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CafeDelMar
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I need some advice. A friend of mine has planned to leave everything behind and buy a restaurant in Bangkok. I tried talking him out of it, but it's his life.
Anyway, I think he is being cheated. The restuarant has a profit of around 1,000,000 bhat annually. The current owners want about 5,000,000 bhat for the place.
Is that normal? I think it is a bit high. Anyone care to enlighten me as I have no clue, but I don't want him to start of badly either.
FYI, I have no interest in opening a restaurant, I don't care to live my life looking after bunch of employess for 14 hours a day. I'd rather teach English... oops, I mean French. With my accent, even the Thais would kick me out. 
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Bangkok Girls : Meet Attractive Thai Girls
Posted on: 11:29 am on June 10, 2004
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Smegma
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A P/E multiple of 5 is not high -ok generally. But how reliable are those figures. And what is the story behind them.
Your friend should do some due diligence. Have him sign a purchase agreement subject to due dilligence. And have him hire someone to do the dd for him. Though probably this will surprise the seller and may make him reluctant to it.
Another alternative is to have a variable sales price -with some claw-back clauses that make the final price paid subject to actual performance over a period of time -doesn't need to be too long.
Just a couple of quick ideas.
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Bangkok Women : Meet Sensual Bangkok Women
Posted on: 11:37 am on June 10, 2004
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CafeDelMar
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Great ideas Smegs. Thanks.
Ya, I know the P to E ratio is only a multiple of 5, but it's a restaurant... and these type of restaurants don't have growth rates similar to companies with PEs of 20 or 60 or 300 (Remember Ebay and Yahoo in the good ol' days?)
So if legit, it could be a good investment if he can actually run the damn place?
He speaks Thai (I can't comment on how well) and has a lot of friends in pseudo-high places (cops, lawyers, judges, doctors). But he has NO experience in running anything, much less a restaurant. :/
Anyway, I'll pass on the info to him about due-diligance.
Thanks, Smegma.
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Thai Girls : Meet Sexy Thai Girls
Posted on: 1:11 pm on June 10, 2004
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Manuel bkk
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Without experience in running a restaurant this is a doomed idea. Those HiSo friends will visit once and will return to the other well run restaurants they use to frequent. I still wonder why so many people think it is easy to manage a restaurant. Because they know the industry as 'guest'? My advise is to find another investment opportunity within a market where he has any experience.
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Bangkok Girls : Meet Sexy Bangkok Girls
Posted on: 1:16 pm on June 10, 2004
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Triyclops
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Sorry to put a damper on your friends idea, but if he has no background in running a restaurant or some such similar establishment it will mean that he will simply be held hostage by his staff, especially the Chef..
Tell him to think again. Better yet tell him to go into any small owner/manager type restaurant and ask to speak to the owner/manager. Ask his/her advice. They are doing it for real..
It is 7 days a week 12-15+ hours a day..
There is no such thing as a day off.
I wish him luck, but he should think it over first.
JMHO
TC
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Bangkok Girls : Meet Attractive Thai Girls
Posted on: 1:20 pm on June 10, 2004
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ringthebells
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how long is the lease, 3 years??
how much are the fixtures and shattles worth??
rtb
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Bangkok Women : Meet Beautiful Thai Girls
Posted on: 9:32 pm on June 10, 2004
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CafeDelMar
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I think a better investment would be to give me the money and see how fast I could spend it. 
Poor chap. But then again, I've seen miracles happen. Luckily he can afford to lose that amount and he tells me that he has been researching this for about 2 years. Who knows?!? A Frenchman succeeding in the restaurant business... yes, but in Thailand (I have my doubts.)
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Bangkok Girls : Meet Attractive Thai Girls
Posted on: 10:06 pm on June 10, 2004
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Abrak
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Restaurants generally change hands in Thailand for about 3-4x cash profit (pre-tax profit before depreciation).
Obviously there can be good reasons to justify a premium such as....
(1) Profit understated. Former owner paying himself large salary and expensing his car, boat, mia noi etc through the business.
(2) Substantial assets. Business owns the premises.
(3) There is some brand value. Say buying Baan Rim Pah in Phuket.
As RTB points out the terms of the lease are crucial in valuing the business.
I doubt there would be many people here who would recommend getting into the restaurant business in Thailand. It is unbelievably competitive - just think when was the last time you HAD to book a table to get into a restaurant?
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Thai Girls : Meet Active Thai Girls
Posted on: 10:22 pm on June 10, 2004
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ThaidUp
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Restaurants are the highest failure business even if you do know something and throw into a mix that it is in a foreign country that is not business friendly to foreigners, in a country that is not your native language or cultural and you my as well just call the place "The Last Supper"
Thai business logic here is non-existant. As RTB has noted most places have a 3 year lease because they do not want to file a longer period lease with the government. The lease may or may not have automatic renewal terms and/or lease increase factors. I would advise having a good lawyer examine both the lease and buy/sell agreement.
After the sale, what is to stop the previous owner from setting up shop again and pulling away key employees. Thai's are very loyal to their friends and former supervisors. I just took away a group of employees away from one company when I hired the senior guy and he pursuaded all his friends to jump ship with him.
If he can afford to lose the money than go ahead, can't say a few of us did not warn him.
Check out the thread from the owner opening the Subway on Suk. There is a guy who did it right and is successful. Then examine Pizza Hut who came here set-up shop and then later got screwed big time.
But it sounds like his mind is made up already. Well best of luck to him.
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Thai Women : Meet Matured Thai Women
Posted on: 10:49 pm on June 10, 2004
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Abrak
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Quote: from ThaidUp on 10:49 am on June 11, 2004
Then examine Pizza Hut who came here set-up shop and then later got screwed big time.
Interesting comment. What do you mean?
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Bangkok Girls : Meet Attractive Thai Girls
Posted on: 11:09 pm on June 10, 2004
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