Big Business

[system]

@Simiyu22

Interesting math.
Rents in the CBD for clubs are astronomically high. Some clubs pay more than ksh 1 million a month. It is a very tough business.
If hes making 3.5 million, lets say he collects even 5 million cash. Thats about 1.5 million a week per club. That means he sells roughly 10,000 beers at ksh 150 each per week. If he pockets everything he pockets ksh 1.5 million. But how much does beer cost for him to buy? 120? 100? I dont know but If its 100, he pockets only 0.5 million. Thats assuming he sells 10,000 beers. And thats before rent and other expenses.

My friend you must be from another planet,in town beers range from 200-250.The margins are even better on the other beverages.

[Simiyu22]

@Art

My friend you must be from another planet,in town beers range from 200-250.The margins are even better on the other beverages.

Dont drink. Soda na machi nowadays. Whats the margin on beers wholesale?

[system]

@Simiyu22

Dont drink. Soda na machi nowadays. Whats the margin on beers wholesale?

For this classy bars they make upto 100% per beer bottle.If they buy a bottle at Kshs 120 from the distributor and sell it at kshs.250 your guess is as good as mine on what they make on the weekend days.

[M2Random]

@Art

For this classy bars they make upto 100% per beer bottle.If they buy a bottle at Kshs 120 from the distributor and sell it at kshs.250 your guess is as good as mine on what they make on the weekend days.

I think the main problem with big business is the high rent and goodwill…that is usually what kills the business in my opinion. This is because you have to sell very many beers just to break even. I drink sometimes, and I can comfortably tell you that it is almost impossible to get a club that sells beer at Ksh 250 per bottle on Monday, Tuesday, Wednesdays and Thursdays…even the so called high end only sell at Ksh 250 on weekends when drunkards are many. Assuming an average price of Ksh 220 per beer, and considering that the club buys at Ksh 120 per beer, that is a good profit margin. However, if the rent is 1 million per month, that club has to sell 10,000 beers just to pay the landlord. Throw in an average of Ksh 20,000 per employee and a total of 20 employees…you have a wage bill of Ksh 400,000. Throw in Ksh 300,000 for the cops etc. Total expenses are already 1.7 million. The club has to sell 17,000 bottles just to break even. That is almost 570 beers per day. Therefore, if you see a club that pays 1 million rent, it must be selling at least 570 bottles of beer per day on average just to remain afloat. I believe the only way to hack this for club owners is operating 24/7 by having a restaurant on the same premises for maximum utility. In such a case, income from food will be pure profit. Otherwise kuweka club pekee CBD seems like an uphill task. You either combine with a restaurant to operate 24/7, or own the building, in which case you dont pay rent.

[Simiyu22]

@M2Random

I think the main problem with big business is the high rent and goodwill…that is usually what kills the business in my opinion. This is because you have to sell very many beers just to break even. I drink sometimes, and I can comfortably tell you that it is almost impossible to get a club that sells beer at Ksh 250 per bottle on Monday, Tuesday, Wednesdays and Thursdays…even the so called high end only sell at Ksh 250 on weekends when drunkards are many. Assuming an average price of Ksh 220 per beer, and considering that the club buys at Ksh 120 per beer, that is a good profit margin. However, if the rent is 1 million per month, that club has to sell 10,000 beers just to pay the landlord. Throw in an average of Ksh 20,000 per employee and a total of 20 employees…you have a wage bill of Ksh 400,000. Throw in Ksh 300,000 for the cops etc. Total expenses are already 1.7 million. The club has to sell 17,000 bottles just to break even. That is almost 570 beers per day. Therefore, if you see a club that pays 1 million rent, it must be selling at least 570 bottles of beer per day on average just to remain afloat. I believe the only way to hack this for club owners is operating 24/7 by having a restaurant on the same premises for maximum utility. In such a case, income from food will be pure profit. Otherwise kuweka club pekee CBD seems like an uphill task. You either combine with a restaurant to operate 24/7, or own the building, in which case you dont pay rent.

Was exactly my point. Plus add employee costs, barmaid , wochies, stima…all over a sudden your margins get dinged. Then a restaurant has its challenges. And so does operating 24/7. I mean how many customers do you get at 4:15 am. Not to mention the hundreds of bars across the cbd.
I think club business, restaurant and transport although profitable are extremely challenging.

[M2Random]

@Simiyu22

Was exactly my point. Plus add employee costs, barmaid , wochies, stima…all over a sudden your margins get dinged. Then a restaurant has its challenges. And so does operating 24/7. I mean how many customers do you get at 4:15 am. Not to mention the hundreds of bars across the cbd.
I think club business, restaurant and transport although profitable are extremely challenging.

I think club business in town is good. However, the only way to hack it is to have it operating 24/7…daytime as a restaurant, and at night it sells alcohol…kama pale CitySpace. While paying rent of 1 million plus per month, you cannot afford to close down during the day. You have to maximize on that rent. If you study well, you will realize that the only clubs that survive operate 24/7 or are owned by the landlord. It is virtually impossible for a club only business running at night and closed during the day to survive in the CBD. It simply wont make enough money to make the venture worthwhile.

[Some_Say]

@Simiyu22

Interesting math.
Rents in the CBD for clubs are astronomically high. Some clubs pay more than ksh 1 million a month. It is a very tough business.
If hes making 3.5 million, lets say he collects even 5 million cash. Thats about 1.5 million a week per club. That means he sells roughly 10,000 beers at ksh 150 each per week. If he pockets everything he pockets ksh 1.5 million. But how much does beer cost for him to buy? 120? 100? I dont know but If its 100, he pockets only 0.5 million. Thats assuming he sells 10,000 beers. And thats before rent and other expenses.

Beer is 250 but there are shots and whiskey to be sold. On a typical friday he makes around 1.5 M per bar and on satos it is more than 2M. Let me tell you, Kenyans drink beer like crazy.

[Kdawg254]

What about sales from other beverages that have over 3 times profit?A bottle of soda they buy at around 25bob and sell it at 100bob ditto water.Lets not even get started on the wines and spirits!
I think if you’ve a pub in town that’s located at a decent place you’re making good money irrespective of the overheads.

[magreb]

Good observations. However, from my little experience in forensics, MOST (not all) of the so called big businesses are just fronts for some shady behind the scenes dealings. Unapata jamaa ako na business which in the normal course of operations cannot support his lifestyle. I mean, how many 25-30 year olds have the acumen to run businesses worth millions. Whereas you will find 5-10 such ninjas capable of running multimillion ventures, the truth is that most of the so called big businesses are avenues for money laundering or worse, just mere fronts ndio ukiuliza jamaa where he gets his money, anasema ako na club tao ama anaimport stuff from china.

[marine1]

Just like some bars are thriving some are closing everyday.some bars the profits pay off loans for the bar owner which in real sense if the bar fails to meet its monthly targets he’ll be in lots of problems.

[Simiyu22]

@Kdawg254

What about sales from other beverages that have over 3 times profit?A bottle of soda they buy at around 25bob and sell it at 100bob ditto water.Lets not even get started on the wines and spirits!
I think if you’ve a pub in town that’s located at a decent place you’re making good money irrespective of the overheads.

Club and bar business is a lot harder than it looks. I don’t think there is guaranteed profit. Plus competition is plenty. Clubs go with trend. The difference between being fully packed every Friday and operating at 70% may be enough for you to close shop. In the food business you have to have a margin of about 300% to survive. So yes they sell at 3 times, but that is a must.

[system]

@magreb

Good observations. However, from my little experience in forensics, MOST (not all) of the so called big businesses are just fronts for some shady behind the scenes dealings. Unapata jamaa ako na business which in the normal course of operations cannot support his lifestyle. I mean, how many 25-30 year olds have the acumen to run businesses worth millions. Whereas you will find 5-10 such ninjas capable of running multimillion ventures, the truth is that most of the so called big businesses are a souvenues for money laundering or worse, just mere fronts ndio ukiuliza jamaa where he gets his money, anasema ako na club tao ama anaimport stuff from china.

Great!you scored it right.Most of these business are mere fronts for crime syndicates.

[Willy_Matadi]

@Simiyu22

Interesting math.
Rents in the CBD for clubs are astronomically high. Some clubs pay more than ksh 1 million a month. It is a very tough business.
If hes making 3.5 million, lets say he collects even 5 million cash. Thats about 1.5 million a week per club. That means he sells roughly 10,000 beers at ksh 150 each per week. If he pockets everything he pockets ksh 1.5 million. But how much does beer cost for him to buy? 120? 100? I dont know but If its 100, he pockets only 0.5 million. Thats assuming he sells 10,000 beers. And thats before rent and other expenses.

The cheapest beer I have taken within CBD this past month was Kshs. 190/- na sio hapa katikati ni huko Taveta Road club ya Rhumba otherwise normal lager retails at Kshs. 200/= to 250/= while recommended retail price as per KBL ranges between Kshs. 140/= to 160/= depending on brand. Therefore minimum profit per bottle could be Kshs. 90/= for most club owners.

[omhangla]

MTU aliuliza P.R.S…P ni nini

[Willy_Matadi]

@omhangla

MTU aliuliza P.R.S…P ni nini

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