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This is a Glendale, California food business combining three revenue lines under one roof: a grocery market, a catering operation, and a sit-down cafe. Established in 2015, it operates from a 4,500 square foot leased space on a high-traffic street with parking, and generates roughly $3.1M in annual revenue against $1M in reported seller cash flow. That implies a ~32% owner-earnings margin, which is unusually rich for food retail and warrants close scrutiny.
The three-part model spreads risk across grocery walk-in traffic, repeat catering clients, and cafe daypart sales. The catering component is the profit driver per the seller, built on relationships with local repeat clients, while the market provides steady daily foot traffic and the cafe captures coffee and lunch spend. The business runs with 18 employees (8 full-time, 10 part-time) who are expected to stay on, meaning the operation is staff-run rather than dependent entirely on the owner day to day.
The seller is retiring and offering negotiable seller financing plus transition support. Rent is described as remarkably low at $17,500 per month for a prime location, and the asking price of $3.3M includes $350k of inventory and $1M of FF&E. Net of those tangible assets, the buyer is paying roughly $1.95M for goodwill and cash flow, a ~2x multiple on SDE after backing out hard assets.
Why we like it
- The reported economics are strong on paper: $1M cash flow on $3.1M revenue is a ~32% margin, far above typical grocery or cafe comps where 5-15% is normal. If the numbers hold up in diligence, buying at 3.3x cash flow is reasonable, and the effective multiple drops to roughly 2x once you strip out the $1.35M of included inventory and FF&E.
- Three revenue streams under one lease diversify demand and smooth seasonality. Grocery drives daily traffic, the cafe monetizes multiple dayparts, and catering carries the fattest margins through repeat local clients, so a soft quarter in one line can be offset by another.
- The catering book is the closest thing here to durable revenue, built on established relationships with clients who reorder. Repeat B2B and event catering relationships create some switching inertia and predictable order flow, which is more defensible than pure retail walk-in traffic.
- Operationally this is turnkey: 18 experienced employees are staying, systems and equipment are in place, and the seller offers training plus negotiable financing. A retiring owner and low $17,500 rent give a buyer a cushion to hit the ground running without immediate operational firefighting.
How to improve it
- Segment the P&L by business line before anything else, then double down on catering. If catering truly carries the margin, add a dedicated sales rep and outbound program targeting Glendale offices, event planners, and recurring corporate accounts to convert one-off orders into standing weekly contracts.
- Launch catering subscription and standing-order programs for offices, gyms, and local businesses to manufacture recurring revenue where today there is mostly transactional sales. Even a modest book of weekly recurring accounts materially raises the durability and resale multiple.
- Optimize the grocery mix toward higher-margin prepared foods, private-label, and grab-and-go items that leverage the existing kitchen. Cutting slow-moving SKUs and reducing the $350k inventory carry frees working capital and improves inventory turns.
- Extend cafe dayparts and build a loyalty and pre-order app to lift average ticket and repeat frequency. Morning coffee and lunch traffic are the easiest incremental dollars given the fixed rent and staff already in place.
- Lock in the lease long term given the below-market $17,500 rent is central to the profit story. Negotiate a multi-year extension with renewal options now so the buyer protects the single most important cost advantage and de-risks resale.
- Formalize the catering client relationships with written agreements and a CRM so the revenue is transferable and defensible rather than sitting in the departing owner's head. This directly protects value through the ownership transition.
- Test light delivery and third-party platform integration for both cafe and market to capture demand beyond walk-ins. Managed carefully to protect margin, this expands the addressable customer base without new fixed cost.
Diligence notes
- Verify the $1M cash flow line by line against tax returns, bank statements, and merchant processing records. A 32% owner-earnings margin on a market/cafe/catering blend is well above industry norms, so confirm whether add-backs, owner labor, and family payroll are inflating the SDE figure.
- Split revenue and margin by each of the three businesses. Understand how much of the $1M cash flow comes from catering versus grocery versus cafe, because if catering is 80% of profit, this is really a catering business with two low-margin appendages, and the risk profile changes.
- Scrutinize the lease terms, remaining length, renewal options, and any rent escalators. The entire profit thesis rests on $17,500 rent being remarkably low; a lease expiring soon or a landlord planning a reset could erase most of the margin advantage.
- Assess catering client concentration and contract status. Ask for a client list with revenue by account and length of relationship, since undocumented, owner-dependent relationships are the biggest transition risk in a retiring-seller deal.
- Confirm the condition, ownership, and useful life of the $1M FF&E and validate the $350k inventory at cost, checking for slow-moving or expired stock. Overstated asset values here directly overstate what you are actually buying beyond goodwill.
- Probe key-person and staff retention risk. Confirm the 8 full-time employees will actually stay, identify who runs the kitchen and catering, and structure retention terms, because losing the operating team during a retirement transition could gut the business.
Source
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