Sept 2011 - Issue 6 - National Federation of Fish Friers

I know quality when I see it!
The Supreme Sausage
James T. Blakeman & Co. Ltd. Millennium Way, High Carr Business Park, Newcastle-u-Lyme, Staffs. ST5 7UF
Telephone: 01782 569610 Fax: 01782 569611 e-mail: admin@blakemans.co.uk
www.blakemans.co.uk
Chip Tips
In this issue Warren Hamlin of NFFF Associate member
company First Merchant Finance Plc, fish and chip shop
finance experts, answers your questions.
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Is it possible to obtain finance for the purchase of a leasehold
fish and chip shop at the moment?
YES! Traditionally, it has always been difficult to obtain finance
for leasehold businesses be they hotels, pubs, restaurants or
take-aways. In most cases, the high street banks will not lend
against anything other than “bricks-and-mortar”. However,
specialist lenders like First Merchant Finance take a more openminded
view about leases. Using many years of underwriting
experience they will often lend on a short leasehold without
additional freehold security if there is a strong weekly turnover.
The underwriting approach is completely different! It is the
profitability of the business rather than the value of the
premises which is the most important consideration.
I want to buy a take-away business. Why would a fish and
chip shop be the best bet?
From our perspective as an active business lender in the
hospitality and leisure sectors we have a very good idea of
which type of retail and catering businesses are doing well at
the moment. There is no doubt that the fast food sector as a
whole is enjoying a boom. Quite simply, when the chips are
down economically, people flee upmarket restaurants in favour
of tasty but cheaper alternatives and within this buoyant takeaway
sector, we would say that interest in fish and chip shops
is stronger than ever.
More buyers are seeking finance for chip shops, even than for
the traditionally popular Indian restaurants, kebab take-aways and
others. In fact, fish and chip shop businesses are in huge demand
at the moment because of the unequalled profit margins. If you
can get your hands on a fish and chip shop, do so!
I am hoping to sell my fish and chip shop business but how
do I value it accurately?
We all know that there are various rules-of-thumb for the
valuation of going-concern businesses, but establishing a
Issue 6 September 2011
realistic sale price in the current market is quite a different
matter. Most BTAs (Business Transfer Agents) will assess the
business at no cost or obligation to the Vendor. However, for
a deeper analysis and perhaps a valuation which will be of more
use to a bank or lender, a business valuation conducted by a
trusted surveyor or valuer will be necessary.
These rule-of-thumb techniques can often lead to the same
final figure but they can also be highly misleading if, for
example, the rent or wage costs are unusually high in a
particular business.
“Bridging” Finance for take-aways. Does it exist?
The purpose of bridging finance is to enable a borrower to
obtain short term funds - usually to complete the purchase of
a business very quickly. Yes, bridging finance for fast food
businesses does exist but from the point of view of most of the
high street banks, it comes down to question of security in
most cases. So, freehold fish and chip shops are going to be
easier to ‘bridge’ than leasehold ones. I would like to draw your
attention to the specialist finance houses who concentrate on
the catering businesses marketplace. These specialist lenders
will often be able to provide such facilities for leasehold shops
and restaurants which borrowers and vendors alike might be
surprised to discover exists.
Serving the best fish and chips but also running a good
business. Two sides of the same coin but can they be in conflict?
Every year, we come across many fish and chip shop and
restaurant operators who are brilliant at what they do. They
cook wonderful food and it is clear that they enjoy their work.
Sadly, not all those who are such experts in the kitchen are so
diligent with their finances. This is undoubtedly because they
work long and exhausting hours in order to serve the best food
they can muster. This can be dangerous for longer term
profitability and for the value of the business should they ever
wish to sell. A good and clear track record of trading is
invaluable. Our strong advice is to employ, at relatively low
cost, a bookkeeper who specialises in catering businesses.
Efficiency and peace of mind will be worth a lot to the already
over-burdened shop operator.
If you have any questions you would like answering please get in touch on yoursay@federationoffishfriers.co.uk using the e-mail heading
‘chip tips’ and we would be happy to help.
For more information about First Merchants service please visit www.fishandchipshoploans.co.uk
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