershopped.

I've watched this site for years knowing that the present store would never live up to expectations (bad staff, poor stock, mostly absent owner) and it looks like I was right. The stores are just off a very busy main road in a densely populated area with plenty of car parking and a complimetary business next door. There are a few schools within walking distance, and I've always felt that a decent bit of smart marketing would make this a winner.

Here's my dilemma. At present I'm trying to get out of where I am. I'm fighting a losing battle with a competitor and am talking to some people in the hope of getting out, if not with cash in my pocket, then at least cleanly. If I can't do that, the landlord will be looking for a new tenant anyway. (I'm sorry I can't go into any more detail here). I know the possibility of getting a job is slim at the moment and I guess I'm trying to keep my options open.

Anyway, I could take the empty unit and fit it out to a very nice and very acceptable standard, and hope the guy next door goes away and that nobody puts a similar business there, or I could make the guy a very insulting offer, which just might be accepted given his circumstances, and hope that the nobody puts a similar business in the empty unit.

I know this post is all over the place, which reflects my thinking at the moment. Maybe I am mad to even consider this at present. Has anyone any thoughts on this? Even questions would be appreciated to help me think a bit deeper about this and maybe clear the fuzziness in my head. Thanks.

if you don't mind me askign a few questions Tony

your current place have a good deli trade? what % of turnover there is deli related? (excluding tea and coffee), are you franchising it? is it a Newhill store? What symbol group are you?

What % is cigarettes?

Howe many staff do you have there on the morning shift, the evening shift, of these how many are deli staff.

How long is left on your lease (if you have one)

Is the second location within 30 mins of the new proposed place?

Is your current place making you 80k+ a year ? (no prob if you don't want to answer this one)

What sq. foot is your current site?

The dilapidated site your talkign about, if the freehold held by the guy thats running it? Whats his profile (his age, is he a flash harry buying fancy cars out of cash flow etc, what business outlook would you preceive him to have)

niceirishfella

DubTony wrote: »

Anyway, I could take the empty unit and fit it out to a very nice and very acceptable standard, and hope the guy next door goes away and that nobody puts a similar business there, or I could make the guy a very insulting offer, which just might be accepted given his circumstances, and hope that the nobody puts a similar business in the empty unit.

Hi Tony, I don't think you're mad @ all. With recession comes great opportunity but equal risk too. But you're right to weight it all up. If you buy out the guy, who's to say someone else will not go in and set up next door to you. You're investment will be better served setting up yourself, you can start with a clean sheet from a rental and fit out and stock point of view.
do it right and he'll go under - thats business.
Best of luck with it anyways.
If you set up beside him

DubTony

Hammertime wrote: »

if you don't mind me askign a few questions Tony

your current place have a good deli trade? what % of turnover there is deli related? (excluding tea and coffee), are you franchising it? is it a Newhill store? What symbol group are you?

Thanks for the reply HT. tDeli trade is atrocious. A competitor opened and my deli trade dropped by 50% overnight. Deli was doing €3500 pw and is now less than €1000.
Symbol group is Londis.

What % is cigarettes?

20%. Services (excluding LOTTO but including scratch cards are at 10%)

Howe many staff do you have there on the morning shift, the evening shift, of these how many are deli staff.

Staffing levels are as low as possible. I do mornings till 3pm with one other starting an hour after me. 2 staff in the evening from 3 till closing at 9. Rarely more than 2 staff in shop and no dedicated deli staff. One staff member per shift is trained in that area. There is a small amount of waste there as well, although hot food is off the menu.

How long is left on your lease (if you have one)

17 years

Is the second location within 30 mins of the new proposed place?

No. And it is about an hour from where I live. (In the country)

Is your current place making you 80k+ a year ? (no prob if you don't want to answer this one)

Half that would be nice. It's just breaking even, with little remuneration for me personally.

What sq. foot is your current site?

3500 of which 2000 is retail space.

The dilapidated site your talkign about, if the freehold held by the guy thats running it? Whats his profile (his age, is he a flash harry buying fancy cars out of cash flow etc, what business outlook would you preceive him to have)

The guy running it has a lease. It seems it's nearing it's end and a new lease is on offer. Personally I think the landlord just wants to ensure he's not left with a second empty unit. I don't know much about the seller, but he doesn't seem to be flash. He did tell me that he works for someone else, so the shop is now a sideline. (Sideline = headache imo.)

Nuttzz

If you open next to an existing store you may be "guilty by association" as it they know he's crap so when they think of the location they think of him first.

Make him an offer, at the end of his lease its not worth a great deal, perhaps he might take it or give you an indication of what he is thinking. If you open a nice store next to him and he has just taken a new lease he may just up his game, last thing you need is a serious competitors next door trying to put you out of business, I saw this with a friends who opened a resturant next to another one.

Good luck

Clare_Guy

DubTony wrote: »

The guy running it has a lease. It seems it's nearing it's end and a new lease is on offer. Personally I think the landlord just wants to ensure he's not left with a second empty unit. I don't know much about the seller, but he doesn't seem to be flash. He did tell me that he works for someone else, so the shop is now a sideline. (Sideline = headache imo.)

To me the obvious play seems to be approach the landlord and offer to take both units off him, merge them, and put 1 beautiful convenience store into the larger unit.

niceirishfella

Clare_Guy wrote: »

To me the obvious play seems to be approach the landlord and offer to take both units off him, merge them, and put 1 beautiful convenience store into the larger unit.

yeah, but that'll double the fit out costs,stock costs,insurance,leases + more and may not double any takings that he could get from the single unitif footfall remains the same?

Bandara

DubTony wrote: »

Thanks for the reply HT. tDeli trade is atrocious. A competitor opened and my deli trade dropped by 50% overnight. Deli was doing €3500 pw and is now less than €1000.
Symbol group is Londis.

20%. Services (excluding LOTTO but including scratch cards are at 10%)



Staffing levels are as low as possible. I do mornings till 3pm with one other starting an hour after me. 2 staff in the evening from 3 till closing at 9. Rarely more than 2 staff in shop and no dedicated deli staff. One staff member per shift is trained in that area. There is a small amount of waste there as well, although hot food is off the menu.


17 years

No. And it is about an hour from where I live. (In the country)

Half that would be nice. It's just breaking even, with little remuneration for me personally.

3500 of which 2000 is retail space.



The guy running it has a lease. It seems it's nearing it's end and a new lease is on offer. Personally I think the landlord just wants to ensure he's not left with a second empty unit. I don't know much about the seller, but he doesn't seem to be flash. He did tell me that he works for someone else, so the shop is now a sideline. (Sideline = headache imo.)

Your in a tough spot Tony,

My initial reaction is get the hell out of your current place before the books go to complete **** on you.

Their may be other options though, however I know your an experienced retailer and know your stuff so I'd imagine you've already investigated these before. Your cigs % is low so your definitely seen by customers as a shop rather than just a box of smokes and a newspaper merchant.

From a standing and fighting viewpoint I'd be of the opinion that you either need to reopen your deli fully (hot food etc) and push the hell out of it, or else shut it down completely. Your operating it halfways which is never going to work, have you approached the local schools about providing a shop in the school at lunch time for the kids to buy their lunches?

You can cover the cost of a full time deli girl even in a quiet deli by having her prepare cold rolls and hot rolls ready to go at 12.45pm to the local school where you have a 60 minute window to bang them out to the kids over lunch, your print up and provide stamps and get the school to post your flyers to the parents about the "Great new service they are offering", you can sell it to them from several standpoints;

1. They are supervising the quality of the food the kids are eating and are taking an active interest in their nutrition

2. The kids are not leaving the school grounds at lunchtime so they are always safe and under adult supervision.

3. You can offer the school a flat yearly fee paid quarterly in arrears and a franchise fee for the space they are allowing you to use. Most schools are desperate for cash and this is an easy one to get past a Board of Directors consisting of concerned parents who are trying hard to raise funds all the time.

Its just an idea but the costs to your are minimal, you already have all the prep area and oven and fridges etc, you need nothing except a few hot and cold catering boxes to transport the food, and a desk to sell it all out from.

Parents today don't make lunches for thier kids, they give them a fiver instead, you can give a kid a Hot Chicken Roll, a can of coke and a mars bar/piece of fruit for a fiver and still run about a 35% profit off it. After you are up and running a few weeks, you start bringing in the yops, yogurts, muffins etc, stick to your sale and return items and your short dated stuff.

The hidden advantage of something like this is its not goign to be known by the revenue so you can ring the majority of it through the tills when you get back a cold deli and thus add another 7 or 8% margin onto the bottom line through Vat saving. Not to mention skimming a €100 a week off the top.

Of course there is also the other option.....

Shut the deli down completely, even put a stud wall in front of it and remove it from view, get yourself a new prepack sandwich fridge free from Freshways, go back to the old days and just bang out the newspapers, cigs, sweets and grocery from a small tight one man operation, One staff member in the morning on their own, one at night on their own and another one doing 5 hours or so straddling the two main shifts to keep the shelves stocked etc. Your cutting down at least 500 a week wages, your removing the stress of a deli, the costs of a deli (chemicals, packaging etc) and your going back to an very easily run low maintenance shop that MOST IMPORTANTLY doesn't need you to be there that much.

You are then a hell of a lot more flexible to go have a punt in the other site without the current pressure of the existing site pulling you back.

Finally, just to completely wreck your head....

You can get the hell out of your current place, approach the landlord of the other site directly and tell him if he gets rid off the current guy by whatever means, makes his life difficult / wacks up the rent etc etc (all the nasty underhanded stuff), that you'll then take both units off his hands.

Put your Cstore in one, get a business partner on board for the other unit next door and fit it out with a business that your skillset could cope with easily and your partner could run, Pizza Takeaway, Insomnia coffee shop etc etc, a bit off the wall I know but it gets rid of problem one, namely the existing store, and also elimates problem two: the risk of some stranger doing something that'll have a negative effect on your business by opening next door to you. There is a lot of redundancy money out there by people itching to open a business with the ready capital to do it. Its sneaky but its a definite possibility.

I hope this has been of some help or maybe got you thinking about things.

Regards
P.

shoutman

Another super post HT.

Darragh29

DubTony wrote: »

I'm looking at an empty unit in the south Dublin suburbs with the idea of opening ... wait for it (and some of you will think I'm out of my mind) ... a convenience store. Before I go any further I should say I've over 20 years in the business and currently own and run a not so busy store outside Dublin, so I'm no novice.

The empty unit has a delapidated convenience store right next door. This store is on the market at the moment (on the QT it seems) and I've spoken to the guy. He's vary vague about what he wants for it, i.e. he's looking for offers. But in my opinion any amount of money would be too much to pay given that it's needs major refurbishing. Based on the current turnover, any prospective buyer would really need to simply take over the guys problem as it could not support any amount of borrowing. I spoke to a symbol group yesterday about the empty unit and simply asked if they'd finance a fit-out. They've to get back to me but I'm not hopeful of a positive reply. Rest assured this is unlikely to be be an all singing, all dancing, juice bar and omellette shop, but your standard convenience store serving a mainly local population. The area has one major supermarket, another also delapidated convenience store, a couple of petrol stations and in my opinion seems to be undershopped.

I've watched this site for years knowing that the present store would never live up to expectations (bad staff, poor stock, mostly absent owner) and it looks like I was right. The stores are just off a very busy main road in a densely populated area with plenty of car parking and a complimetary business next door. There are a few schools within walking distance, and I've always felt that a decent bit of smart marketing would make this a winner.

Here's my dilemma. At present I'm trying to get out of where I am. I'm fighting a losing battle with a competitor and am talking to some people in the hope of getting out, if not with cash in my pocket, then at least cleanly. If I can't do that, the landlord will be looking for a new tenant anyway. (I'm sorry I can't go into any more detail here). I know the possibility of getting a job is slim at the moment and I guess I'm trying to keep my options open.

Anyway, I could take the empty unit and fit it out to a very nice and very acceptable standard, and hope the guy next door goes away and that nobody puts a similar business there, or I could make the guy a very insulting offer, which just might be accepted given his circumstances, and hope that the nobody puts a similar business in the empty unit.

I know this post is all over the place, which reflects my thinking at the moment. Maybe I am mad to even consider this at present. Has anyone any thoughts on this? Even questions would be appreciated to help me think a bit deeper about this and maybe clear the fuzziness in my head. Thanks.

I went into a business venture previously Tony and it ended up in failure and the reason it failed was because when I saw a potential difficulty or an obstacle, I hoped that events would go a certain way for me and they usually don't, or they didn't in my case.

My advice to you is to research this venture a lot more before you proceed to commit to it. You can't start out with a business and hope that nobody will open a similar venture beside you. If this does happen, you have to have a plan to deal with it. Again, if you haven't access to funding to fit out the shop, this is something that has to be dealt with or the project will struggle to get off the ground. I'm not saying do not proceed with the idea, but just make sure you have as many boxes ticked as you can before you commit to the project fully.

Also, another thing to bear in mind, I get the impression from your post that this area is some sort of disadvantaged location. If this is the case, you might need to factor in a security presence into the costs and this will also result in higher fit-out/preventative security costs, CCTV, etc. I'm sure someone will come on saying I'm a condasending pr*ck, well I've a friend who runs a convenience shop in Ballyfermot and he said his biggest problem on a day to day level is junkies and skangers coming in to rob stuff from the shop, so just be aware of this...

DubTony

Thanks for the great replies lads. I'm going to think over all your suggestions for a day or two. I hope I can work it all out.

Seriously though, Daragh, I do appreciate you pointing that out. I think it shows exactly where my head is at present. This kind of help is as important as anything else. Thank you. Rest assured due diligence will be done. Plenty of food for thought here.

The area is not rough at all, although nowhere is safe from scumbags. This also raises the question as to why there are 2 pretty crappy shops in it.
As for security issues? 15 years in Crumlin. Handguns, shotguns, knives, iron bars, a bic biro (I kid you not), I've seen it all. Been there, done that, and I'm sure the tee-shirt got ripped in a robbery. (If I didn't have a sense of humour I'd have gone insane by now)

Thanks lads. Plenty for me to think about here.

--amadeus--

I think the idea of cutting out teh middleman and going directly to teh landlord has some traction.

If the lease is running low / out then you could talk to the landlord about taking both units (ideally one with an option on the other). Sit tight until the lease runs out and the landlord refuses to renew, then step in and take over the current shop (with reduced or minimal fit out fees). Over the course of a year or so you build a name and reputation with the locals while using the cashflow from the current unit to refit the new one. Once you open the doors on the new unit you then follow the advice above and put a complimentary business (pizza being a good recommendation) in the original unit. You minimize your risk and up front costs while still getting to where you want to be.