Kitchener's Deli - Analyse this!

[Porty]

The new lights in K's d look a lot better and had the For Sale board gone?

On closer inspection I'm not sure if the lights I spotted are new?

[Libby]

Why does no one else contribute to this thread ? is it like the same as me they have no knowledge of all the Legal Jargon you are going on about ?

Like i say, cant understand it all, i must admit i am learning and find it good reading and very interesting.

Keep up the good work.

By the way sorry for the interruption

[Porty]

Most of us are familiar with Kitcheners and how it operates. At times there is one person on duty at others there can be up to 6 bodies. It seems to me that the minimum number required to run the place anywhere approaching efficiently is 3. One on the counter, one in the cafe and one support in the kitchen- Coffee Machine. Thats not allowing for busy periods and covering the outside tables, which can be unpredictably quiet or busy. (Weather dependent)

If I were interested in buying the business I would need to see the staff rotas over a 12 month period to establish exactly what hours are being rota ed on a weekly basis?

The advertising particulars indicate the following:

Trading Hours
Monday 8.00am – 7.00pm
Tuesday – Friday 8.00am – 9.00pm (this varies and may be later on busy nights)
Saturday 8.00am - 6.00pm
Sunday 10.00am – 4.00pm

This equates to 79 opening hours per week, which is ignoring any prep or tidying up time and the "may be later on busy nights".


If the average number of employees on duty is 3, thats (3 x 52 x 79) which equates to 12324 hours per annum. Holiday pay would add on about another 1300 hours per annum, a total of 13,424 . So at the minimum wage of £5.52 this would equate to (13424 x £5.52) = £74100. We then have to consider employment costs, which typically add on 11% to a wage bill.

So to staff Kitcheners with, 3 staff that are over 21, all year round would cost somewhere in the region of £85,000 There would be scope for reducing this by employing under 21's on a £4.30 minimum wage or paying cash in hand (i'm not suggesting this goes on.)

On the other hand, one would need to some sort of supervisory or assistant manager support on a cash business that is open 79 hours a week, which is going to cost more more than minimum wage.

In the above analysis I have not allocated any hours to the owner (s) However, without them the wage bill will come in at around £85,000.

I'm going to speak about profit but I actually mean cash. Accounting profit takes into account depreciation and interest on borrowings along with other items.

If you recall the earlier analysis? Kitchener's makes a 51% Gross Profit on a turnover of £275,0000, which equates to a GP of £140,500. From this figure there are some substantial deductions to be made: Rent £12500, Rates £3500, Other Costs £11,000 (CheeseA says that this is overstated) and of course Wages at £85,000. This leaves a net but pre-tax profit of £28,500.

If an owner decides to work 60 hours a week to reduce the wage bill, then this would save (60 x 48 x ££5.52) which equates to £15,987. ( I assumed an owner would have 4 weeks holiday)

So the owner would have pre-tax cash £44500 in reward for his or her labour and management skills.

All of the above is before any account is taken of a new owner having to borrow to pay whatever money he has to pay to buy kitcheners? As I've already stated above if that figure is £165k then its going to cost about £2000 per month over 10 Years.

So thats why I struggle with the asking price for Kitchener's: I'm using Actual Opening Hours, Actual minimum Wage, Actual Turnover, Stated Gross Profit and Actual Cost of Borrowing money The only areas of dispute are "Other costs" which, I guesstimated at £11k (CA says are less) and whether or not Kitchener's needs 3 staff on AVERAGE to run efficiently? I am convinced that it does, customer service deteriorates greatly when there is only 1 or 2 staff on, many of us must surely have observed this?

Roma was advertised as being open 32 1/2 hours a week and closed Saturday and Sunday. I never saw any more than 2 staff on and and that includes what I presume were the owners. It is an approximately similar business but a different proposition altogether.

[Bob Jefferson]

Reluctant and unqualified as I am to enter into this discussion, my own feelings as a punter are that the extended opening hours, a bold move at the time, do not seem to have been justified. As a prospective buyer, I would be very interested in a breakdown of takings by time of day. Can you operate the evening period with just one member of staff? Possibly, but you still need bums on seats to make it profitable and not just one or two people nursing a cappuccino all night. Is there scope to make the evening trade more profitable? Maybe, but to have Porty's minimum staff of 3 would add considerably to the wage bill.

The other problem, of course, is that Kitcheners is on the wrong side of the road. If we really want a continental-style al fresco experience in Portobello then we need to redesign the High Street and extend the pavement on the sunny side of the street.

And then you might want to do something about the weather!

[Porty]

For clarity; what I mean by average is that although K's does need 5 or 6 staff at times it also operates with just 1 at least some hours of the day, probably including the evenings.. I suspect the actual average at the moment is 3 or somewhere around that mark.

I lost count of the times Gk, myself and others discussed how awkward a place Kitchener's was to staff, there's up to 4 different areas to oversee.

For example we could never fathom the amount of time and labour that used to go into making homemade Quiche. (from memory this was done on a daily basis)GK insisted it was a customers favourite but what percentage of overall revenue did it generate?

I'm sure the new owners have made some improvements in efficiency but there is no escaping the fact that it is a labour intensive business. Many valuers ignore labour costs when they value a business, merely taking into accouint Turnover and Gross Profit.

[Porty]

Roma: From the IME sales particulars (which i can't seem to cut and paste from)

Opening hours 8:30am until 2pm, Monday to Friday inclusive
Rent: £7,500 pa
Rates: Pyable £ 2178 pa

No information is given on Turnover or Gross Profit percentage.

Other Costs

Small shop open less than 40 hours a week. Lets say £100 per week.

£5200.

Wage Bill

Assuming an owner works all 32 1/2 hours per week that leaves one person to pay. we have to take into account holiday pay, employent costs and so on. (56 x £5.52 X 1.11) = £11,151 pa.

Gross Profit

" Made to order"Sandwich bars are generally advertised as having Gross Profits or Margins of 70%.

Turnover

We don't know the Turnover but its pretty easy to build a wee business model to illustrate what profit levels would be achieveable at various levels of Turnover. I'll do it when I get some time.

[seashell]

[Porty]

Simple Business Model for ROMA:

TURNOVER / GROSS PROFIT /WAGES & COSTS /INCOME

£70,000 £49,000 £26,209 £22,791

£80,000 £56,000 £26,209 £29,791

£90,000 £63,000 £26,209 £36,791

£100,000 £70,000 £26,209 £43,791

£110,000 £77,000 £26,209 £50,791

Could not get the table format to copy over correctly but you get the general idea. Turnover and income are in bold.

Even the worst case scenario doesn't look too bad for a Monday to Friday job where you start at 8am and finish at 3pm! Although I'm not sure it would be worth a £60k buy in at that level. A Turnover of £110k seems doable, it equates to about £400 a day and 40% of Kitcheners.

[Porty]

[Porty]

Its interesting to see the changes in Roma. I'm assuming the new owners liked the look and numbers of the old business? Yet, they've chenged the name and branding. What happened to the goodwill?

The counter has been redesigned, more counter display cabinets, music is playing, seems like less space to queue inside the shop, there is now just one choice of soup- a bigger portion for the same price, the soup is served at the counter rather than prepared through the back and I'm sure there are other changes too. (I've only been in once). Think there was 3 staff on.

How will the business develop?

[coxy]

Jesus,

And you wonder why most people who lurk on this forum see many here as petty gossips just out to boost their own egos.

Haven't you got anything better to do than this, Porty? Everytime I read this thread you make me wonder about the use of this place.

Time to delete my account. I think.

[Dadaist]

[Porty]

[ecm]

[Pal of Porty]

[wangi]

Guys, can we lay off the bickering, thanks.

While Porty's posts on this thread might be a bit dry and tedious for some, there is no compulsion to read them. Just ignore the thread. And all the info here is publicly available - there's no invasion of privacy.

[Porty]

Dry and tedious??? Wangi, I could go back and do a bit of editing, maybe include some photos of puddles and stuff like that, to alleviate the tedium. Would that suit you sir?

[Sandra]

[Epykat]

[Maria]

[Pal of Porty]

I see that the asking price for the Deli has now fallen from £165k to £100k.

A considerable reduction but I still think it has some way to fall yet before it comes anywhere near financially stacking up for a prospective purchaser, given that the bricks and mortar are not included.

[Grunk]

I thought they were meant to be expanding? which bits are for sale? and by whom (agent)?

[Pal of Porty]

The transaction is being handled by Knightsbridge and hopefully I have managed to put the link in below.

http://www.knightsbridgeplc.com/busines ... sid=113161

[Porty]

Still the original agents.

[sally_miranda]

Hey I only just opened this thread, fascinating argument! However I haven't got time to re-read it all. How long is the leasehold porty? It would be worth it if it was 25 years.

[Porty]

I have it on good authority Kitchenes is closing at the end of next week.

[Pal of Porty]

[Porty]

[SoupDragon]

Klaze was once a pet shop. It had a mynah bird instead of a doorbell

[Porty]

Dont remember that at all.

[SoupDragon]

Checked with family over the festive season they remember the mynah bird but some were a bit vague what the shop sold. I'm positive we went there for cat food