Unit in a Railway Station

[Poppet2]

Hi

I looked into a lease for a small coffee unit in a Railway station. The lease runs for and is renewed every two years. The bills inclusive of electricity, rent etc. are quarterly. However, if I wanted to BUY it, they would charge £50k for a PRIVATE sale to buy the business in the unit, but you would still need to pay the lease & bills etc.

When I asked why so much, they said it was being sold as a going concern, all stock inclusive, plus the footfall. The stock etc. itself is minimal as the shop is smaller than the size of a prison cell, literally. As for footfall, well, it's natural, I mean it's not like a window cleaner who had to go looking for customers to build up his round, in other words, people naturally come to the station, plus the busy period is limited to just the early morning rush hours, as they close at 11.00am.
What do others think?

 

[businessfunding]

As you said you can't buy footfall in a captive unit

Who are you negotiating with? F and f could cost more than £50k to replace but it still sounds steep.

 

[Alan @ Cloud Accounting]

There's a heck of a lot of information missing here, but regardless of whether you can buy footfall or not (you can, imo), what is for sale is the goodwill of the business, ie, it's ability to generate profits. Have a look at the P&Ls, assess whether you are getting an acceptable ROI and make your decision. I have a client who has a small coffee stand in a semi-busy train station, and, it makes considerable profits - approaching £30k per annum. He does very little work in the business so there is no adjustment for owner's salary required to this. If the incumbent owner decided to put it on the open market, he'd be looking for at least 5x earnings or £150k.

 

[smarterbarcodes]

So its an existing business? Surely the accounts for the last 2 years and so on are completely relevant. If they have made 100k clear in those 2 years then maybe its a good idea, if they barely broken even then 50k is madness etc, so depends on more detail.