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Stephen Wright
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Posts: 246
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10/07/2009 19:54:39
- Hi Raymond,
I see you have two threads running simultaneously but I saw the other is dated 2008, which is less current than this.
Bargain Booze really is a strange bird and needs careful consideration before going anywhere near them.
Let's put it blunt - they have a lot of blind fans and a lot of blind detractors - made worse by the fact that neither group seem to want to see.
Here are some basic principles on which to hang some decisions:
Many corner shops sell 600 to 700 bottles of wine a week but spend 11 or 12 hours humping it from the Cash & Carry. They never cost their time but expect to get about 18 to 22% GP from the stock. Most people pay cash so no credit issues arise but obviously a fistful of cash is needed until you have built your reputation. A pallet of wine is 600 bottles, except for champagne which is 440 bottles.
This stock is identical to the stock delivered twice weekly to you at BB.
BB take the money from your account after 10 days. They also take a franchise fee.
Tobacco products can achieve about 6 to 7% from the cash & carry but perhaps 4% from BB. Baccy uses up lots of cash.
BB say a shop needs to be doing £18k per week to be viable. Therefore the 3 shops under offer need careful looking at as to which one is the problem - or are all of them a problem?
of course from the GP you have to pay the rent and rates, staffing costs, Electric, Repairs, Legal & Accountant, alarm security maintenance, refuse, training and marketing - plus lots of other costs.
The net profit per shop is therefore conditional on two key factors - Turnover and non variable costs (rent & rates). At 12.5% there is a lot less room for error than if you are making 22%.
Only you can make teh decision as to the value oif the various trade off factors.
Intrinsically, it boils down to the reputation of the site as represented both by the number of customers coming through the door and the take per customer.
With a newsagent, PO or convenience there are other reasons people come through the door and it is the ability to cross sell "Whileyouarehere". So the Sunday monring walk for the newspaper, also gets the milk, the fags and a bottle of wine. It depends on how thoroughbred you want to be - of course the newsagent has to be open at 6am, while the offie should not be open after 9pm.
There are many BBs for sale at a knock down price because they are only able to achieve 8 or 9k per week. But what if you get a proper profit margin in there and can fund the cashflow requirements. Then even a recently closed one is worth paying something for because the fundamental laziness of the customer will bring him through the door again and again. Rememebr it is the same stock.
Who knows you amy even want to tier the business and go upmarket for quality wines and become a real wine merchant.
There are always parcels to snap up and cash is a big lever in your hands - thereby giving a constant supply of opportunities tp pass on to the customer - everyone loves a bargain in their booze don't they?
I can go on ad nauseam about this but it would be best to work with specific examples.
Find me if you want to go into anything further. I am based in the Thames Valley but travel around quite a lot if you want to meet or have me look at anything specific.
For your information I have a network of winemakers throughout europe who supply me with mixed pallets of my choice, thereby achieveing over 40% gp - mouthwatering?
Best wishes
Stephen
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