Home – New Forums Money matters Help! Business going downhill, solutions?

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  • #974118
    class64
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    Hi everyone,

    My name is Ronald, I own a Charcoal Chicken shop in the outer eastern suburbs of Victoria. It is located in an outdoor shopping centre which incorporates Safeway, caltex and various other family owned businesses (pizza, fruit market, chemist, tattslotto and bakery) aswell as a large carpark.

    Our shop has been established for around 6 or 7 years. I am the third owner of the business, currently approaching my 2nd year, previous owner 4 years and the owner before around a year.

    I bought this business back in first half of 2009. Back then, business was quite profitable, as time passed, the revenue generated has been on the continuous path of declination.
    We have tried absolutely everything to improve the business, whether it be advertising, specials, promotions, rewards program, signage, etc. Nothing has made any sort of considerable improvement.
    I have no idea what to do…It could be the area, the economy, the trends, anything, its easy to put a reason to anything, but there must be a key to be unlocked somewhere.

    As of today, I just cannot afford to pay the annually increasing price of rental due to the low taking. I am trying to sell the business… however the factor that turns potential buyers off is the monthly rental. For the amount of profit generated compared to the price of rental, potential buyers find similar businesses with better statistics.

    I have tried to persuade the landlord to adjust the price of rental according to market trends and the economy, however he just doesnt seem to understand…
    He has even requested extra penalty payments due to inability to pay the rental on time in full.
    My observation of this landlord is of lacking in fulfilling his duty as a shopping centre owner, this is because he does not assist business owners in the centre to improve business, does not provide realization of the centre, “cleaning” up of the centre… as in removal of undesirable characters involved in criminal activity, aswell as improving the overall environment as a customer.

    If I cannot improve the business taking, how can I sell the business? I am already selling the business at a loss but it seems to be very hard to sell a business at this stage of the economy. Im in a very deep hole at the moment and its just up to the point where I have signed up on here to seek help.

    If anyone is genuinely good hearted and is willing to provide some tips or advice. Please send me a PM and it would be my pleasure to give you fine details regarding my situation or we can even meet up for a discussion if thats the case.

    Regards, Ronald

    #1066138
    Anonymous
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    Hi Ronald,
    Sorry to hear that you’re having such a tough time. I hope you receive lots of helpful advice here, and am sending you lots of luck.

    Jayne

    #1066139
    AgentMail
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    Hi Ronald,

    Sounds like unfortunately a bad landlord is stunting your growth. How much flexibility is there in the lease? Just wondering, can you negotiate a % profit lease arrangement. I know in good times these can be more expensive, but if the landlord believes in the site, there should be some consideration to this option.

    Have you looked at costs across the business, can you negotiate with your suppliers etc.?

    Is there anyway you can expand your product offering? I must admit, I don’t fully understand what a charcoal chicken shop is, I assume takeaway chickens etc. but can you offer other products, that are perhaps aligned with this. Whenever we get a cooked chook, we usually get a ready made pasta and a pull apart bread – can you offer these sorts of things as well.

    I think to focus on the landlord/lease etc. too much, might be detracting from the bigger issue of increasing walk in trade.

    I know you mentioned you have tried loyalty cards etc. but have you recorded the results.

    If a cash injection is what is needed, perhaps a daily deal site might be an option for you. I have seen cafe’s promote offers like chicken, chips and a can for $3.95 (just an example), and with the daily deal site selling a few hundred of these, if you make the offer limited to lunch time or something similar, at least you are filling your shop with new customers, and hopefully filling a time that is not as busy.

    Chin up, don’t give up, but starting thinking outside of the box.

    #1066140
    Boa
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    Hi Ronald

    Whatever you do don’t give up as there are a lot of people who want to see you succeed.

    There is a place named Business Angels that may be able to help you over the hurdle you are up against.

    As it was suggested it may be that you can negotiate with the landlord some sort of deal but remember he has the upper hand at the moment so be very careful about what you sign.

    Lunchtime specials are always a draw card particularly if you have an industrial area nearby – the word spreads very fast. You could also look at catering for small businesses, put out a few flyers.

    I hope this helps and I wish you all the very best with the business.

    Kind regards

    #1066141
    themot
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    AgentMail, post: 82136 wrote:
    Hi Ronald,

    Sounds like unfortunately a bad landlord is stunting your growth.

    Why is everyone so quick to slam the landlord? Has anyone seen the interest your paying on a commercial loan at the moment. The landlord just like the chicken shop owner is running a business and is entitled to make a profit. Last time I checked people bought investment properties to make money from them, it’s not a charity.

    #1066142
    Marc D
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    Hi,
    A couple of points to chew on: (and i agree the with comment regarding the landlord being in business too. surely you have a lease with fixed increases so it should be no surprise?)

    When was the last time you put your prices up?

    Do you ever walk into comparable and competitor stores and see what they are charging?

    How tightly do you monitor the accounts, do you have cashflow forecasts? If you are physically servicing less customers, have you reduced staff hours to match? Is there spoilage that can be controlled? Costs that can be cut? Staff that can be better managed? Relocation to another shop or location? Edit: Rereading your post maybe the demographics of the neighbourhood has changed to the point where maybe this is an option? Have you adjusted to changing trends in customer wants or is the menu the same as two years ago.

    I did a quick Google on charcoal chicken and it came back as a healthy food option. Do you or can you push this angle in your advertising?

    Sorry, these were just random thoughts in no particular order. Hope something helps. My only bit of advice would be to remember you are running a business not just selling chicken..sometimes that notion gets lost in the day to day battles

    Good luck with it

    Regards

    Marc

    #1066143
    altima
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    It’s very hard to give a specific advice w/out having the whole details about your business.
    Fundamentally if your profit is declining you have only next ways to improve the situation:
    – increase your margin (cut costs or increase prices)
    – increase your revenue
    Seems that you have a problem with both revenue and margin (due to increasing cost of rent).
    As a rule cost cutting can be done faster, but there is a risk to do it at the expense of your service quality and put your business to the downward circle.

    As I understood your revenue is declining. Have you tried to analyse what was the reason of that? Do you have a data about the number of people visiting your shopping mall? Is it also declining?

    Did you analyse the competition in your area? Maybe many new shops was open that drives some customers out?

    One of popular framework for business analysis is Porter’s 5C

    There are a lot of stuff and possible reasons, probably you should try to seek a professional advice. I have heard that there is a possibility to get a free one via http://www.business.vic.gov.au since you have a luck of finances.

    Good luck!

    #1066144
    Crash Lander
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    Just thinking out loud here.
    Everything is being blamed except for the product.
    Have you done a local survey to find out why people are not coming to your store? What do people think about the taste and quality of the food? I know Gordon Ramsey is a tosser (lol), but if you watch his shows where he visits failing restaraunts, the first thing he does is canvas the streets to find out why people don’t go there. It could be the staff is rude, or the food tastes bad or bland or boring, or the prices are too high etc.
    If the food is good, and the prices are right, and it’s the type of food that people want in the area, then really, there isn’t much reason why people wouldn’t go there.
    Has your product or quality of that product changed at all in the time since you were last profitable and now? Honestly?
    Is your store still keeping the highest standards of hygeine and cleanliness?
    Just throwing some other possibilities into the pot for discussion.

    #1066145
    Property Idiot
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    hi ronald,

    I may be able to offer a little assistance, I too am in the eastern side of melb,

    would you mind posting or private message (up to you)

    your takings, rent, outgoings, Gross Profit, wages etc etc.

    or whatever you feel comfortable with providing

    #1066146
    fav
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    Hi Ronald,

    I’m in the same situation. I own a ladies boutique. I tried more advertising etc, but came to the conclusion that the bad economy is the reason I don’t have enough customers. I use to get at least 80 people through the shop on a Saturday. Now we count maybe 30. Everyone tightened their belts since January this year. I tried to hang on, hoping things might change, but it hasn’t. I am looking at my options to get out of my lease.

    Sorry I don’t have advice for you, but you are not alone.
    All the best to you,
    fav

    #1066147
    steve201
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    Hi Ronald,

    I have read your predicament with great interest because we have a bookkeeping and consulting client in Keysborough , in Melbourne’s south east whom was in a similar predicament to what you have described 4 months ago.

    Due to our quick acting, he is now up ten percent for the last quarter, and is planning a Facebook page because most of his customers are now on Facebook.

    This person was also on the verge of selling his business because it was becoming too hard. He now goes to work with a big beaming smile each day and his food shop is probably one of the busiest in the local area for such a small shop. All this has happened in the space of the last 3 months.

    I am happy to work through a few potential systemic solutions with you that we did for this particular client.

    Do you know here all of your costs are? You mention sales takings are down?

    Is there a cash budget? Payroll issues? Insurance? IT issues?

    You also mention that rent is too high – is it possible that your takings are down due to advertising in the wrong manner? You mention people dont respond to vouchers and specials. Are they accessible on Facebook and Twitter? What about the new Google Plus?

    Give me a call or send me an email and let’s have a chat about it.

    Please goto our website at http://www.thomasservices.com.au .

    Steven Thomas CPA.

    #1066148
    StellarScott
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    Hi Ronald

    Just a couple more ideas to ponder

    – Do some market research, what do your customers like and not like about your store, what are succesful chicken shops providing that you arent; are the other small traders in the complex suffering too;
    – You have a captive market with the safeway, how are you capturing this market … give them a reason to visit your store
    – Is the rent increase cpi or market … Is the rent realistic to the market, may have some negotiation power if not

    Good luck

    #1066149
    akagrp
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    Hello Ronald

    Yes valid points raised in particular by Crash, what I recommend is the following

    1. Stop blaming the Center and the landlord for the situation, this just manifest in more negative thinking creating a Doom Mindset

    2. Look at your offerings, what is on the menu can the menu be improved, one thing I have noticed in Sydney with successful Chicken Outlets is that they seem to have aligned themselves with a Well Liked Brand of Chicken Producers, eg LilyDale

    3. Create packages if not already doing so, try to keep at around $9.95 for a meal

    4. Add a coffee bar if not already serving coffee, let coffee help with cashflow

    5. Look at surrounding business and see if you can provide them for staff lunches, catering (always have salads in your menu to compliment the meal)

    6. Reduce your costs, I have a number of clients in food sector and we have found that sometimes it is cheaper to go to Big W etc to purchase the can of drinks rather then direct suppliers

    7. Set down with landlord and tell him your happy to pay the rent but in return he needs to take action re upkeep of center (get together with other tenants and devise a plan if this is affecting trade to center) All suburban centers have the unwanted element cannot really be avoid.

    8. Do you have outdoor setting? Make your shop attractive

    Post some pics of shop and shop Front we can then provide more options, if you have hand written signs around shop remove

    Goodluck with it the food industry is hard but speak/ask the questions to your current customers what the like/dislike

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