Too much for rent on a pool hall/bar

[#Cruncher]

My better half and I have been seriously considering opening up a pool hall/bar next year.

We have been casually looking for spots in our metro area of about 1 million people.

We were at a mini-mall and the biggest store was for lease. Looking through, the glass, I fell in love with the spot. 10,000 sq. ft. wide open. Nice building.

I got home and looked up the property online. My fears came true. A place this size and the fact that it was a nice building in a decent area meant that the rent would be about 2,000/week.

This place could easily fit 20 to 25 tables with a nice bar setup, but I don't know if that rent is a feasible nut to cover.

We might have to start smaller or in a more reasonably priced area. Any expert owners with similar dilemas on rent costs?

Thanks.

 

[luckyninja]

It kind of all depends on what part of the country your in.

 

[premiumbilliard]

I'm no expert but I do have a 2 businesses in 2 states. I own my building in one state and in the other state I rent. In the state I rent, for the size of the space I have, 8000 square feet, I pay less rent than the taxes would be on a building of that size if I owned it.
I know it feels good to say "I own this place", but it is not always the right thing to do.
Whatever you do, keep the rent low. Now is the time you can haggle with property owners. Have a look at how many months the spaces have been empty. Months empty=lots of incentives to move in. Also make sure you put an escape clause in their so you are not left personally responsible for 5 years rent @ $8,000 a month when you are out of business. That could literally ruin your life.
Look at it on a per square foot price per year rate, not monthly. $8000 x 12 months= $96,000 divided by 10,000 square feet = PSF price of $9.60. That's pretty steep. You should be able to find out if that is the going rate or not. Don't forget that usually that is triple net too. Which means you still have to pay for: insurance on the space, CAM fees (common area maintenance), and utilities.
Bottom line is your rent is the only thing that will always be there no matter if you have a thousand customers a month or zero......
Good luck!

 

[TurdFerguson]

PremiumBilliards makes good points.

In addition, I would work out your base operating expense...rent, triple net, extras...and work that out in table hours...

For instance, if your nut is $2000, and you charge $5 /hr, then you need 400 table hours a week to fully cover it. With 20 tables...that is 20 table hours per week, per table.

Of course you will not only be selling pool, but this gives you a great baseline idea for thinking on a per day basis in relation to costs.

Obviously you must factor in debt financing on the tables and renos...

If it helps, in a small room with 5 tables in the Pacific Northwest, in a community of 8500 people, I got about 250 table hours a week during the 7-8 good months, for 4 years.

I worked hard to create new players though, using tournaments and customer service, and that was the key to my success.

I was very simple...pool..no booze...and decent concessions.

I have been around pool for many years, and generally I would say that the wannabe top players, and shortstops, are the single biggest factor to the downfall of rooms. Owners take what they say to heart, not realizing that 99% of these people have no experience in the pool business. Cater to the meat and potatoes players, not the top guys

I also consulted for a room with 10 tables, and booze, for about one year, in a city of 500,000. I did all the same things, and doubled the fellows business. I was onsite however.

Pay very close attention to the layout of the room. Make sure you have high stools or seats around the table areas. Pool is performance art for most people, however skilled they are.

Also, decide your game plan before you do the layout. I cant stress enough how the pool business will depend on the layout.

Always willing to give tips, if you are receptive.

 

[Bigjohn]

I'm no expert but I do have a 2 businesses in 2 states. I own my building in one state and in the other state I rent. In the state I rent, for the size of the space I have, 8000 square feet, I pay less rent than the taxes would be on a building of that size if I owned it.
I know it feels good to say "I own this place", but it is not always the right thing to do.
Whatever you do, keep the rent low. Now is the time you can haggle with property owners. Have a look at how many months the spaces have been empty. Months empty=lots of incentives to move in. Also make sure you put an escape clause in their so you are not left personally responsible for 5 years rent @ $8,000 a month when you are out of business. That could literally ruin your life.
Look at it on a per square foot price per year rate, not monthly. $8000 x 12 months= $96,000 divided by 10,000 square feet = PSF price of $9.60. That's pretty steep. You should be able to find out if that is the going rate or not. Don't forget that usually that is triple net too. Which means you still have to pay for: insurance on the space, CAM fees (common area maintenance), and utilities.
Bottom line is your rent is the only thing that will always be there no matter if you have a thousand customers a month or zero......
Good luck!

So is the owner eating the tax bill

 

[ridinda9]

So is the owner eating the tax bill

In this economy , it can happen just that way ~ say he's got a strip mall with 10 storefronts ~ if all 10 are occupied , it looks like healthy business , and he'll have a waiting list to get in . . .

If only 8 are occupied , it can be a "depressed location" , and a new business may be hesitant to locate there. . .

If he drops 6 occupied units , it's considered a "bad" location , and nobody wants to move there . . .

If it drops to 5 units or below , it's a "dead" location , and potential tenants shun it like the plague . . .

A landlord may offer great deals on his remaining space to protect his deal with the "anchor" store in his mall . Say he has a mall with a large supermarket franchise , a major drug chain , and 8 satellite stores . If the drug store or the supermarket close , it can be a death knell for the satellite stores , because that was the magnet that drew in the traffic .
Similarly , if all the satellite space is vacant , the supermarket chain may 're-evalute' the suitability of that location and decide to relocate.

For this reason , it is in the mall owners best interest to keep occupancy at or near 100% , even if every storefront doesn't pay it's exact percentage of the total operating expense , as long as he doesn't go into the red . . .
Perhaps the supermarket has 30% of the total sqare footage , but pays a rent equal to 50% of the landlord's total expenses , and the drug chain occupies another 30% of the square footage , and is likewise covering 50% of the total operating expenses .
The landlord now has 100% of his expenses covered , and still has 40% of his retail space available . This is known as the profit margin , or , in the vernacular "GRAVY" ! He HAS to keep those satellites full to keep the anchors happy ! They don't want to sit alone in an empty plaza . . .
One way many landlords have resorted to doing this in this economy is to donate the extra space to non-profits for use either as thrift stores or offices . It keeps the space occupied , the traffic moving , and provides a tax break at the end of the year .
Meanwhile , PAYING renters in the satellite stores may be receiving SCREAMIN' deals on their square footage , just so the lights are on in there ~ renting for less than the taxes would be.
This concludes today's real-estate class . . . .