“Look, Ty is a nice kid, and he works hard,” Mr. Bartley said. “But lady, you seriously want me to sell my pizzeria to a 19-year-old?”
I sat between my boss and my professor like a spectator at a Chinese ping pong match. I knew better than to make a peep.
“What does his age matter?” Professor Hunt asked.
“I guess it doesn’t as long as the check clears. But with the way this kid eats everything within a five-foot radius of his mouth, I never took him for a trust fund baby. How much are you offering anyway?”
The Professor gave her sweetest grin. “One dollar.”
Bartley burst into a cackle. “One dollar? Are you nuts? Do you have any idea how much money I put into this dump?”
Even as my boss got hotter than the pizza oven, Professor Hunt kept her cool. “What matters isn’t what you put into it. That’s all lost, as you know. What matters now is how much more you’ll have to shell out to close shop. Unless I’m mistaken, you’ve got to pony up a pretty penny before you can walk away from the Leaning Tower of Pizza, don’t you?”
Mr. Bartley gritted his teeth. “Now you sound like my wife.”
“The woman speaks sense.”
I’d agreed to this meeting because Hunt sounded awfully confident, but honestly, I was with Bartley. Despite all my professor’s arguments the day before, it still sounded nuts. Businesses were bought by people a heck of a lot older and more experienced than I was—people with money behind them.
Professor Hunt kept her gaze steady. “Closing a business is expensive, Mr. Bartley. There’s no way around it.”
“I could declare bankruptcy.”
“Not without significant costs and exceptional headaches. Bankruptcy is a black mark you don’t want on your credit, one that will haunt you for years.”
It was so awkward watching my boss squirm. “Yeah, yeah, my attorney told me the same thing.”
“How much longer are you locked into your lease?”
“I can get out after the first year, which means I have five more months, but the landlord tells me that if he can fill the space, he’ll let me out early.”
“That’s a big if. Even if he finds someone to take over, it could be months before the handover. Months when you’re paying rent and getting nothing in return. What about your suppliers?”
“I owe a bunch of them, though not a ton. I’m mostly on net-30 terms, so I’ll be out of pocket about a month’s costs.”
Hunt gave me a quick look, the one that said, I told you so. “What about your furniture and equipment?”
“The furniture I own. I got it used from a Mexican place that went out of business. I didn’t have enough cash to buy the pizza ovens and fridges outright, so I financed them. I’m supposed to pay them off over five years, so I’ve got four and a half to go.”
As bad as I felt for Bartley, this was why Hunt was my favorite professor; she was sharp as a tack. “What will happen to the equipment when you close?”
“I could try to sell it, but used appliances are worth a fraction of new ones. Most likely, the company I got them from will agree to take them back. With a hefty fine, of course.”
“I’m telling you, Mr. Bartley, $1 to take all that headache and expense off your shoulders is an outstanding deal.”
I finally had the courage to sit taller. She had him pinned.
“Look, Professor, I’m sure you’ve studied plenty of textbook acquisitions, but this is the real world. Even if Ty wanted to take all that debt off my shoulders, he couldn’t. I wouldn’t have gotten my lease or my equipment without excellent credit. No way they’re going to let me off the hook and take a broke 19-year-old in my place.”
I slumped again. He had a good point.
“Ah, but in this case, the broke 19-year-old will have a fabulous guarantor backing him up.”
“Oh? You’re willing to personally guarantee all those financial obligations?”
“Me? No way.” Professor Hunt shook her head. “You are.”
Bartley cackled again, and I had to bite my lip not to join him. My professor hadn’t prepared me for this part of the conversation. “Just how crazy do you think I am, Professor?”
“Not crazy, just desperate.”
Bartley grew hot again. “I’m not that desperate.”
“It’s not as bad a deal as you make it out to be.” Hunt spoke in the same calm tone she used when explaining a concept for the third time to the slow kid in class. “Let’s say Tyler gives it a shot, and after three months he’s back in the same spot, needing to close shop. You’d still be better off than you are now.”
“How so?”
“Right now you owe five months’ rent on the space with no guarantee you’ll find a tenant to take over any of it. After three months, you’ll owe a maximum of two months’ rent. The same goes for the equipment; you’ll have three more payments made. And rather than spending the next month closing down, you can go back to that job with your brother-in-law tomorrow and start making money again. So even if you need to shut it down a few months from now, you’ll have some cash on hand, which will make closing shop less painful.” She leaned in as though sharing a trade secret. “But I don’t think Tyler will fail.”
“You think this kid who’s never run a business before can operate it better than I can?”
“He doesn’t need to. You have kids?”
“Two. Plus a labradoodle.”
“That’s a lot of mouths to feed. And there’s that nice car you drove in here.”
Mr. Bartley crossed his arms. “It’s a Toyota. Nothing fancy.”
“No, but hardly broken down either. You own it?”
“It’s on a three-year lease.”
“That’s still a chunk of cash each month. Ty, what do you drive?”
Now it was me turning red. For the first time in what felt like an eternity, I spoke. “I can’t even afford a bike.”
Probably not what Professor Hunt wanted to hear given she was bargaining on my behalf, but she still smiled. “Wife? Kids? Labradoodle?”
I shook my head. “Even the cockroaches in my apartment left seeking greener pastures.”
Mr. Bartley threw up his hands, as if this proved I couldn’t be counted on, but Professor Hunt grinned wider. “The fact is, this boy can keep the pizzeria operational while only drawing out a fraction of the profits you’d need to make it worth your while.”
“Look, I’d hear you if the business was making a small profit, but it’s not even breaking even. He’s got no cash to make up the deficit each month.”
“No cash, no. But if I know Tyler, he’ll put in the effort. Remember, part of your deficit was paying his wages. If he has to double his hours and cut his take-home salary for a couple of months while he’s building up a customer base, he’ll do it. And all that time, he’ll be paying down debts you already owe.”
Mr. Bartley shook his head but still asked, “How would this work?”
“Very simple. You’ll agree to sell him The Leaning Tower of Pizza for one dollar.”
“Why the dollar? Why not just give it to him?”
Wait. Did I hear right? Was Bartley actually considering this?
“It’s a legal principle called consideration,” Hunt said.
“Doesn’t seem all that considerate to me.”
Hunt broke into her first chuckle. “It just means that for a contract to be valid, value has to be given for value.”
“If he’s giving me value for value, he should give me a hell of a lot more than a dollar.”
“The law doesn’t require the value to be equal. And given your debts and losses, one could argue that a dollar is entirely too generous. But none of that matters. More businesses are sold for a dollar than any other price.”
Bartley looked from me to Hunt. “OK, then what?”
“Tyler will take over all financial obligations. He’ll cover your rent and make the payments on the ovens and fridges. He’ll continue paying the food suppliers, the utilities, all of it.”
“What about the furniture? I own that outright.”
“What did you pay for it?”
“About $3500.”
“And now it’s had one more owner. Not to mention, it’ll be a hassle to sell and move. What’s the least you’d take for it?”
Bartley’s gaze scanned the awards on Professor Hunt’s wall. “Let’s say $2800.”
“Let’s say $2400. Tyler will pay you $200 a month for a year. If the business goes under, and he can’t keep up the payments, you can take it back, and he’ll surrender any payments made.”
“What about the lease on the space?”
“What were the terms?”
“I locked in the lease for five years, with an annual rent increase of 3%. But like I said, I have an out after the first year, and there’s no way I want to stay on the hook for four more years, even if Ty can keep the doors open.”
Professor Hunt went quiet. Did she finally hit a hurdle she couldn’t clear? “Landlords love stability,” she said. “I expect yours would rather have the same tenant in place for twenty years than keep finding new ones. We’ll need to speak to him before we close. We’ll ask him to transfer the lease to Tyler after the one-year term expires. It’s in his interest to agree, especially if Tyler is running a profitable business by then.”
“I’ll need my security deposit back.”
“How much was it for?”
“Just a month’s rent.”
Hunt looked right at me. “Then Tyler has five months to get that money together. Are we agreed?”
I gulped and nodded. It was a good thing my stomach was empty.
Mr. Bartley shook his head again but muttered, “I guess so.” He extended his hand to Professor Hunt, and they shook. Then he reached out to me. “Congratulations, kid. You just bought yourself a pizzeria.”
“Why are you doing this for me?” I asked Professor Hunt after Bartley left her office.
“You’re my student. Owning a pizzeria may not be your dream business, but it’s a far bigger venture than anything else you’ve come up with. It will stretch you. By the time the seminar’s over, you’ll have a first-class business education. Not to mention a chance to pay your way through school. I also get to teach business acquisition, which is often a faster route to success than starting from scratch. Sounds like a win/win, doesn’t it?” Professor Hunt smiled ear to ear.
I thought about it. “Yeah, I guess it does,” I said. But something still didn’t sit right.
I continued chewing on the deal during ultimate frisbee practice that afternoon.
“Hey, Ty!” Marques called out. “You coming in or what?” Jones was heading toward the sideline, and it was my turn to rejoin the game. I dropped my water bottle and went in.
“Everything okay?” Marques asked. “You look distracted.”
“I am, I guess,” I said as we walked towards the end zone. I told him about losing my job and the negotiation with Bartley that morning. Marques, now a senior, had taken Hunt’s seminar two years earlier, so I knew he’d get it.
“Old Artemis has you in her grips, eh?”
“Artemis?”
“Goddess of the Hunt. When she sets her eyes on prey, look out.” Marques patted my shoulder.
“Who’s the prey here? Me or Bartley?”
“Both.” He raised a hand, showing the other team we were ready for the disc. “Don’t get me wrong. It’s not bad having the best prof in the biz department looking out for you.”
“Then why that smirk?” I asked.
“I used to drool at her every word like a puppy, though I’m not sure even I would have let her talk me into buying a failing pizzeria. Sounds like she’s got her hooks into you even deeper.”
I blushed. “You said she’s the best. What’s wrong with listening to her?”
“The problem is you think she’s in it for you. Don’t fool yourself. She’s not doing this pizza deal for you. She’s doing it to you.”
“What do you mean?”
“From the sounds of it, she wants it bad. I don’t think you even realize what she’s getting you into.”
“Look, I know the Leaning Tower’s failing, but it’s got potential. She’s offering me a chance to make some real money.”
“You’re not the only one getting a chance. Our favorite prof’s got as much or more to gain than you do. You’ve gotta recognize when you’re a pawn in someone’s game, man.”
“What game?”
Marques met my eyes. “Hunt’s up for tenure. She needs a success, Ty. A big one.”
“Why?”
“Enrollment in her classes is down. This Build a Business seminar has been her pet project, but how many students signed up for it?”
“Eight.”
“Exactly. If she doesn’t show an explosion of interest, she’s through.”
“She’s too good a teacher for that.”
My captain shook his head. “Doesn’t matter. Just look at our team. Jones is studying, what, environmental awareness education? Peter’s doing psych, Anders has his head back in the fifteenth century, and Culpepper’s in creative writing.”
“Don’t forget Zander. He switched from engineering to set design.”
“Exactly. Artemis can teach students to run a business. But so few want it.”
“So…?”
“The most successful student in my Build a Business seminar imported cell phone cases and sold them in the quad. He made a few thousand bucks, but nothing groundbreaking. Nothing that would get other students to say, ‘I want to do what that guy did.’”
The other team finally threw off. It was a deep, curving throw, and I backed into the end zone to catch it. “But if I could buy a pizzeria for a dollar and make it into a huge success…” I threw the disc to Marques.
He caught it with a wink. “Heads would turn.”
The next day, Mr. Bartley gave us access to his financials. Professor Hunt brought Meg, her research assistant, to help us pore over the pizzeria’s invoices, expense reports, revenue statements, everything.
“This guy sunk over $100,000 into starting this business,” Meg said, a pile of invoices beside her. She’d tied her jet-black hair in a bun. “It really takes money to make money, doesn’t it?”
“No,” Professor Hunt said. “It takes money to lose money. If there’s a story in this paper trail, it’s one of a guy who had too much cash and not enough experience. That’s a dangerous combination. Now he’s got a heck of a lot more experience and a heck of a lot less cash.”
“Where does that leave me?” I asked. “I have neither.”
“You have two big advantages over your old boss, Tyler. First, you know you’re clueless. If Bartley didn’t think he knew what he was doing, he wouldn’t be in this mess. Second, you’re broke. When you make mistakes, you’ll have no choice but to fix them fast or lose your shirt. Bartley had a nice fat bank account to cover his errors. He was too slow to react, too slow to learn.”
“So that’s my big advantage? I’m desperate?”
“Worst comes to worst, you’ll get a ton of experience for free,” Meg said.
“Worst comes to worst, I’ll have to drop out of school because I’ve been working all semester with nothing to show for it.”
“Even if you do, you’ll be back,” Professor Hunt said. “Frankly, I wish more students at this university had fallen on their faces a couple of times before enrolling. They’d come in here with a lot more clarity and gumption.”
I exhaled and eyed the stack of receipts in Hunt’s hands. “So, what’s the tale of the tape tell you?”
“His food costs aren’t awful,” she said. “For a restaurant, I like to see them under 28%. Anything up to 32% is still acceptable. He’s been pushing 35%, which is edging into the danger zone, but hardly at emergency levels.”
“Sorry, I’m not following,” I said.
The Professor looked up from her stack of papers. “A $10 pizza costs him $3.50 in ingredients.”
“Got it. And you’d like to see it at $2.80. So I should cut back on the quality of ingredients?”
Meg tensed up. Professor Hunt didn’t seem so bothered. “That’s one option, but I wouldn’t necessarily go right there.”
“What are my other options?”
“You could charge more for your pizzas. You could negotiate better prices from your vendors or even change vendors. You could also reduce spoilage by preparing only what you need. And if you don’t think it’ll hurt sales, a little less cheese on each pie would be prudent.” Hunt pointed to one invoice. “See here? Cheese is the most expensive ingredient.”
Less cheese? That’s my favorite part of the pizza. Still, if that’s what it took to hit profitability, I might have to do it. But would it be enough? “Wait, Professor. You said even the 35% going to food isn’t at emergency levels, so what is?”
“That one’s obvious,” Meg said. “The Leaning Tower’s overstaffed relative to its customers. And it shows in the numbers.” She pushed a stack of sheets across the table. “These are last month’s payrolls. Staff costs are averaging about 41% of revenue. That seems high to me.”
Hunt nodded. “You’d ideally like to get that under 30%.”
I rubbed my forehead. Things got hectic whenever someone missed a shift. “So I need to cut staff to make it work?”
“Not necessarily,” Hunt said. “Tell me, when you were working, were you struggling to keep up with the demand?”
“Not even close. Half the time, we’d be checking our phones while waiting for people to come in. But then, ten minutes later, we needed all hands on deck. It was sporadic.”
“How much more pizza could you have made with the same staff?”
I bit my lip as I thought back to a typical shift. “I’d guess about double.”
“Making twice as many pies with the same staff would lower your staff costs from $4 on a $10 pie to $2,” Meg said. “That’s probably asking too much. But if you can serve 50% more pizza, you’d still hit the Professor’s 30% goal.”
That sounded like a pipe dream. “That assumes I can sell all those extra pies. It’s not like Bartley didn’t try to do just that. How am I supposed to pull it off?”
“Not sure,” my professor said with a sigh, “but not by sinking more money into marketing. Bartley spent 8% of his revenue there, not crazy for a new business, but you’d like to keep it closer to 3% long-term.”
“This is where being young is an advantage,” Meg added. “You can leverage social media in ways Bartley could never wrap his head around.”
“Let me get this straight. My boss spent 35% on ingredients, 41% on staff, and 8% on marketing. There’s room for improvement in all three,” I said. “But that only brings us to 84%. Where did the rest go?”
Hunt picked up a spreadsheet. “Rent was 13% of revenue, about twice what you want.”
“I don’t think I can renegotiate the rent.”
“You shouldn’t need to. It’s a nice big corner space a block off campus. I don’t think you’re overpaying.”
“Right, I just need to sell a ton more pizza, and then the rent won’t be such a high percentage of my revenue. I’m sensing a theme here. So now we’re at 97%. What else is there?”
Hunt ran her finger down the spreadsheet. “5% for insurance. 3% for utilities. 2% for taxes. 5% for credit card processing.”
“Wait,” I said, “something’s off. That adds up to way more than 100%.”
“Exactly.” Meg shook her head. “In total, his expenses were 112% of his revenue. In other words, for every dollar he brought in, he lost twelve cents.”
“Yikes.”
Meg turned to our professor. “I’m stuck on something. I thought credit card transaction fees were normally around 3%, but he’s paying 5%. Isn’t that too high?”
“Credit cards charge two fees: a percentage and a per-transaction charge. Bartley’s percentage was only 2.9%, but he also paid $0.28 per transaction. That’s nothing on large purchases but adds up on small ones like pizzas.”
All the numbers started to jumble in my head. It wasn’t enough to get 112% down to 100%. If I wanted to make money, my costs had to fall even further. “Bottom line,” I asked, “can this place make a profit or not?”
“I don’t know, Ty,” Professor Hunt said. “I’ve never run a pizza business.”
“What do you think, Meg?” I asked.
Meg looked skeptical, and I expected her to tell me to walk away. But she said, “It’s a great location with a hungry audience. The potential is there.”
“Professor, any chance this will bankrupt me?”
“Not unless someone lends you money,” Hunt said, “which I don’t think any bank is stupid enough to do. For all the existing debts, Bartley’s still on the hook if you fail.”
Due diligence gave me an out if I wanted it. We’d shaken hands, but nothing was signed. I could still claim the financials were worse than expected and walk away with my pride intact. But the clock was ticking. Bartley wanted to know if he was selling or closing shop. When he handed over the books, he’d given me 24 hours to decide.
Brittney and I hiked up to the overlook for sunset. I meant to ask her opinion on whether she thought it was a good idea to move forward. Before I’d even got a chance, she said, “I still can’t believe you’re buying a pizzeria.” She laced her fingers through mine, giving them a squeeze. “There’s no way I’d do that at nineteen.”
“So you think I’m nuts?”
“No.” She smiled, but it wasn’t the usual teasing grin. It was soft. Earnest. “I think it’s bold. Adventurous. Gutsy.”
I liked the sound of that. But the numbers churned in the back of my brain. The debt, the rent, the risk. “It might go under anyway,” I said, trying not to sound like I cared as much as I did.
“It’s already going under.” Brittney shrugged, as if it were the smallest thing in the world. “If it crashes after you take it on, that’s not on you. But if you pull it off? If you bring it back from the edge? At nineteen?”
I couldn’t help grinning. The idea sounded absurd and amazing at the same time. “Then maybe I’d actually be a businessperson.”
She leaned in closer. “Then you’d be my hero.”
