Coffee Cart Turnover £220k For Sale

I have always been a sucker for street food. I mean who doesn’t love it.

Often a small, efficient menu making just a few products the very best they can be.

But do they make good businesses? Or are they a slog with low margins?

I spent considerable time investigating coffee trucks / converted containers in Edinburgh, Scotland.

And my findings even surprised myself.

High Turnover

I started at a warehouse looking at different conversions already made, and what was being produced. A family run business that specialised in making kiosks.

As I spoke with the owner, he told me a hundred stories about his work, kiosks he ran himself and that of those he had built, rented or sold.

The particular unit I was interested was run by himself, however as he approached retirement age, he was stepping back from the kiosk itself and managing the manufacturing side.

Anyway, long story short, the little gold mine was turning over £220k per year (on the books at least).

All they sold was coffee and cakes. Talk about efficient.

Due Diligence

Typical coffee trucks in the UK operate with around a margin of between 60-70% gross profit. The bottom line will come down to whether the owner wants to make the coffees, or take a step back and pay labour.

Looking at £220k turnover on 60% for safety leaves a great business (gross 132k), especially for owners to work in.

So now, it comes to price and finance options.

To buy something and launch from scratch is of course the cheapest option with nicely refurbed vans costing anywhere from £20k - £50k. A complete unit ready to go.

Next you need permission. In the UK, you need a street traders licence (time consuming bureaucracy), following that you will need permission for a pitch from local authorities.

I did take the time to investigate this, and found it to be a million hurdles to jump through with permission needed from several departments.

Which brings me back to acquisitions.

The original coffee truck which already has permission at a high traffic site, is available to buy as a complete business for £45k.

In my opinion a very fair offer.

Which works out at 0.2x revenue. (roughly) but very attractive.

With valuations on a small, portable efficient business like this, it begs the question why bother starting one from scratch.

Structuring a deal

It is not necessary to put down £45k. First you talk with the owner.

In this case, I stumbled across this trailer and pitch by accident, as the owner told me he was retiring.

Which opens up the conversation of seller financing. With this business, it didn’t get that far, but here is how I would go about it.

Just ask nicely. Make your case.

If he agrees, then perfect.

This is a great little example of how you can walk into a lucrative business without needing to re invent the wheel or launch a new business from scratch.

Not all debt is bad if used correctly.

As for this coffee truck, I haven’t moved forward with it yet as we are relocating out of the UK (another story), however it is a little gold mine waiting for someone to takeover.

Conclusion

These types of deals are everywhere, in every sector.

The more I search, the more I find. So many great lucrative businesses, some local boring services, some online businesses, but all providing an opportunity to chase your dream and quit your 9-5.

With creative finance options, you can find ways to fund acquisitions that does not scream “Wall Street only”.

Some of these options might require personal credit approval, some might not, its not a set in stone format.

Anyway, hopefully this has opened your mind to what is out there.

Until next week.

Note: as this newsletter grows, I will be running referral prizes and awesome giveaways to boost our following. Be sure to stay tuned.

Aaron

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