Lincoln Sports Bar & Restaurant Earning 1M in Sales
Located in a higher income neighborhood in Lincoln, this family fun sports bar is a popular lunch spot and sporting event hangout. With sales consistently over $900,000, the current owner averages a 25% profit margin. In operation for 12 years, the food and atmosphere of the bar has made it a local mainstay. Its proximity to schools and local businesses draws a strong lunch crowd who enjoy the “Mom and Pop” food specials on the menu.
The casual dining feel is blended with an Alpine ski lodge look, with pine booths and a large wood and stone awning around the bar. Beer drinkers are treated to 19 drafts on tap, and 50 kegs are always kept ready in the 40x10 walk-in cooler. Seating for 150 is spread between bar stools, booths and tables, and the 5,000-sq. ft. building feels even more spacious with the high, open ceilings.
The current owner averages 20 hours/week managing 26 employees and helping out where needed. There is a full-time manager in place who could easily handle these duties, but a part-time person would be needed to cover her days off.
Open 7 days a week, patrons have an extensive food and spirits menu to choose from, and are quick to utilize the 40x20 outdoor patio when the weather is nice.
A buyer paying 20% down ($115,000) would net $180,980 after debts the first year, representing a 157% return. As the only bar in the neighborhood, a new owner could easily increase profits by capitalizing on nearby sporting event traffic.
- Years in Business: 12
- Location and Service Area: Lincoln
- Capacity: 150
- Lease: $6,600/mo for 5,000 sq. ft. (includes CAM and a 40x20 outdoor patio)
- Employees: 26 – 1 FT Manager, 7 Cooks (3FT, 4PT), 11 bartenders/waiters (4FT, 7 PT)
- Hours: Mon – Sat 11am – 10pm, Sun 12pm – 9pm
- Reason for Selling: Retirement
- Growth Opportunities: Capitalize on nearby sporting event traffic
- Current Owner’s Responsibilities: 20 hrs/week managing employees and helping out where needed
- List Price: $575,000 * Business valued at over $750,000, but the price is reduced as the seller is anxious to retire!
- 2016 Gross Sales: $1,071,508
- 2016 Cash Flow: $268,739
- YOY Growth: 12% increase in sales from 2014 to 2016
- Profit Margin: 25%
- Assets Included in Purchase: $100,000
- Equipment – pizza ovens, fryers, grills, walk-in coolers and freezers
- 40x10 walk-in cooler used to hold 50 kegs to supply the 19 beers on tap
- Intangible Assets – premium location near higher income households, high schools and businesses; years of reputation and community standing
- Equipment – pizza ovens, fryers, grills, walk-in coolers and freezers
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||P&L Statement||P&L Statement||Notes|
|Net Income Shown on Financial Statement||$188,581||$189,820||$157,440|
|Compensation to Owner||$65,000||$47,500||$50,000|
|11% Tax on Owner's W2 Salary||$7,150||$5,225||$5,500|
|Auto-Personal Use||$5,233||$0||$4,599||Non-ongoing expense|
|Non-Business Telephone||$2,775||$2,775||$2,775||Personal cell phones: $232/mo|
|Seller's Cash Flow = Total Addbacks + Net Income||$268,739||$245,320||$220,314|
|Profit Margin||25.07 %||25.93 %||23.50 %|
- 25% profit margin in 2016 with an 11.7% increase in gross sales from 2015 to 2016
- Consistent gross sales in excess of $900,000 YOY
- Each booth is outfitted with a TV, but there are still many big screen TV’s throughout to the bar
- Keno is offered with 2016 Keno commissions totaling $103,064
- Over $7,000 in beer sales during one week, with Friday the biggest day
- Total sales from Friday to Sunday are over $14,500
Weekly Sales Analysis
- Liquor and food sales comprise 61% of income on Friday, 63% on Saturday, and 66% on Sunday.
- Friday sees the largest beer sales of the week, while Saturday sees the biggest food sales
- Cheese fries, boneless wings, nachos, French fries, fried green beans, onion chips and more
- Grilled chicken, shrimp, taco, chef, southwestern, and side
- Special burger, mushroom swiss, open-flame, patty melt, mini burgers
- 7” personal pizza, 14” large, supreme
- Philly, prime rib, club, BLT and more
Daily dinner specials range from hot beef sandwiches with domestic beer to prime rib with 16oz shakers. On tap are 19 draft beers, and a regular stock of 50 kegs are kept in a walk-in cooler measuring 40x10.
1 FT Manager – handles daily operations and management of employees when owner is not around
Currently the owner works 20 hours/week, with most of these hours worked during the FT manager’s day off
A new owner could be an absentee-owner and hire a part-time manager to cover the current manager’s duties on days off
7 cooks (3 FT, 4 PT)
11 bartenders/waiters (4 FT, 7 PT)
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business. The formula used is as follows:
Cash Flow x Multiplier = Price
Cash Flow is the sum of net income plus any owner perks and non-onward going expenses.
Multiplier is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation (average is 3).
The Cash Flow for 2016 is $268,739, and the prescribed Multiplier is 2.8.
$268,739 x 2.8 = $752,469
The List Price for the business is set at $575,000 to accommodate the seller’s eager desire to retire within the next six months.
Purchase Price: $575,000
20%Buyer Down Payment: $115,000
30%Seller Financing: $172,500
50%Bank Loan: $287,500
Seller financing 5-year term at a rate of 4.5% equals a monthly loan payment of $3,216.
Bank loan 7-year term at a rate of 5.25% equals a monthly loan payment of $4,097.
After business expenses and annual loan payments of $87,759, a buyer would retain a profit of $180,980. A 20% down payment of $115,000 results in a 157% return on investment during the first year!
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $575,000 with the terms outlined above, the coverage ratio if 3.06. Please note that the decision to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
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Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
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Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
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