Aldes Business Brokers

Summary

A well established National Brand Franchised Supermarket, with in-house bakery and opportunity for a liqour store. Turnover of R1m.pm while netting over R120,000pm.

1. History Background

Fully describe the business's activities?

This is a Franchised Supermarket from a well known and successful group. It supplies the usual items found in a supermarket and has an in-house bakery. The store also earns extra income from an in-house DVD store as well as from a coffee machine, Lotto and Amusement Machines

How long has the business been established?

The business has been established and has operated from the same premises for twenty years.

How long has the owner had the business?

The current owners have had the business for 11 years.

2. Present Market

How does the business operate on a daily basis?

It is a busy supermarket and operates 7 days a week from 6am to 9pm.

How are the clients attracted to the business?

The business is well known in the area and also has the support of national advertising.

What Advertising/Marketing is carried out?

National TV, Radio and Newspaper advertising is done by the Franchisor . This is a well known brand.

What competition exists?

Minimal competition in the area. The closest is a garage nearby with it's food convenience store

What are the seasonal trends?

Busy all year round with peaks during holiday season, particularly December

3. Financial

Is the business VAT Registered?

Yes

What VAT documentation is on file?

VAT documentation will be supplied to all qualified purchasers upon request.

Are there up-to-date Management Accounts available?

Management Accounts are available on file up to the end of December 2011.and will be shown to qualified ,serious, potential purchasers

What Balance Sheet and Income Statements are available?

Balance sheet and Income Statements are available for the 2011 and 2010 Financial years.For the purposes of this report the Financial income statements for 2011 were used and averaged out per month. The Net Profits were calculated by adding back items such as Depreciation, Interest on Loans and personal Expenditure . Other items such as food and monthly groceries taken from the store by the owners are not added back and would increase the actual net profits even further.

What percentage of the business is cash/credit?

The business is largely cash with a minimal percentage ( approx. 1% ) of credit granted

What is the age analysis of the debtors book?

30 days

How could the profitability of the business be improved?

The business could incorporate a Franchised bottle store on the premises which would greatly enhance turnover and profitability.

Is Seller finance available and for what amount?

The seller would not be prepared to offer finance.

What is the payback period?

The payback period is 33 months, excl stock, which for a solid franchise of this nature is good.

What is the ROI?

28%

4. Staffing

What is the total staff complement?

Their is a total staff complement of twenty four.

Give a breakdown of staff/functions/length of service?

17 of the staff are casuals employed on a shift basis. There are 7 permanent staff members.3 operate as managers.

Are they on contract?

The permanent staff have letters of employment.

Do any have management potential?

The three managers are all capable in their particular fields of operation.

How involved is the Owner in running the business?

The two owners are fully involved and share the duties.

5. Premises

When does the current lease end?

The current lease has two years to run.

Is there an option of renewal & what period?

There is an option to renew for a further 5 years.

What is the annual escalation %?

8%

What are the trading hours?

Mon - Sun 6am to 9pm.

What is the square meters of the business?

386 sq. metres.

Is a copy of the lease available?

A copy of the lease is available to qualified purchasers.

Do you require a licence?

Normal Business licence and Liqour licence

What lease deposit and/or other surety is required?

To be negotiated with the Landlord.

6. Assets

Is a full asset list on file?

A full list of Assets will be supplied to qualified potential buyers.

Are any items not included in the sale?

All items are included other than one vehicle ( Taz ) which can be negotiated.

What is their overall condition?

All equipment and assets are in good condition.

How have they been valued ?

Assets are valued at replacement value.

Which assets are on lease/HP and with whom?

All assets are paid for

Are they presently insured?

All assets are fully insured

7. S.W.O.T. Analysis

Strengths?

An excellent well known branded supermarket that is well established and known in the area.

Weaknesses?

No discernable weaknesses

Opportunities?

Opportunity exists to operate the Franchisors in house bottle store on the premises

Threats?

There are no discernable threats other than a weakening in the economy.

8. Reason For Sale

What is the reason for the sale?

The partners are brothers and the younger brother wishes to relocate overseas. The elder brother only wishes to sell because he cannot see himself working with another partner.

9. Conclusion

Why is this a good business?

This is an excellent , well established business making good profits and backed by a well known brand. The store underwent a major refurbishment last year for the world cup and no other refurbishments would be required by the Franchisor for another 4 to 5 years.To set up a new store for this Franchise would cost in the region of R6.5 miilion.

What is the price plus stock and the net profit?

The price is R4,300,000 plus stock of approx R1.2 mill.