Dave And Buster
I have only been to this place once, and have a chance to place then in an empty building... Allowing 200K for conversion, we can pay 4M (what they are asking) and still have a 15 cap building. What do you thing of D&B as a franchise / tenant?
[ Edited by cjmazur on Date 09/05/2010 ]
The projected net numbers would have to be huge for a 15 cap restaurant at $4.2M...
I must be missing something. thanks for the feedback.
have to check my tool.
Since I have non recource debt available, I if my math is right, will use my SD-Roth
Here is a hypothetical set of numbers based on your 15 cap... If you have full to capacity for a solid 6 hours per day and clear $25 per customer after all expenses, then you would clear 25x15x6x365=$821,250 profit per year on $4.2M investment. So, at minimum 5 years to break even!
My misunderstanding of lease / franchise, thought with the numbers you laid out it was you who were running it. But, given that, the size may limit their income potential and thus they may not be keeping their doors open very long...
This is in the "east bay" contra costa area of SF/N. CA. This are is more affluent. So I thought of West Marine as a backup. Public, $$$, etc.
Where did this come from? ddstew said "...the size may limit their income potential and thus they may not be keeping their doors open very long..." From the D&B filings: "Our new locations typically open with sales volumes in excess of their run-rate levels, which we refer to as a “honeymoon†effect. We expect our new store volumes and margins to be lower in the second full year of operations than in their first full year of operations, and to grow in line with the rest of our comparable store base thereafter."
Regarding the hypothetical profit per year, why not derive numbers based on the "real" numbers that are in the SEC filings? And I assume that Chet will probably build as big or small a building as D&B specs out. From their SEC docs: "...Our lease terms, including renewal options, range from 20 to 40 years. Our leases typically provide for a minimum annual rent and contingent rent to be determined as a percentage of the applicable store’s annual gross revenues, subject to market-based minimum annual rents. We currently pay contingent rent in only a small number of our stores. Generally, leases are “net leases†that require us to pay our pro rata share of taxes, insurance and maintenance costs. Typically, one of our subsidiaries is a party to the lease, and performance is guaranteed by the Company for all or a portion of the lease term."
As you probably know there is a D&B in the bay area (Milpitas I think). I would see how that one is doing since it is a good barometer of another location in teh Bay area - they can support several. Sounds like a decent idea since it will take some time to get a bldg renovated for it.
I would see if you can get away with only 200k in renovations. Does that include likely tenant improvements you may need to provide D&B? Have you spoken to commercial brokers to get a feel for what kind of improvements tenants are asking for these days?
interest rates are coming in a six percent, cash flow is minimal but exist. Your right though need to get info on cash out and refinancing options after buy down.
Thanks for that insight!