Pizza Today - December 2023 - 16

Building Blocks
Building
Blocks
Nick Bogacz
Founder & President
Caliente Pizza & Draft House
S
o, you want to own a
pizzeria, or maybe you
want to open another
shop, but you don't quite have
the capital. Th e most important
thing to remember is this:
as much as you want to buy a
pizzeria, somebody wants to sell
it even more. If you speak to
wealthy individuals, they will tell
you that a lot of the time they
got wealthy off of other people's
money - better known as leverage.
Caliente
owns seven pizzerias
and fi ve buildings, and we have
done millions of dollars of acquisitions
by seller fi nancing. Not
all the deals have worked out,
and some sellers just want their
money right away, and sometimes,
sellers just want an out. I
like to fi nd locations that used
to be landmarks or destination
restaurants, one owner removed. I
don't want to buy from the owner
who is selling to retire and move
away to the warm weather. I am
looking for an owner who has
faced some hardship, whether
that hardship is fi nancial,
personal or medical, or maybe
they bought the restaurant for
an investment with the idea that
they would fi nd someone else to
run it.
Th e order of the negotiation
is very important when you're
trying to negotiate seller fi nancing.
I usually do not negotiate
the actual price. By agreeing to
what the seller asked, they are
happy and delighted, and somewhat
taken by surprise that you
were willing to pay the asking
price. Most people have an asking
price and then they have a
price in mind that they'd accept
for the sale. Th e reason I don't
negotiate the price is because I
focus on negotiating terms. Th e
terms include the interest rate,
the money down and how long
the payments will last.
Everyone knows what interest
rates are in this climate
right now. I have negotiated
interest rates from 2.5% being
16 / PIZZATODAY.COM / DECEMBER 2023
the lowest and 6% being the
highest. Within the last six
months, I was able to negotiate
an interest rate of 3.5% on my
latest acquisition. I always try to
put the least amount of money
down so that I have more working
capital for the remodel and
the start of the business. I have
put as high as $125,000 down
and as low as $50,000 down at
once, and I have done owner
fi nancing on deals as low as
$125,000 and as high as $1.4
million. Most of my deals are
for fi ve years, but I have done
a couple as long as 15 years -
though of course those were the
higher priced acquisitions.
A sample acquisition might
look like this: $225,000 asking
price over fi ve years at 6% interest
with $75,000 down. I always
know the highest amount that
I want to put down and I never
start at that amount. I always
start by negotiating lower, and
then work my way to the higher
amount. When someone balks
at the interest rate, I remind
them that I gave them the
asking price. Most times they
are pleased with the fi ve-year
arrangement.
If you're lucky enough to
not just buy the business, but
also the building, that is the
best deal. And in next month's
Building Blocks, we will talk
about all the advantages and
disadvantages of being your
own landlord.
@caliente_pizza
http://www.PIZZATODAY.COM
Pizza Today - December 2023

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