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Annual turnover

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  • Mandate: 35019
  • Added: 09 May 2022
  • AFS
  • 262

Franchise bar, restaurant and entertainment venue. Location in an affluent area

Windhoek & Central, Khomas
262
Mandate 35019
Added 09 May 2022
N$ 3,800,000* NAD
Stock: N$ 200,000
Assets: N$ 5,500,000
N$ 41,100 NAD
Ursula Gollwitzer
Aldes Namibia
Windhoek, Kleine Kuppe
Windhoek, Kleine Kuppe
Summary

Professionally trained managers and staff in place.

Franchise bar, restaurant and entertainment venue. Location in an affluent area
SELLING PRICE AFS
N$ 3,800,000* NAD
Stock: N$200,000
Assets: N$5,500,000
N$ 41,100 NAD
Summary

Professionally trained managers and staff in place.

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How long has the business been established?
High profile location with an established daytime and evening restaurant trade. Offering a unique, relaxed and entertaining dinning experience created by a dedicated and professional team who are committed to delivering on its promises of service and quality excellence. Combining the key features of coffee and cocktail bar, restaurant and entertainment venue, this franchise is a trendsetting and benchmarking brand within the industry. Striking store designs, award winning mixology and culturally progressive music encompass the renowned vibe.

How long has the owner had the business?
The owner opened the franchise 7 years ago.

How long has the Franchise group been establised for?
The Franchise group was established 27 years ago.

How many existing franchisees are there in the group and for how long have they been operating?
There are currently over 30 franchisees in the group, operating from one year up to 27 years.

How does the business operate on a daily basis?
Managers open and close the business. Doors open at 9am for trading right up into the evening.

How are the clients attracted to the business?
Well known franchise brand and located in a popular mall, thus allowing clients to walk in freely with minimal bookings or reservations. The latter has become a norm with duel to demand. The takeout clients make use of delivery APPs. The use of social media platforms are used extensively to further lure new and old clients with the latest offerings/specials and events. One of the advantages of a restaurant franchise is that you get instant brand recognition. Your customers would be familiar with the brand and there is no need to gain your customers' trust from scratch.

What Advertising/Marketing is carried out?
The Franchise group run national advertising and the Franchisee advertises through street pole advertising. Social media gains great traction as followers stand at over stands at over 10,000. This is one of the primary reasons for buying into a franchise rather than building a business from the ground up. You're able to take advantage of the franchisor's image and marketing reach and even benefiting from local advertising.

What competition exists?
There are other bars and restaurants in the area. This business offers more entertainment and a very exciting menu.

What are the seasonal trends?
Mondays to Wednesdays are quieter days considering the start of the week, weekends are usually busy. On quiet days specials are offered so as to lure clients to the store. Turnover is steady throughout the year. This business constantly evolves to catch up with trends that appeal to Namibians, such as the current trends being healthy drinking shakes and freezos.

Does the Head Office assist in securing contracts (if applicable) or is it up to the individual franchisee's to do this?
The onus is on a franchisee to secure contracts with Namibian suppliers at favourable rates, however overall, HQ assist tremendously when help is needed.

What advertising and marketing is undertaken on a group basis and what is the individual franchisee expected to do?
No form of advertising is marketed in the public domain without HQ approval (primarily the marketing department). Franchisees forward ideas for their separate stores to HQ, of which input and guidance is given. Moreover, all designs pertaining to flyers/posters/promotions are done at HQ. Franchisees are responsible to come up with initiatives to push sales and HQ supports by boosting promotions on social media.

How did the Covid-19 pandemic impact the business turnover / daily operations?
The restaurant industry was hit the hardest and restaurants were compelled to resort to takeaway sales only. Since the latter was never been part of this Franchise business model, the business took a dip and had no choice but to pivot in terms of conducting daily operations. The biggest change was adopting several new safety measures for employees to execute their tasks efficiently. Menus were changed and social distancing measures cut down the seating capacity by 70%. The workforce was scaled down by 50% and employee’s working hours dropped from an average of 45 hour per week to 25 hours per week. The restaurant changed their condiments to take away and moved to adding plastic cutleries. The risks were high as customers were more health and hygiene conscious when they visited the restaurant and immediately went to social media when customers and staff were not following Covid-19 protocols. As a result, stringent measures were followed so as to adhere to government regulations.

What steps / actions have been taken to combat the effect of Covid-19 pandemic?
Sanitation and usage of masks upon arrival at the restaurant was mandatory. Constant training of employees and adopting new ways of customers placing order without touching or holding physical menus through QR codes where clients could view the menus online by getting accessing the restaurants Wi-Fi. They partnered with delivery and takeout partners even though online ordering in Namibia is not as popular, but has gained traction especially now with the aftermath of Covid19. The Franchisee had to minimize their storage par levels and this has taught them to minimize wastage and reduce costs.

Is the business VAT Registered?
Yes, this business is registered for VAT.

What VAT documentation is on file?
All VAT documentation is available on file and will be made available during due diligence.

What percentage of the business is cash/credit?
Less than 10% is on Credit and the remainder is cash.

How could the profitability of the business be improved?
Profitability can improve by further marketing strategies and cost control.

What is the total staff complement?
The staff compliment consists of 17 permanent staff and 18 waiters whom are commission based.

Give a breakdown of staff/ functions/ length of service?
A detailed list of staff, reflecting their positions, length of service and remuneration is available on file for buyers during the due diligence stage.

Do any receive special perks or incentives?
The permanent staff receive lunch, one meal per day.

Do any have management potential?
Yes, their are two managers in place. One has been identified by the GM as exceeding all expectations, albeit no experience in the industry and hence has been undergoing extensive training and grooming.

How involved is the Owner in running the business?
The Owner is always in the know-how on all activities, financial obligations and the like, although day to day operations and responsibilities lie with the two managers. Managers are required to report back monthly with challenges which are discussed at great length.

When does the current lease end?
A new rental contract was concluded May 2021 and runs for 5 years. The current Franchisee is negotiating the exit clause down from 6 months to 3 months.

Is there an option of renewal & what period?
There is an option for renewal, with alternative periods.

What is the annual escalation %?
The escalation is at 7% percent per annum compounded. In addition : • Turnover Percentage: 8% on the Tenant’s Net Turnover • Marketing Fund contribution: 2% of the Gross Monthly Rental per month. • Lease Administration Cost : N$1,250.00 once-off • Lease Period : 4 years remaining • With escalation date to be effective from 1 May 2022. Thereafter on the anniversary of the escalation date of each subsequent year during the lease period

What are the trading hours?
Minimum trading hours; Mondays to Fridays: 09h00 to 19h00 Saturdays : 09h00 to 19h00 Sundays : 09h00 to 17h00

What is the square meters of the business?
Restaurant measures 314m2 Outside Seating, One Basement Bay - Storage (optional), 11m2 Store room, 8m2

Is a copy of the lease available?
Yes, this is available to buyers during the due diligence stage

Do you require a licence?
Yes, the existing Liquor Licence needs to be updated.

What lease deposit and/or other surety is required?
Rental Deposit: An amount equal to 2 times the final month’s Total Monthly Rental (Including VAT), subject to adjustment based on the strength of the Tenant’s and/or the Surety(ies) financial review.

What are the main assets of the business?
The main assets of the business are the shop fittings, furniture and kitchen equipment.

What is their overall condition?
Moderate wear & tear, the owners make sure that regular maintenance and repairs take place.

Which assets are on lease/HP and with whom?
The Dishwasher is on a rental agreement.

What are their settlement amounts?
The monthly rental agreement amounts to N$1,437.50 (Vat incl.)

Will Seller settle or Buyer to take over?
The buyer will either take on the existing rental agreement and or enter into a new rental agreement.

Are they presently insured?
The business and its assets are comprehensively insured.

What is the reason for the sale?
The Seller has other businesses which require more attention currently.

Why is this a good business?
A franchise investment offers a ready-made business model, along with training, guidance and support. In recent years, the economic track record for franchises has been strong. Franchise businesses are growing at a faster rate than non-franchise so far in 2016, according to the International Franchise Association. The initial cost to purchase this Franchise is well over the N$7 million mark.

What is the price plus stock and the profit?
The selling price including a stock holding of N$ 200,000.00 is N$ 4,000,000.00, excluding once off Franchisee joining fees of N$ 150,000.00.

What is the Franchise joining Fee?
The Franchise joining fee is N$150,000.00, excluding VAT. The initial joining fee to join this Franchise is N$ 300,000.00.

What is the monthly royalty, management and marketing fees? Are these fees based on turnover or a flat rate?
Royalty fees: 6% of monthly turnover (excluding VAT) Minimum fee: N$ 30 000 (excluding VAT) Escalation rate: 8% per annum Marketing Fee: 1% on Sales (excl. VAT)

What extra marketing and advertising should a franchise budget for?
The standard Marketing fee is 3% of monthly turnover (excluding VAT) 1% of monthly turnover to be paid into Marketing Fund Account. 2% of monthly turnover to be retained in Namibia and utilized for local store and brand marketing

Will stock purchases be solely from franchisor in the future or can the franchisee purchase from other suppliers?
Purchases from Franchisor are only on certain items such as nachos, spices, etc. Most of the purchases are sourced from local suppliers such as meat, chicken, seafood and vegetables.

How many staff members are required to successfully operate the franchise?
17 permanent staff broken down as follows: • 4 managers (1 bar, 1 kitchen & 2 front of house) • 5 bartenders • 8 kitchen staff • 18 waitrons The above is optional and at owners discretion and vastly depended on the magnitude of the restaurant as well.

What training is provided for new franchisees and staff members? Is there a cost associated with this?
Mandatory in depth training relating to the development and operation of the franchise business followed by a practical training for franchise owners. The practical training is conducted at an appropriate franchise business chosen by the franchisor, with cost borne by franchisees. For staff members, HQ conducts all training at respective franchise businesses with cost incurred by franchisees. Usually three representatives fly down to conduct the training for the three departments (kitchen, bar and front of house). Training is mostly done when there is a menu change which happens twice a year to keep setting the trends in food and cocktails. The cost thereof is also incurred by the Franchisee which includes: - Traveling cost - Accommodation - Meals (during training) - Telephone calls made by trainees during the training programmes. - Charges and photocopies during training programme. A request was made to HQ to consider sharing these costs, of which HQ has made a commitment to incur costs for one training session per year and thereby the Franchisee covering the second training session, however this is for the new Owners re-negotiation with the Franchisor.

Where will training take place and for how long?
Training for owners/GMS - usually takes place at HQ. Theory is for about a week and practical (on the job) varies depending on owners’ schedule/availability. It can go up to a month. Staff training at inception of business (3 weeks) at the franchise store (local). With menu changes and refresher training usually 4 to 6 days depending on the need.

What support and backup is offered to the franchisee?
.As alluded earlier, HQ avails itself whenever challenges arises on request by franchisees. From marketing, training, challenges with landlords, brainstorming sessions, performance issues, changes to menus (if need be) and addressing the needs of individual Franchisees. The list is endless, as the focus is on ensuring the brand lives up to their values and is profitable for both parties.

Does the franchise have to be owner operated?
Not necessary. If there are experienced staff (GM, managers) who are able to run the business on a daily basis, suffices. As long as the owner plays a pivotal role in the overall guidance so as to ensure he gets good return for his investment.

Will upgrades to the premises be required and if so how often will this occur?
Yes, this is a mandatory requirement, depending on the wear and tear, usually every 5 years. The current Franchisee has paid for new designs and costings for the revamp of the restaurant. This can be done once the Buyer is ready and is under no pressure to upgrade immediately.

What skills and background is the franchisor looking for in a prospective franchisee?
For any Franchise with a recognized brand, it is easier to get loans from lenders. Characteristics that fits the business module are: * Financial skills * Management skills * People interaction skills * Dedication in working long hours. Previous experience is not necessary. Experience in hospitality is a great advantage, but an enthusiastic franchisee that has a strong business acumen and the financial capability to establish and operate their own franchise business to generate a healthy return on investment, is what they look for.

Is there any industry regulations or licenses needed to operate the franchise?
All the below are renewed annually and up to date: • Liquor license, • Fitness Certificate (City of Windhoek) • Namibian Society of Composers and Authors of Music (NASCAM)

Strengths?
Buying a franchise lets you skip over some of the early phases of business development, like creating a business plan, branding, and conducting product research. Instead, you can start your business with a market-tested product that is already familiar to your consumers. Full support is offered by Operations, Marketing, IT and Logistics within the franchise brand. • Unique offerings • Rush Hour Initiatives • Attractive store designs • Unique brand • Laid back ambience • Great customer service Excellent brand and well positioned. High profile location with an established daytime and evening restaurant trade. Innovative food and cocktail menu, developed centrally and changed regularly.

Weaknesses?
• Outdated Point of Sale • Manual Cost of Sales reporting • Exposure to Covid-19 regulations • New norm sanitization & hygiene • Tight costing margins due to increases in supplier prices

Opportunities?
• Employees need to get vaccinated • Exceed customer experiences • Broaden product ranges to target new segments and current trends • Build new bonds/relationships with social media influencers • Build relationships with delivery Apps • Health-conscious food

Threats?
• Losing valuable clients • New restaurants gaining market share • New lounges adopting and approving this concept and thereby attracting their night customers • New Covid 19 variants • Suppliers increasing prices • Covid lockdowns and variant

Do any of the Bank or Financial service providers recognises this franchise and will they offer any form of finance?
Yes, most banks do. Nedbank however, is well acquainted with this Franchise model and hence the best option.

How much unencumbered cash is needed from prospective franchisee?
50% Unencumbered capital is required.

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AGENCY DETAILS

Aldes Namibia

4 members
10 mandates
Windhoek , Kleine Kuppe
4th Floor 1@Steps C/O Grove and Chasie street , Kleine Kuppe , Windhoek

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