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Business for Sale: Looking for Heady Growth?

Looking for heady growth? Check out this Utah-based restaurant and microbrewery.
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THE BUSINESS: If you're in the market for a profitable business that has great growth potential, this one's for you: a six-year-old restaurant that offers, along with lunch and dinner, at least six types of beers brewed on the premises. The business is based in Moab, Utah, a thriving tourist destination about 200 miles southeast of Salt Lake City and the gateway to such well-known national parks as Arches and Canyonlands. The restaurant serves an average of 500 meals a day from March through October, which are its busiest months, and remains open year-round. The microbrewery's beers are formulated from proprietary recipes. They have become so popular that the current owners are negotiating with a bottler to produce a test run of about 4,500 cases of "Dead Horse Ale," "Lizard Light," and "Scorpion Ale," which they plan to sell across the state. With that experiment in mind, the owners invested about $175,000 last year to boost the business's production capacity from 2,000 to 4,000 kegs annually. Besides its beer recipes, the company's big selling points include the brew pub, which is valued at $840,000, and about $450,000 worth of equipment and fixtures. The owners, who run the company from afar, want to move on to other business ventures. But their team of 100 or so employees (including a restaurant manager, a chef, and two brewers) should stay on for the next round.

PRICE: $2.25 million (with possible financing by the seller, perhaps to cover the real estate portion of the deal)

OUTLOOK: It's positively heady. After all, this company's brews are tasty, and its timing is great. For one thing, the economic downturn has converted plenty of champagne drinkers to beer drinkers. And thanks to the upcoming Olympic Games, in Salt Lake City, the company's new bottled line should get plenty of visibility. A new owner could either stick to small efforts (by subcontracting out a small brewing and bottling operation) or go for a big gulp (requiring an investment of at least $250,000 to set up the company's own facilities for a regional business). The current owners are also exploring an acquisition that could provide them with existing distribution channels. One thing that might cloud this deal: if the economy continues to weaken, plenty of potential customers may switch from high-priced designer brews to whatever's on tap.

PRICE RATIONALE: The current owners are so convinced of this company's market potential that they've priced it high with the intention of holding on to it if they don't make a frothy sale. Since they're continuing on a fast-growth course, that position could be justifiable. But here are some numbers worth considering: a brew pub (which this company has been since its inception) will typically sell for 25% to 30% of sales. Based on this company's projected revenues for 2001, that would suggest a range of $536,000 to $643,000. With real estate, fixtures, and equipment added in, that price tag would be about $1.8 million to $1.9 million. (And it may be that only an intoxicated buyer would pay full value for used furniture and equipment.) So think before you drink to this deal.

PROS: Who wouldn't want to own a business with the potential for off-site management and for impressive profit and revenue growth, as well as unlimited lager and ale from a recipe mix that's constantly changing?

CONS: You'll wind up with quite a hangover if you price this company based on what it could be rather than on what it is, which is a tourist hot spot with good eats and fine drink.

Utah Microbrewery and Restaurant
GROSS
REVENUES
EBITDA* OWNERS'
COMPENSATION
1999 $1,679,751 $227,739 $30,000
2000 $1,670,311 $145,780 $30,000
2001** $2,144,581 $315,000 $30,000

*Earnings before interest, taxes, depreciation, and amortization.
**Projected.

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 Dave Moore at Business World Brokers Inc., at 970-928-0842.


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Business for Sale: Looking for Heady Growth?


Please e-mail your comments to editors@inc.com.

Last updated: Jan 1, 2002




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