The Business A well-established 50-year-old, 2,000-square-foot diner in a historic community (population 38,000) on Boston's North Shore. Diner seats 50 (13 at the counter, 37 in booths); serves breakfast, lunch, and dinner Monday through Friday, 5:30 a.m. to 7:45 p.m.; and is open half-days on weekends. Jukeboxes in booths generate 0.1% of revenues. An often-photographed landmark, the diner has been owned and operated by the same family for 46 years -- and is on the market because the family has run out of members who want to operate it.
Financial Summary 1990 1991 1992*
Gross revenues $294,000 $266,000 $300,000
Recast earnings before $14,000 $33,000 $39,000
interest, taxes, depreciation,
and owner compensation *projected
Outlook Diners are hot. According to restaurant-industry types, the chic and pretentious 1980s have given way to the casual, value-conscious 1990s. Add the backlash against techno-foods (fake fats, fake sugars, fake meal portions), and it would appear diners are in position A. This diner boasts a strong repeat clientele, including one customer who's been coming daily for the past 50 years. The diner's cost of goods sold, currently running at 43% of revenues, needs to come down; the industry average is 30%. But its net margins, before owner compensation, top the norm.
Price Rationale The seller values the business at $130,000 and the diner itself at $45,000, numbers experts deem fair. Though valuation formulas for diners -- essentially antiques with sentimental value -- vary, aficionados suggest five times earnings is appropriate for this one. The question is, what are earnings here? Seller would be happy to stay on in his current role as short-order cook, but paying him could cut the heart out of profits.
Pros A Sterling Streamliner, this is the Porsche of the breed. Plus there's opportunity to grow the business by serving Real Food to Real People deeper into the dinner hours -- when margins are higher on favorites like the gravy-slathered hot-turkey sandwich or the fried-seafood plate.
Cons This may be the equivalent of buying a job. Short-order cooking can be fun, but are you ready to do it every day?
-- Alessandra Bianchi
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 the Boston Restaurant Group, 508-887-9895. n