Location: Rexburg, ID
For Sale Website:
Greek Food Gourmet is a restaurant that specializes in Greek Foods. It is located in Rexburg, Idaho. The asking price of the business is $70,000. This price includes furniture, fixtures, equipment worth $65,000, and $5,000 worth of inventory on hand. The building is leased. This forecast includes the next 8 years of a pro forma income statement, a balance sheet, an analysis of cost of capital, and internal rate of return for the restaurant. We used numbers that would be relative to the Rexburg area and all inputs can be changed to project different scenarios.
The current model is our projection for the current business to keep running as is. This would mean that the company would not break even for 3 years and the average profit margin would be around 1.7% of sales. This assumption also includes an internal rate of return of 9.45%. To match this number with a weighted cost of capital would be unrealistic, putting the debt at 98% and the equity at 2%.
Because the debt to equity is so high to achieve the cost of capital, we believe that this restraint would not be successful in the small town of Rexburg. The problem with this business would not necessarily be purchase price but potential cash flows.