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Phoenix Gas & Convenience Store – Absentee Owned

CASH FLOW
$334,731

Specifications

  • Price
    $1,255,000

  • Revenue
    $7,313,844

  • Equipment
    $50,000

  • Inventory
    $125,000

  • Location
    Phoenix, AZ

  • Employees
    14: 1 General Manager, 1 Assistant Manager, 12 staff (2 FT, 10 PT)

  • Lease
    2,500 sq. ft. building on a .5-acre property: retail, kitchen, restrooms - All new LED outside lighting, new pumps and signage, many upgrades!

  • Service Area
    Excellent location in Northern Phoenix, near a major highway and a few important thoroughfares, very easy access to the site via vehicle

  • Intangible Assets
    Well-known franchised convenience store and gas station, franchise direction and support, growth since 2016, fully-staffed

Located in Northern Phoenix, this gas station and convenience store have been recently updated with LED lights, new signage, and an attractive façade.  With over $7MM in sales, this busy station is located near a major highway as well as large thoroughfares.  It is conveniently located on a corner and is easily accessed by vehicles, bikes, and pedestrians alike.  The owner is absentee, and the managers and staff run the day-to-day operations. 

 

Featuring a full kitchen for hot food service as well as a large retail area, this convenience store has all items a commuter may want.  The fuel station has six double-sided pumps, with 12 total dispensing nozzles.  This location sells lottery tickets as well as beer and wine. 

 

This business receives guidance from the franchise headquarters.  All merchandise is chosen and priced by the company, taking the guesswork out of running this shop and station.  Purchasing is done through approved providers.

 

Currently, marketing efforts have been focused on utilizing the franchisor’s campaigns, but local advertising could help drive traffic to the station

 

Business Highlights

  • Years in Business: 30+ years in business
  • Location: Excellent location in Northern Phoenix, near a major highway and a few important thoroughfares, very easy access to the site via vehicle
  • Area Demographics: Middle class
  • Services: Gas station (80%), convenience retail, beverages, hot food (15%), lottery (5%)
  • Pumps: 6 double-sided w/ 12 total dispensing nozzles
  • Building: 2,500 sq. ft. building on a .5-acre property: retail, kitchen, restrooms - All new LED outside lighting, new pumps and signage, many upgrades!
  • Reason for Selling: Divestment
  • Employees: 14: 1 General Manager, 1 Assistant Manager, 12 staff (2 FT, 10 PT)
  • Hours: 24-hour
  • Seller Training Period:  90 days transition
  • Growth Opportunities: Foster marketing actions that create interest in the location
  • Current Owner’s Responsibilities: Absentee

Financial Highlights

  • List Price: $1,255,000
  • Gross Sales:
    • 2017: $7,313,844
    • 2016: $6,167,396
  • Cash Flow:
    • 2017: $334,731
    • 2016: $200,236
  • Assets Included in Purchase*
    • Equipment: $50,000: Equipment kitchen, retail, office
    • Average Inventory:  $125,000: Gas, retail, lottery
    • Intangible Assets: Well-known franchised convenience store and gas station, franchise direction and support, growth since 2016, fully-staffed

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnNotes
20172016
GROSS SALES$7,313,844$6,167,396
Net Income Shown on Financial Statement$-43,437$-178,004
ADDBACKS
Interest$4,718$4,700
Depreciation$313,450$313,540
Management Fee$60,000$60,000$5,000/month
TOTAL ADDBACKS$378,168$378,240
Seller's Cash Flow = Total Addbacks + Net Income$334,731$200,236
Profit Margin4.58 %3.25 %
  • YOY growth 2016-2017

Employees

Total Employees: 14

  • 1 General Manager
  • 1 Assistant Manager
  • 12 staff
    • 2 FT
    • 10 PT

Growth Opportunities

  • Foster marketing actions that create interest in the location

Valuation Details

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          Prescribed Multiple     =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.

For this business, a 2017 cash flow was used with a prescribed multiple is 3.75.  With this information, the computation is as follows:

$334,731         x          3.75     =          $1,255,241

The fair market value found above positions the business list price at $1,255,000.

Funding Example

Purchase Price:                                $1,255,000

15%Buyer Down Payment:                $188,250

15%Seller Financing:                         $188,250

70%Bank Loan:                                   $878,500

Seller financing 6-year term at a rate of 4.50% equals a monthly loan payment of $2,988.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $11,545.

After business expenses and loan payments, a buyer with a 15% down payment of $188,250 would retain a profit of $160,335, which results in a 85% return on investment in 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 $1,255,000 with the terms listed above, the coverage ratio is 1.92. 

Please note that the decision of whether 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. 

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