Margins - Food and/or Drink?

Spins

Hi,
We've come in to some money and we're looking at two potential businesses to purchase. Both currently turnover in the region of €750,000, both with scope to grow the turnover, both similar size properties within 200 metres of one another. Neither are officially on the market, however both are willing to sell "if the price is right". I'm looking at putting together a proposal.

I've only started our investigations and this is mt first port of call.
Business 1 turnover - 75% drink, 25% food
Business 2 turnover - 60% drink, 40% food

Broadly, how do margins compare between drink and food?
What are your initial business instincts?

Thanks

jimmii

Way too vague for anyone to be able to answer margins vary massively from place to place. Only way to know is going to go through the books.

If the owner is genuinely looking to sell then they should be happy to share that information if they see you as a genuine buyer. Although maybe not so much if you let them know you could possibly become the competition instead!

If you haven't worked in the industry before then its going to be easier to manage the drink one from the outside food seems like it would be a nightmare to manage.

Spins

Thanks @jimmii
I'll request the accounts and go get some professional advice so.

jimmii

Spins wrote: »

Thanks @jimmii
I'll request the accounts and go get some professional advice so.

That really is the only way to know unfortunately! Good luck with it!

My advice would be to forget the turnover numbers to start with and look at the net profit number, thats the important one. Work your way backwards from that as opposed to forwards from the turnover figure.

Bicky

Both of these are restaurants as opposed to pubs?

Spins

Bicky wrote: »

Both of these are restaurants as opposed to pubs?

Both are originally pubs but have developed a significant restaurant trade, to the extent that both are viewed as restaurants with pub trade by the public now.

odeamarcas

Spins wrote: »

Hi,
We've come in to some money and we're looking at two potential businesses to purchase. Both currently turnover in the region of €750,000, both with scope to grow the turnover, both similar size properties within 200 metres of one another. Neither are officially on the market, however both are willing to sell "if the price is right". I'm looking at putting together a proposal.

I've only started our investigations and this is mt first port of call.
Business 1 turnover - 75% drink, 25% food
Business 2 turnover - 60% drink, 40% food

Broadly, how do margins compare between drink and food?
What are your initial business instincts?

Thanks

Just a quick note for you to consider, I was working on preparing a business plan for a gent that is about to purchase a bar lease. As part of the research I was reading reports from the Vintners association along with other publications. The prevailing consensus is that the bar industry is changing, and that future viability without the addition of food as an income source is limited, all due to changes in consumer behaviors and attitudes. Entertainment is also a critical element.