The Business A three-year-old French bakery and cafÉ located in a medium-size eastern Virginia bedroom community. Among its products are baguettes, croissants, napoleons, and the occasional specialty bread in the shape of a bear or an alligator, and revenues are split 20-80 between wholesale and retail accounts (which is fairly typical in the bakery business). The owners, a husband-and-wife team, will gladly train new owners in the arts of baking bread and making fancy French pastry. They are selling to return to their native France.

Financial Summary 1991 1992 1993*
Gross revenues $254,000 $226,000 $226,000

Recast earnings before $82,000 $74,000 $80,000

depreciation, interest, taxes,

and owner compensation *projected

Price $275,000

Outlook Overall bakery revenues have seen a gradual but consistent rise recently, and hearth breads, which include French bread, are currently the fastest-growing bread category. Per capita U.S. consumption of hearth breads is up a projected 16.8% from 1988 to 1993, compared with a 3.5% increase for white pan bread. And this establishment is set up to capitalize on the trend; it comes equipped with the latest and greatest in baking technology. Unfortunately, that technology has presented a problem, too: the owners overbought on equipment and can't service the debt.

Price Rationale The owners appear to be trying to recover a good part of their initial investment ($386,000) with the asking price. But bakeries tend to sell at 30% to 50% of their gross annual revenues; for this one, that amounts to what insiders consider a far more likely price range of $67,800 to $113,000. Most experts agreed that the most probable selling price for this business would be around $92,000.

Pros Baking bread has got to feel good. And here you'd start with a great equipment setup and the training to be able to use it. Experts say this bakery's 26% cost of goods sold is very favorable. So someone buying this shop at the right price should do well.

Cons The key word here is right, which this price isn't. And we're talking lo-o-o-o-ng hours here: the current owner's day starts at 2 a.m. (Those "time to make the doughnuts" commercials aren't lying.) A bakery is a challenging business: you'll need to be able to make more than one kind of dough rise. -- Christopher Caggiano

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Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Johnson & Glazebrook Inc., 703-372-4343.