Key Details:

1. 
   

   Location & Size:

   
   
   
   
   
   • Size: 1,479 sq. ft.
   
   
   • Location: Sharjah, a major UAE city with a growing population and vibrant business scene.
   
   
   
   


2. 
   

   Financials:

   
   
   
   
   
   • Rent: AED 111,000 per year (AED 9,250 per month).
   
   
   • Selling Price: AED 400,000 (including stocks).
   
   
   • Monthly Sales: AED 150,000.
   
   
   • Monthly Expenses: AED 80,000.
   
   
   • Net Profit: AED 10,000 per month.
   
   
   • Agency Fees: 10% of the selling price + VAT (AED 55,000 + VAT).
   
   
   
   

Profitability Breakdown:

• Monthly Sales: AED 150,000.


• Monthly Expenses: AED 80,000, which likely includes rent, salaries, utilities, food costs, and other operational expenses.


• Rent: AED 9,250 per month (included in expenses).


• Net Profit: AED 10,000 per month, which translates to AED 120,000 per year.

Return on Investment (ROI):

• Selling Price: AED 550,000 (including stocks).


• Net Profit: With a net profit of AED 10,000 per month, it would take 55 months (about 4.5 years) to recover the investment, assuming profits remain consistent.

Considerations:

1. 
   

   Profit Margin: While the restaurant generates substantial monthly sales (AED 150,000), the net profit of AED 10,000 seems relatively low. This suggests that operating costs are high in comparison to revenue, which limits the overall profitability. The business could benefit from a review of expenses to see if there are areas for cost-cutting or improvement in operational efficiency.

   
   


2. 
   

   Growth Potential: With strong sales, this restaurant may have room for growth. Increasing profit margins by either boosting sales further or cutting costs could make the investment more attractive.

   
   


3. 
   

   Stock Evaluation: The selling price includes stock, but it's important to assess the current stock value and relevance to ongoing operations. The stock should be in good condition and appropriate for the restaurant’s needs.

   
   


4. 
   

   Agency Fees: The 10% agency fee of AED 55,000 + VAT should be considered when calculating the total cost of acquisition.

   
   

Recommendations:

• Expense Review: Since the net profit is relatively low for the sales volume, review the expense structure to identify areas where operational costs can be reduced without compromising quality.


• Sales vs. Expenses: Investigate if there is potential to increase sales or introduce more profitable menu items or services to increase margins.


• Due Diligence: Ensure that all financial records, including sales reports and expense breakdowns, are carefully reviewed before proceeding with the acquisition to ensure the business can maintain or improve its profitability.

This restaurant has high sales potential, but the low net profit suggests that there may be room for improvement in efficiency or cost management.           

 

About RVRG Real Estate: RVRG Real Estate specializes in commercial and residential properties across the UAE, offering comprehensive real estate solutions. Our services include property sales, where we facilitate smooth transactions ensuring sellers connect with qualified investors. We assist buyers and investors in identifying lucrative investment opportunities, providing tailored leasing solutions to maximize returns. Our market analysis guides informed decision-making, while negotiation support ensures favorable terms. Additionally, our property management services efficiently handle diverse portfolios, ensuring client satisfaction and value creation.