Do you want to buy a drive thru coffee stand but lack experience? If YES, here are 10 crucial questions to ask when buying a drive thru coffee stand for sale.
It is an established fact that coffee is good business because it is a drink people take on a daily basis, and some rely on it to function well. You can choose to sell your coffee from a brick and mortar coffee shop, drive thru business, a truck or cart, and you will still make enough income to tide the business over.
Let’s assume that you are thinking of opening a drive thru coffee stand, and you cannot afford to go through the hassles of acquiring and opening a new stand, another option left to you is to buy an existing drive thru coffee stand from a person that wants to sell.
Why Buy an Existing Drive Thru Coffee Stand?
In truth, buying an existing drive thru coffee stand is an easier way to start the business as you do not have to start looking for real estate, talking about lease, permits, inspections and a host of other things that go into starting a new business.
But that does not mean that you should go and plunk down money on any selling drive thru coffee stand that you see. You have to make the necessary investigations and ask the necessary questions to avoid financial losses or even any damaging liability from the owner who is closing shop, leaving town, or simply looking to cash out.
When you are buying a business like this, you should never be shy to ask the necessary questions to the current owner. You should never take them by their word. This does not mean that you don’t trust them; it’s just that you don’t know them, and you are trying to be careful with your money.
You need to see numbers, you need to see tax records, you need to see detailed data sheets, and you need to do your own data collection. Getting the facts, and having time to digest the information will help you make the best educated decision about your purchase.
When asking questions from the owner of the drive thru coffee stand you are interested in, there are a couple of things you need to look out for, things that can raise a red flag if they show up. First, you will expect the seller to be honest in answering your questions.
Next, they should be up front with you, and comfortable with answering your questions; and more importantly, they should be willing to show you the books. If a seller is not being upfront with any of these, then it would be in your best interest to forget that drive thru coffee stand and look out for another. In this business, it is better to be safe than sorry.
Because of how important it is to ask the right questions before you think of putting money down on any drive thru coffee stand, we have listed out ten very important questions you need to ask a drive thru coffee stand seller before you start thinking of buying the business.
Important Questions to Ask When Buying a Drive Thru Coffee Kiosk
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Why are you selling the business?
Finding out the reason why the owner of the drive thru coffee business is willing to sell the stand is perhaps the most important question you can ask. This is because a lot of things can make a person sell a business. It could be that he is tired of the business and wants to do something else, or wants to retire, or for some reason he or she is leaving town.
It could also be that the business is no longer turning profit so the owner wants to sell it and count his losses. This is why you need to know why the business is being sold.
If the owner wants to retire or leave town, then it is safe to buy, but if the business is no longer turning a profit, you need to ask other pertinent questions to find out why this is so, and to see if it is something you can turn around by bringing fresh ideas. Note that before you make this decision, you have to consult with experts so as not to make a mistake.
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How old is the drive thru coffee stand?
Asking about the date the drive thru stand opened does not meant that you just want the exact date only, this question would also help to reveal the history of the business you are trying to buy. It’s important to get to know the history behind the coffee stand business that you are interested in taking over, if not for anything else, so you can keep it in the record; though this information can come in handy one day.
While you might get an exact date the business opened, you might also be able to garner more information that otherwise would never have come up.
The business owner should come with relevant amount of history (and accompanying financial data) to help you make the decision on whether you should buy the business or not. When asking this question, look out for as much information as you can get, you should equally get clarification on thing that seem confusing or shady.
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What is it like to do business in this location?
Experience tells a lot of story about something, and it is the same with a drive thru coffee stand. When buying this kind of business, you should try to find out the experience of the person selling it. Assuming that you intend to keep the coffee stand at the same place, it’s important to determine what it’s actually like to do business at the specific location.
What qualitative factors are there that may impact your decision to buy the coffee stand at this location? What’s the surrounding community like? What are the customers like? How are other factors like foot traffic, crime, and competition going to impact your day-to-day operations and your bottom line?
While you need to ask these questions, but you should also check out the location for yourself by visiting the stand during a variety of times during the day – including when the business is closed. You should endeavor to step out of your car and walk around the coffee stand business – and see what the neighborhood looks and feels like.
Do your observations and gut instincts fit in with what the owner and baristas are telling you? When it comes to retail, location is everything. Take some time to study and incorporate your knowledge of the area before making any decisions.
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Is the coffee stand business turning a profit?
No entrepreneur would want to buy a business that is not making profit, so you need to inquire from the seller if this business is actually turning profit. You may have high sales numbers, but it may not mean that the business is actually returning a healthy profit for your coffee business to be self-sufficient. You can only stay in business if you are making a profit.
You should know that a coffee business that is simply “breaking even” will not last because the owner will not be able to live and pay other related personal bills on this level of income. While you should definitely double check the business’s profitability based on receipts and profit and loss statements, you should also listen to what the owner says about his profitability and future potential of revenue.
Asking an “open ended” question regarding profitability allows you to hear directly from the current owner what his or her concerns are, and you can even pick up on things that are left unsaid.
Remember, it is in their best interest to portray their business in the best possible light to improve their negotiating position. Profitability is the “factor” that rules all other determinants and should be thoroughly examined and double-checked.
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How many customers do you have in a day?
Your coffee drive-thru success will depend on the number of customers you have. While you should ask to see any “profit and sales reports”, as well as “count customers” on your own, you should also simply just ask how many customer visits the business averages per day. This may give you a lump figure on the level of business you will be working with.
Additionally, this seemingly open-ended question can provide you with valuable information, such as the owner’s own perspective on the “ebb and flow” of customer numbers. You will, of course, be checking this with your own data from counting customers.
Owners are often known to offer advice on what to do to make the business profitable for you. They sometimes have this knowledge, but do not have the time or inclination to carry it out. So, even if suggestions on improvement do not come out, you can ask for them on your own.
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How many employees do you have?
This seemingly innocent question can answer a tremendous amount of information. For example, it can help you determine how many employees (baristas) you will need to hire (or fire). It may give you an indication of the level of traffic (or sales) being generated.
For example, it is very common for busy coffee drive-thru stands to have two or three baristas working at the same time, especially during your early morning rush hour.
Depending on your hours, you may have 2 or 3 different part-time work shifts every day. It can be common for a single coffee stand to employ up to 10 part-time baristas. Now, of course, you will need to review the current hours of operation and analyze them with the average sales and variable costs to determine whether or not your coffee business warrants an increase or decrease in hiring employees.
In the end, you will have to meet with each of these baristas and determine who stays, who wants to stay, and which ones you may have to let go – either for financial or performance reasons.
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Do your employees know that you are selling the business?
Many coffee business owners don’t like the idea of their baristas knowing that they intend to sell the coffee stand business, and for good reasons. This information can obviously increase the baristas’ levels of anxiety, performance, and dedication to the coffee business.
While you interact with staff, it may also be beneficial for them not to know that you are interested in buying the coffee business – as they can be more candid, relaxed, and natural with their customer service as you observe them. Baristas can reveal a lot of information about the state of the business. Often, this is not because of any negative feelings towards the business owner or the business itself.
It simply might have to do with the barista’s unique perspective or point of view. In some cases, the baristas are the ones that spend most of the time in the business during operating hours – and can have a deeper understanding of what is going right and wrong.
However, you should respect the owner’s wishes to keep the pending transaction under wraps. Nevertheless, building a good rapport with the baristas, asking questions in a non-aggressive manner, and being genuine, can allow you to learn quite a bit about a specific coffee business.
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What mistakes did you make and how can I avoid them?
Starting a new business is never easy, it comes with a lot of ups and downs. Plenty of decisions will need to be made when setting up any business – and a coffee shop is no different! Since there will be hundreds and hundreds of small decisions to be made, chances are that you may not get it all right.
This is why it is very important to ask the seller for mistakes he made and how you can avoid making those mistakes yourself. Note that in this business, the more informed you are, the better for you all round. Why would you want to make the same mistakes your predecessor made when you have the chance of completely avoiding it?
Learning from experience is wise on any level and in any field. Learning from current or former coffee shop owners can help you avoid some mistakes.
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Do you like working in this location?
Similar to an earlier question, this one is a bit more specific. By asking if the owner likes working here, you will be able to garner a few of the positives with the actual location. In addition, you may be able to garner a few negative attributes and perhaps gain some valuable advice on how to cope/deal with any negatives currently bothering the owner or something that may be coming up on the horizon.
Consider asking a few of the baristas and customers this question as well. It may seem rather forward to ask this question of baristas or customers who may no be in the know that the business is being sold, but we are talking about the future success of your business here.
It’s not the time for you to be shy. For example, customers may not like the parking situation, neighboring businesses, or baristas may wish to have more street and alley lighting for their safety, etc. These are important factors that should be taken into account.
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What is the landlord or property owner like?
When you buy a coffee stand, often times, you will be buying the physical stand, equipment, inventory, branding, and the goodwill. Additionally, you will often be buying the existing terms of the lease, which may be transferred to you (unless otherwise stated).
It is very important to get the honest perspective from the current business owner of what the landlord or property manager is like.
What’s it like to do business with him or her? What kind of personality does he or she have? You should do this in addition to reading the existing lease. Are there any grudges, misunderstanding, personality issues, or in-fighting going on?
The current coffee stand owner may want to provide a positive outlook or perspective on the property owner/manager, even if things aren’t so rosy. Remember, the current owner may have an incentive to paint a good picture of a bad situation, so try to get as much information as possible to make an objective opinion.
In addition, to getting the owner’s perspective of the property owner, keep in mind that you will need to meet the property owner yourself.
Why? Because a property owner can really impact your business – negatively or positively. Having a professional but very positive relationship with your property owner/manager will lead to your business stability, potential growth, and value (if you were to eventually sell).
Meeting him or her may not fully tell you the “whole story” or predict your professional relationship – but you can at least get an impression of the type of person you will be working with. At the very least, it will give you a more well-rounded view of him or her.