Acquisitions Anonymous - #1 for business buying, selling and operating - A Neighborhood Coffee Shop: Good or Terrible? - Acquisitions Anonymous Episode 117

Episode Date: August 24, 2022

Michael Girdley (@Girdley) and Bill D’Alessandro (@BillDA) talk about a small neighborhood coffee shop in British Columbia, Canada. Could this be a rich man’s trap? We’ll be going deep into figuring out whether we got an outperforming deal or not. You won’t expect who we think should buy this deal. -----Thanks to our sponsors!* CloudBookkeeping offers adaptable solutions to businesses that want to focus on growth with a “client service first” approach. They offer a full suite of accounting services, including sophisticated reporting, QuickBooks software solutions, and full-service payroll options.-----Do you enjoy our content? Rate our show!Follow us on Twitter @acquanon Learnings about small business acquisitions and operations.-----Show Notes:(00:00) - Introduction(00:26) - Our sponsor is Cloudbookkeeping.com(02:02) - Deal financials: A Profitable and Delightful Coffee Shop(06:31) - Do we like it? What does Bill like?(08:00) - What is scary about this businesses(10:00) - Is this coffee shop worth the time investment? What is the value-trap concept?(13:00) - Is this coffee shop outperforming or underperforming in terms of EBITDA?(14:31) - Would you see an opportunity to optimize or rather leave it and look for a better deal?(17:13) - What does it mean when there’s a given yield on a particular location of a coffee shop?(19:13) - What to expect when Girdley is at your board meetings?(20:20) - Who are the potential buyers? What is the one thing they should negotiate on?(23:25) - Can you be a hands-off owner with a General Manager for $75,000 a year?(26:08) - Let’s hear a funny story about a cool scam!(27:29) - How can we protect ourselves from operation scams? Did you like this episode? Leave us your feedback in the comments!-----Additional episodes you might enjoy:#108 A fireworks store and a ski rental business for sale#106 A Pet Product and Saas business for sale - Which one do we like?#105 How to Make Money in the E-Commerce Game - Bill D’Alessandro gives an e-Commerce masterclass - Part 1#79 What do Investors want? - Dig into an investor’s mind with Bradford Hardin#Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Hey, Michael here. Welcome to another Acquisition Anonymous banger episode today. This is episode like 4,500 or so. Actually, I think it's like 117, but we had a great time doing it. Today's deal is one we had a ton of fun with. It is a small neighborhood coffee shop in British Columbia, Canada, and I think you'll be surprised who we think should actually buy it. So definitely stick around, listen to this. Me and Bill had a ton of fun, but first, a quick word from our sponsor. Hey, Michael here. Want to talk to you about today's sponsor for the episode, which is cloudbookkeeping.com. So cloud bookkeeping is actually run by my neighbor, Charlie.

So I've met him in person and can attest that he's a real human being and a good person. And what cloud bookkeeping does is offer a full suite of bookkeeping services all in the cloud for you around QuickBooks and other technologies that you're using as a small business owner. So if you're interested in getting the bookkeeping part of running a business off your plate and focusing on running your business, Charlie and his team are one to call. They can put together a bunch of other stuff in terms of helping you manage and grow your business besides just bookkeeping, sophisticated reporting, definitely helping you get your quickbooks online set up in the right way, and a number of things around payroll as well. So definitely know them and recommend them. If you want to find out more about cloud bookkeeping, you can go to their website at cloudbookkeeping.com,

reach out to Charlie. I know many of you have and see if he can help you make running your business easier and more fun by letting them help with a lot of the bookkeeping solutions. And when you call, mention this podcast. It would help us and help Charlie know that we're supporting him as well. So thanks a bunch.

and cloudbookkeeping.com as the sponsor for today's episode. Okay, good morning, everybody. Evidently, we need exactly what our first deal is going to be giving us because we just weren't sure who was hosting. So I'm hosting. So good morning, Bill. Evidently, Mills is still sick, so I hope he gets better. Yep, hope Mills survives.

Mills does not have COVID. He's got something else right after having COVID. So he's due to win the lottery or something. The things that I'm hearing of people getting is like random, some bounce back. My mom just had bounce back COVID. And then there's all these like weird post diseases. People get it's just, it's a bizarre time.

There's a lot of diseases out there. Don't catch one. That's my recommendation number one from the show. Cool. All right. So I am reading deal number one. Okay. So the name of this deal that we're going to review today is called profitable and

delightful coffee shop located in BC Canada. So British Columbia, Canada. And it's from dealbuilder.com, which is one of the, aggregation sites for small businesses for sale. So they have a coffee shop per sale. By the numbers, this looks like a pretty typical coffee shop, 479,000 a year in revenue, 127,000 in seller discretionary earnings, and 72,000 in EBDA. So that means these are all Canadian dollars. So I think we have to discount them by 25% to US dollars. But so that means US dollar wise take 25% off everything. But for the sake of this discussion, I think we can leave it

US dollars. So here's the description. They say this coffee shop is, coffee shops are not created equal. The formula is simple enough, serves tasty treats and light meals to go along with outstanding coffee. Yet so many try and so few succeed in getting that formula right. How do you know when it's right? It's right when your business keeps growing and growing month over month and year over year. As an aside, you know, we can tell when business brokers are kind of phoning it in and then we can tell when business brokers are like, let's go. Like I really want to put, I'm putting some emotion into this thing. And clearly this business broker's listing has done that. That's what it is with this wonderful coffee shop. The owners have put together formula that's doing what it should. It keeps people

coming back again and again. It keeps those people telling their friends. And then the new folks start that process all over again. I feel like this needs more emojis. This listing is so awesome. Quality coffee shops, I'm going to skip a little bit. Quality coffee shop opportunities like this, don't come around very often inquire today to make sure you do not miss out, Bill. So it was a established in 2013, one full-time employee, one part-time employee. It is a least property. They have an overview of the industry that talked about how coffee was a typical thing of everybody's daily routine. Then COVID came along, and it was kind of a mess. 71% of Canadian adults drink coffee on a daily basis, and the average Canadian coffee drinker

consumes an average of 2.7 cups of coffee per day from the latest data available. The industry has benefited from greater consumer spending on breakfast over most of the past five years. The breakfast segment has been a bright spot in an otherwise slow-growing food service sector among the period, and yada, yada, yada, and operators like this have added a greater variety of food items to their menu, such as breakfast sandwiches and fruit and gannola cups. Customer concentration, lots of locals and university services, and marketing has been heavily through word of mouth and reputation to bring people in, and they don't do much marketing at all. star rating on Google and Facebook with over 400 reviews. There is some growth potential they list

here, paid advertisement, I had event nights to attract a later crowd with a liquor license and so on. And it's conveniently located in a highly trafficked greater Victoria community. The cafe is watched as the neighborhood has grown from a new 500-unit living space across the street, new schools, countless other businesses while they have remained a staple within the area. It is one of the busiest parts of Greater Victoria, Victoria, just minutes from the beach. And 50% of the space is for seating areas, 50% for kitchen prep and washrooms, and you can fit 30 people in there. The facility is 1,326 square feet of lease space in a busy building.

They currently pay $37 per month on a 10-year term, which expires October 25, and there is no renewal in agreement in place at this time. So basically, that is something to worry about, because right now it is August 22. So that basically gives them a little over three years left on the lease here. Well, this is like one of the most complete Sims we've ever seen. I'm pretty impressed. This business broker is really good. You see actual financials here.

Very steady, Eddie, in terms of total revenue, averaging about $470,000 a year over the last four years. Cogs is about $170,000 per year over the last three years. Gross profit, very steady, kind of in that $320-ish. and then net income somewhere in the $50,000 to $70,000 per range. And then apparently with this level of STE, the seller is working in the business. Is that the way you read this, Bill? Yeah, I read it as the seller's working in the business and says that he can be replaced by a $50,000 to $60,000 year employee based on the spread between SD and EBITDA.

That sounds right. That sounds right. They are asking two times SDE. So if STE is about 125, they're asking $250,000. I didn't see an actual listing price. Oh, $25,000 up here at the top. They want $250,000 for this business. And I assume this comes with equipment and kind of all this stuff.

It's a turnkey sale. So maybe we can assume that. But I don't know if they really talked about that. Okay. This broker goes from A plus to A or maybe A minus for missing that. So what do you think? This is a traditional walk-in coffee shop in British Columbia, middle of nowhere. Bill, do you have your checkbook out or do you have both checkbooks out?

Which, what's going on here? I have no checkbooks out because this is a trap. This is a trap. This is a trap. So this, like on the surface, right, this is almost as good as it could get, I think, for a coffee shop. The short-term lease definitely scares me, right? With three years left, like that rent is going up for sure, especially.

if the location is as good as this broker makes it sound like. But this violates my number one rule of investing in business, especially in small business, which is that restaurants and anything related to restaurants are a rich man's trap. All kinds of rich people think you want to own a restaurant. You think you want to own a bar. You think you want to own a coffee shop because you imagine how cool it would be to walk in and everyone kind of welcomes you into your own coffee shop.

And you know, you get the best table and it's all great. except the problem is, especially with this one, you don't want to own the place. You just want to be the best customer. Just go in there, tip well. It's the same as owning the place. Because the problem with this is this business makes, you know, SDE of $100,000 a year, is, right? And the amount of headache that this is going to create for you is terrible. Your manager is going to quit.

And before you know it, you are pulling espresso shots. I mean, all kinds of stuff goes on. Like this business is not even close to big enough and has so many moving parts. There is just this this ruins your life in a million different ways you don't even see coming. You know, it's fine on any individual day, but on the average day it's fine. But there are like, you know, five to eight times a year where it's a complete disaster. Yeah. And those days, those days always happen like at the worst moment.

like you're on your way to your kid's soccer game and over the weekend you promised your son you were going to be there and nothing would stop you and you're definitely coming and invariably you know your your lead barista gets COVID slash doesn't feel like coming in that day slash has to forgot to tell you they're going on vacation there's a fire in the kitchen or a fire in the bathroom or somebody's doing drugs in your bathroom invariably that always happens personally at the wrong moment it doesn't happen on Tuesday afternoon when you're just kind of like well, you know, nice day. Just making it happen.

That's when those nightmares always happen. And to some extent, that's why, like, you know, I'm in the coffee business too. To some extent why there's like a lot of really bad things have to happen before like I'm pouring coffees. Like so there's like, there's like four people have to get hit by a bus before I'm in their port of coffee. And we're moving to almost five soon, which I think is really good. That's good.

You want as many people between you and delivering the service as possible. Yeah. It's just not big enough, right? Like if this thing we're making a million dollars a year, I would let it interrupt me, you know, sometimes, right? But it's just not big enough to be worth the potential explosion, right? Because business makes a million dollars a year or $100,000 a year. Your lead barista quits, you're still pouring shots.

Like, either way, it really ruins your day. So it's not big enough. But Bill, it's so cheap. It's two-time seller earning. I will earn all my money back. in two years. How can that go wrong? How many things will happen over those two years? How many heart attacks will you have? No way, man. Not worth it. One concept I've started to work in with a lot of people I work with now is the concept of the value trap, which is something I think I always understood,

but is something that I've heard kind of talked about really well by the stock guys. I'm sure you know this term bill, but for the people that, for the people that the audience maybe aren't familiar with it, idea that a lot of times the trap is just because something cheap doesn't make it good. Oftentimes, it's a sign that is potentially bad. And this is consistent with being a total value trap where you're like, well, you know, I get all my money back in two years. But man, like, what a deal. What a deal. So you get all your money back in two years. Then you make one year of profit and then your lease expires. Right. So, well, I mean, like, that's how this thing goes, right? You sign up. You've got like one year of kind of total hell while you learn it, right? And you build relationships with all the employees. You figure out

what X going on. You're probably pouring shots just anyway, right, to get your arms around the business. Then by year two, you know, hopefully you got a good manager in place. Everything's fine. You still live year two with, you know, the five to eight blowups or so. But everything's mostly on track. Okay, I got all my money back. You know, maybe I paid down my loan. Year three, also, okay, I've made $100,000. Boom, landlord says, you're out. Or your rent is triple. or whatever. Yeah. So I think one of the things I do want to point out about this,

and it points out something really important when you're going to look at a new business is going to find like relative comparables of how well something like this should be performed. And I will tell you that as I look at this, this coffee shop is underperforming. So they have caught, I did the math. They have cogs here that's 178,000 on 479,000 in revenue in 2021. That puts them just shy of 409,000. percent cost of goods sold. That's extremely high. That should be probably 28 to 32. So they're losing another 5 to 10 percent of margin there. And then when you look at this secondarily, you kind of look at

how that ties into what the EBITA is on this business. 73,000 on 480, like for a typical coffee shop, they should be outperforming that number. So this is an underperforming coffee shop, which leads me to believe that some of that word-of-mouth stuff that they talked about is because they're not pricing their stuff appropriately. I would be curious what happens when you start to run this with actual correct coffee shop margins as opposed to what looks like a, hey, we're going to be everybody's kumbaya buddy and charge all these college students 20% less than market. Yeah, of course you have word of mouth, right?

You're giving the product away. You're basically working on behalf of the customers or not the owners anymore. So anyway, that's one of the things where it's like, okay, it's so important when you're going to look at a new industry like this, go do some expert calls, go look if it's something more common like this, go look at some of the example P&Ls from well-run versions of what you're doing, whether it's a property management shop or a coffee shop, like how do you go find that kind of baseline and then see how you're performing compared to the benchmarks. So anyway, I have more rants about that benchmark stuff. But then that also tells you when the,

when the broker gives you this thing that wildly outperforms market norms and you're just a commodity business, then you know that's a bullshit projection and you're never going to hit it. Because invariably, you might slightly outperform the market norms, but you're never going to beat them by two or three X, which is what a lot of brokers tell you're going to do just because they're brokers. And that's how they operate. I love that. So looking at, so how do you think about that? Because on one hand, you said, okay, the flow through of this business is not optimized. So there's probably an opportunity to raise price and probably improve EBITDA, right? But on the other hand, if you do that, you risk potentially severely impacting your demand.

Totally. Right? You know, as you said, like the business model may not sustain it. So when you see a business at P&L like this that is clearly not optimized, it feels like some investors would say, great, opportunity to optimize, right, by raising price or by taking out cost out of the value chain or whatever, whereas some just say, eh, broken business. I'll just find a better one.

Which are you? Something here. Well, I think I think to understand that you really have to double click to understand the fundamentals of business, right, in a particular business. So like in your business, for example, like D2C stuff around pets or, you know, lotions and potions and stuff, there are value drivers in that business, right? And you have to understand in a situation like this, what is the number one, two, and three kind of value driver of how you're able to kind of create value in the business? And actually, it turns out the number one value driver in retail is where you're located. That's what matters.

Like, yeah, it's like location. and then location and then still location and then the stuff after that, right? And that's why, you know, that's why you see like here in San Antonio Waterburger or, you know, Starbucks, right? Like, if they can, they'll pay up for a better location because they realize, you know, even though it might cost them 50% more to have a better location, they'll double their revenue or double their profits by being there because their cost fixed, right?

So my suspicion is with this one is based on who your customer is, that's, you know, that's who's around your location, right, and who's convenient to you. They say they have a bunch of college students and they're in rural BC. My suspicion is there is no real ability here to raise prices. I think the business starts to crater because they seem to target the people who don't want to pay up for Tim Hortons or a fancy coffee shop out in the suburbs and they get these people who are willing to pay up only if they get a discount. So, you know, I think you're stuck here with this business because you double click on the location and this is clearly a location that only

supports kind of this price level. Now, could you, could you double click on it and understand that maybe this owner is just somebody that is just being really nice and they're in there talking to customers all the time and they want to give them a good deal and they're doing this because their buddies? Yeah, but like that's something, is it worth it to you to go really figure out if that's what's going on here? I don't know. If this was 12 of these or 15 of these in a chain and I thought maybe the owner was just being a good guy for everybody, there could be a real opportunity there, but one of them is tough. Makes me think it's more about the location.

So on that point of location, it's kind of interesting. So, you know, just imagine it's on a corner down by the beach or something, right? It sort of implies that, you know, there's a given piece of real estate, like you put a coffee shop in it, assuming the owner is not completely incompetent. There's kind of like a given yield on that location if location is a coffee shop, right? Which means that you as an owner, assuming that the previous owner wasn't totally bungling it and you don't totally bungle it, you're probably going to earn returns that are roughly in line with the yield of coffee shop in this spot. Right. And you can't really grow it beyond that because,

you know, more people aren't going to, assuming you don't like achieve cult status and people come from far away for your coffee, right, which doesn't usually happen. You know, you're only going to grow this business so big, there's a cap on it based on the location. You know, maybe there's a floor on it and a ceiling on it. Like, it just performs in band is what I'm getting at. So for this business, That's what bums me out about it, right? It's 100K and SD right now. Maybe you can optimize it to 120, but it's never going to be bigger than that unless you're opening new locations.

And if you're opening new locations, why do I really need this one? Yeah. Well, that's the, you know, that's the unfortunate kind of tragedy of retail, right? As your cap-ex, you require massive cap-ex to grow always, right? And I think that's why you look at a great example is go look at how much like the Salesforce founders like Mark Beniof, own of Salesforce still, and then go look at how much Howard Schultz, who in arguably is the greatest most successful coffee entrepreneur in history, in modern history, at least.

And he owns like several single digits of Starbucks. Like, it's just a radical difference in terms of how much CAPEX is required to grow these businesses. And, you know, it's also why people get into franchising. Because then you offload the CAPX onto people getting SBA loans. But, you know, this is one where it's like. like, yeah, exactly right. You're never, are you ever going to turn this in?

You have no optionality. We're going to turn this into a $900,000 your coffee machine, unless you decide to start selling drugs behind the counter, which is totally, you know, totally you do you. But why do you need a coffee shop to do that? You can do it on the street corner. Unless maybe it's a coffee shop in big air quotes in the Amsterdam style. A funny joke that I usually do about the third board meeting of any company,

especially when it's new people, is like the CFO will show up with like the, with like the finances and then like start bringing out the bank accounts and the audits and all the stuff and I'll be like oh point of order I thought we were a drug front is this what's going on here I thought I thought this was just a heroin operation anyway some some board members I'm confused I thought there would be more cocaine involved here what's going on this is a software company anyway some board members find that funny a few are a little confused but it's usually a good joke I pull out the old gridly repertoire about the third board meeting So now you know what to expect when you invite Gurdley to your board.

Yeah, I mean, have a good time. It's all business. It's all business. But yeah. So I think the other thing to think about here is who could potentially be a buyer for this? Clearly, you know, Mike Gurdley, Bill D, who are trying to maximize, you know, return on time and return on hassle. This is the wrong business for us. But I would like to pitch for you a scenario in which there's somebody for whom this is the right

thing. And I think this is a perfect retiree looking for something to do and wants to get integrated and be a part of the community type business. You know you're going to get your money back. You don't need to get 40% IRA. You're excited to get up at 4 a.m. every day because it gives you something to do. You get to talk to everybody in your community. You get to be a hub. You get to be around all these young people. You're slinging coffee and making people happy, brightening their day. I think this is an opportunity for something like that, for somebody who isn't necessarily motivated by return and has a lot of extra time. So anyway, I think it's out there. If they did do that, I would highly recommend as a contingent upon the sale, there needs to be a renewal negotiated

on this lease because the worst thing that's going to happen, and I guarantee it'll happen, is the landlord is running to you at $3,700 a month right now, and they'll say, oh, you know what? Cost went up, five grand a month, and suddenly your business just lost most of its monthly profit, and it is captured by a landlord in that situation. So that's the caveat I would put on that pitch that this is a good retiree thing. Bill, tell me I'm wrong. Yep. No, you're not wrong. I like that a lot. I mean, this is the type of thing where the returns to this one are not entirely economic, right? I mean, if, but I even, but the non-economic returns as a remote operator, I cannot reap, right? Neither can you. But if you are willing to

live in the town and it's a nice town where you want to live and that's where you're retired anyway, you can reap substantial non-economic profit from this thing. And I would agree with you that rents going up. And the way you know that rent's going up is that it's a current, they tell you in the listing, it's a 10 year lease. So it is way below market. Definitely going on it is at 10 years ago market. So they're, it's definitely going up for sure. And the other, the other ideal buyer, I would say for this is the guy that owns the surf shop next door. Right. If you're already there every day and you can share employees, you know, you, you just kind of bolted on to your operation. You can negotiate a renewal of both leases at the same time, and you just kind of expand your local business that's on

the same block, you know, add a turnkey coffee shop. That could be cool. There you go. Let's see. Anything else about this? The normalizations, so I guess we think these normalizations are all just the ad back of what the owner has taken themselves from the deal, paying themselves 58,000. Yeah, we don't have detail, but we got to assume that, you know, that's just replaced me with a manager, is probably what that is. That's not. Which incidentally is in a lot of these things, and they always underpriced the manager. You, the owner, are doing a way better job, like running the whole thing than the $50,000 or $60,000 a year title-inflated general manager. You're going to put in that space.

If you want to be hands off, that GM slash player coach, you're looking in the U.S., probably 70 to 75 to U.S. dollars to make that work. At least salary is low in San Antonio. I live in San Antonio, yeah. It's just, we're just the northernmost city in Mexico. It's basically the way this works. Was that in pesos? No, no, it's US dollars. Look, I have market data.

I have market data. This is real. All right. Actually, I believe you on this. Yeah, I mean, to something, it also depends on what kind of person you want to get and how much you're willing to get your hands dirty as the owner. But if you want to be a hands-off GM or a hands-off, owner with a GM.

It's at least, you know, it's kind of in that range, kind of in that range, for sure. You want the guy that actually will stand between you and pouring espresso shots. It's more expensive than that. I mean, I think for 75, you can get somebody that can get really good at serving the drinks, knows all the recipes. Maybe you can do a basic level of translating recipes into a set of standard operating procedures. they can build an employee handbook, they can recruit teams, they can do schedule, they can run payroll. They will probably have trouble with some of the bookkeeping and higher level function,

and you will need to come in and help with kind of strategy and optimizations once in a while. Like, you know, how do we time, you know, throughput, right? Or how do we optimize this particular expense, like milk, right? And something like this, you'd be surprised you think coffee will be like, by and large your biggest expense, milk tends to be very close to it. Like, you go through a lot of milk in these situations, which is fascinating to me in the coffee business. But yeah, I think for 75 you're getting that, but you're still doing some work, like as an absentee owner. Like, you're probably running QuickBooks yourself and,

hey, why does the, why does the bank account not jive with the cash that showed up in the bank? You're going to be dealing with that kind of stuff for that type of job. And then you figure out, oh, crap, the barista is skimming, and you just ruin your vacation, right? Because you have to fire the brista and now you're poor shots. Yeah, definitely, definitely true. Yeah, I mean, that's the other part of this. Like, there's very little to stop a good guy barista from robbing you. You know, and you got to, so you got to have cameras and then you got to take your

own time to watch the cameras and you got to do traffic count and then compare that. I mean, that's your GM can probably do that. But it's still you're going to be doing some work. You're going to be earning your money here. Less and less. I mean, you see like all these places that are like, no cash, we don't do it. And that's a big reason. You can't, if you're swiping a credit card, it's hard to skim off the top.

So funny story for you. I watched the coolest scam. And actually, Mirko, who is our editor and is listening in and producing this, is an Argentinian. And it was actually done by a bunch of Argentinians. So it was a bunch of Argentinians working at the Park City ski resort last year. And they were not happy to be there. They were just not happy.

like Park City, Park City, Vail Corporation was clearly shitting on them. And so the scam they were running was literally, if you walked up and you tried to pay with cash, Vail Corporation had said, we're not taking cash. We're going cashless in this situation. And so what the Argentinians would do would say, oh, that's fine. Just put the money in the tip jar. Put your cash in the tip jar. And then they would just wave you through.

Oh, all right. Yeah. You got to be careful. You got to be careful about those Argentinians, Mirko. Wait, is this whole podcast a scam? It's a drug. Have I? Michael, have you actually seen any of that sponsorship money?

I actually haven't seen it in an account this month. It's a drug front, actually. Yeah, we're part of the Colombian connection. So that was interesting to me, Bill. So what would you do in that situation? Like, do you? In the ski resort situation? Yeah, like, you're a skier, and I saw it happen.

I was like, what do I do here? I mean, that's, there's like a whole branch of like, you know, operations and accounting they called separation of duties, right? Like, the guy taking the money cannot be the guy checking the tickets, right? Like, there's got to be like, you know, it prints through this barcode and you need the barcode to go through. And if it gets overridden, you got to track the number of overrides. Oh, geez.

What a nightmare. Yeah. So they were, they, the system they had at Vail or at Park City, was totally susceptible to this. So they had Argentinians behind the counter handing out food, totally no counting, no tickets, no ordering done there. So they hand you the food, cafeteria style, then you walk up and then you check out and you pay. So there is no accounting beyond, you know, food wastage or whatever. There was no accounting from when that food got handed out behind the counter to me walking out the front door. So management had no idea.

and had set up a system where they would have no idea. Yeah. So you're saying Michael looks like a patsy, is what you're saying? So wait. Okay. So just so the listeners, you know, this clearly means that these Argentinians thought I looked like somebody who would go along with a scam. That's it?

I mean, yeah. I mean, you might as well be touching your face right now. I mean, they're wearing a hat. You can't try to have a hat. Oh, man. On that note, yeah, this is a tough, a tough one. But I think Goodwin to explore and also totally explains why it's two times SDE. Just it is what it is because you got to find a very unique buyer that wants to do this.

A lot of times, and I think it comes back to your point, a lot of times deals like this get 95% seller financed with earnouts. I would be willing to bet that's where this goes. And it's either that or the owner just runs it into the ground and then, you know, goes and sells their equipment on a use basis and maybe get some of their money back. You know, downside of this type model. Now, the other thing we haven't even talked about that sucks about this model is your customers come in, spend two or three bucks, use your Wi-Fi all day, and occupy your real estate and filthy your bathroom.

So that is the one thing that I, the one corner as you and I were talking about, that I like the quick service drive-through aspect, the Chick-fil-A, Dutch Brothers, Red Runner Coffee, our business model because at least I know that I'm going to have 350 square feet to work with or 500 square feet to work with and ain't no money going to pop in their butt down using my Wi-Fi all day for $2. Not going to happen. Yep. Well, not only that. I mean, you can see almost every fast food chain operator has figured this out because during COVID they all had to shut their dining rooms. Yeah. For COVID reasons and it was drive-through only. What percentage of dining rooms has reopened? Like they're all still closed, right? Like the whole world is back open post-COVID.

and all the quick service dining rooms are still closed. When it's made our thesis for our business, we're at three locations going on six, it's made our thesis very difficult because we didn't anticipate that we anticipated the coffee thing to happen, which drive-thru only, like those people have come in and kind of what I expected, but we didn't expect like Wendy's, Chick-fil-A, Starbucks,

everybody to go to drive-thru-only, small-format-type stores. And so the price on those has gone from, discount to a premium, at least here around San Antonio. So it's made our real estate acquisition stuff an interesting and fun challenge, to say the least. I guess all the Red Runners are going to be in fireworks store parking lots. Man, that's hard too. That's hard too for other reasons, but not good topic for the episode. All right, well, good. If you are a retiree, small business aspirant looking for a job where you get to wake up at 4 a.m. every day, 360 days a year,

and you want to own a coffee shop in BC next to a university, we've got a deal for you. Otherwise, it's time to just look for the next one. So I hope you guys enjoy this one. Thanks for listening.