How much would you pay for a fish & chip shop?

If I offered you the chance to buy a profitable fish & chip shop, how much would you pay?

I was musing on this today whilst writing some notes on “lifestyle” businesses for our new AQA AS Business Unit 1 Course Companion.

A quick look on www.businessesforsale.com shows that, at the time of search, there are 956 chippies available for sale. It is a fascinating list and the data contains a wealth of information that would be of use to business students.

I clicked on the first chippy listed, to discover an “attractive” investment opportunity in Putney.  Here are the highlights:

- Sales revenue: £80,000
- Net profit: £35,000
- The location is leased
- The fish and chip shop has been in business since 1920; it is a family business and is run by father and son
- Reason for sale? “my father worked in this shop for the past 3 years , so in January we bought the business to keep it in family , we just cant work together any more so we better sell” (which just goes to prove that there is a story behind every business!)
- Expansion potential:  “there is room for a kebab machine and if you know how to manage it will be a hit (lots of requests from customers) with small investment”

So what price for the business?  You could get your students to come up with a valuation, or identify the other information they would want to know before making an offer.

The “asking price” for the business is £60,000 (i.e. about 2 times profits).  Is this the norm for chippies?  Could the price be negotiated down?

Lots of rich business studies material in this…

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Michael Porter - Shared Value and the Limitations of CSR [15 Feb 2011]
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Q&A - Distinguish between price and cost [2 Jan 2011]
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Dominos Pizza - Growth & Strategy (Part 2) - Innovation, Service and Smart Operations [26 Nov 2010]
Dominos Pizza - Growth & Strategy (Part 1) - Driving Competitive Advantage [26 Nov 2010]
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Cash flow Clue-doh! The Mystery is Revealed… [2 Nov 2010]
Profits up at Amazon - but so are costs [22 Oct 2010]
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Insights from an Entrepreneur - Fraser Doherty (SuperJam) [10 Oct 2010]
Pricing Strategy - Mobile Data Networks [14 Sep 2010]
Lesson Worksheet - Adding Value [10 Aug 2010]
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