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Established Bakery In Larnaca District For Sale

Larnaca District
Asking Price:
€700,000 Furniture / Fixtures included
Sales Revenue:
€620,000
Cash Flow:
€170,000

This is a unique opportunity to acquire a highly profitable, well established and sustainable wholesale bakery business which maintains a highly recognizable brand in its territory.

Reported Profit After Tax per Audited Accounts is well over €620.000 annually, while owner’s total discretionary earnings (including salaries and other benefits) are about €170.000 annually. Furthermore, although profits have been growing over the last 3 years at an annual rate of 4% there is significant room for expansion into new territories or via new products.

The business is offered for sale solely because of owner’s serious health problems.

Business Model

The business has been operating for 27 years and has developed a loyal clientele in Larnaca & Famagusta Districts, based on excellent quality and service. This is a production & wholesale business (B2B), serving grocery stores, supermarkets, the hotel-restaurant-cafe sector, function halls, street food vendors and other retailers. It has over 80 clients and unlike many other wholesalers does not rely excessively on a few large supermarket chains.

The product line consists of staple/everyday bakery products, such as several types of bread loaves, sliced bread, sandwich rolls, rusks and simple pastry products. Everything is produced fresh in-house and distributed in the market every day by the company’s own fleet of 6 delivery vans. Prices are, on average, slightly higher than those of competitors and profit margins are kept high – the business competes on quality and good service, not on price. Clients who tried to switch to cheaper suppliers eventually returned to this business, exactly because of the quality and reliability it offers.

The products offered are everyday basic staples, therefore this is a low-risk business not subject to economic downturns and has no competition from imports or new trends. Bread and related products will always be in demand.

Production/ Logistics

Production takes place in seller’s freehold premises which can be rented by the new owners at only €1.000/month. Alternately, the new owners may easily relocate production to other premises within Larnaca District.

This is a lean business which requires only about 150 to 200 square meters (1650 to 2200 square feet). Larnaca is strategically located to serve Famagusta District but also the whole of Nicosia District and the East side of Limassol District, so there is significant room to expand the territory served. In addition, the owners had plans to introduce new products, however these plans were put on hold due to health problems in the family.

The business is fully equipped to produce, package and distribute its products. Total investment in industrial bakery machinery and delivery vans was over €190.000 so far. Production is currently done at night (12-hour cycle) and deliveries start early in the morning, around 5:00am. However, it is possible to start production at 6:00 am and start deliveries at 6:00pm in the afternoon.

Receivables & Payables are very well managed, with an average Receivables of only 17 Days. Inventory of raw materials turnaround is only 12 Days. Therefore, the business does not require working-capital, this is practically a cash business and has negligible Bank debt.

Upside

The business distributes wholesale mainly to Larnaca and Famagusta district, but with increased sales efforts it can expand to Nicosia District and also Limassol District.

New basic, everyday baked food products can be added to the product line.

In addition, there is excess capacity of around 15% which means that without additional investments the turnover can easily exceed (currently).

Sales & Advertising

Although this is a B2B business which relies mostly on direct sales, in order to generate awareness and more pull among consumers, it advertises over the radio and sponsors TV series, festivals, schools, charities and local events.

Hand Over

Production processes are streamlined and full-time personnel of 6 is highly experienced, competent and loyal. All personnel will stay on after the sale, unless the new owners have their own people to employ. At the same time, the sellers are willing to provide intensive support & training for at least 6 months, therefore the new owners need not be experienced bakers. However, the owners should engage in overall business management and maintain relationships with clients.

Offer to Sell

The business is conducted by a limited company, therefore it can easily be transferred via a share sale. The company has no Bank debt while accounts receivable / accounts payable are settled “cash-on-delivery” or maximum on a weekly basis. Therefore, very little working-capital is needed.

The Asking Price is set just under 5X owner’s discretionary earnings and with the right guarantees, a portion of the payment may be deferred. Included in the price are the operating company clean of any debt or liabilities, all bakery equipment, 6 delivery vehicles, trade name & goodwill as well as hand-over support and training. Stocks-at-Cost will be added to the price on the date of transfer (value ranges around EURO 30.000 in flour, additivies & packing material)

Anyone who buys this business can start earning up to €15K per month from Day 1.

Property Information

Real Estate:

Lease

Lease Terms:

To be negotiated with current owners who also own the premises.

Leasehold Rent:

€12,000 per annum

Location:

The bakery is located in Larnaca District, close to the Larnaca - Agia Napa highway, which is convenient for deliveries.

Premises Details:

The production area is 150 square meters (about 1650 square feet), in addition there are extensive storage facilities and plenty of parking for the company's 6 delivery vehicles.

Size in square feet:
1,650
Planning Consent:

License and Town Planning permit for Bakery

Business Operation

Expansion Potential:

There are many ways in which the business can expand:
- Capture clients outside the main area currently served. Right now most clients are in Larnaca and Famagusta Districts, however the business can easily deliver to any client in South Nicosia and East Limassol regions. With excess capacity of around 15% this means that new machinery is not needed until sales reach EUR 720.000.
- Expansion of product line with new bakery products in high demand.
- More direct sales

Competition / Market:

The business competes based on high quality and excellent service, so prices are slightly higher than the competition.

Reasons for selling:

Serious health problems

Trading hours:

Production takes place at night and deliveries start at 6:00am. However, production can start early in the morning with deliveries beginning at 5:00pm, this is up to the owner to decide.

Employees:
8 F/T and 3 P/T
Years established:
27

Other Information

Support & training:

The full-time personnel of 6 (excluding the 2 owners) is highly experienced and the new owner need not be an expert in bakery. However, the current owners will provide extensive support until the new owner is comfortable with production, sales and relationships with clients.

Furniture / Fixtures value:
€190,000 - included in the asking price
Inventory / Stock value:
€20,000
Relocatable:
This business can be relocated.

Contact Information

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