How do you rack up $1m in debt ?

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Mark

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#239415 16-Jul-2018 22:21

Just read an article on the NZHerald about the Toto Pizza restaurant in Auckland racking up over $1.3million dollars of debt .. how do you even go about generating that much debt while selling pizza ? You'd think they'd have flagged things after $100k or less! (I'd be suicidal at the $50k mark I think) .. fleet of Audi pizza delivery cars ?

The pizza is really good so would be a shame for them to go under forever.

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#2057366 16-Jul-2018 22:32

It's all the high costs of transporting pizza to our office.

I'm serious too, we get it alot :D

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Geektastic

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#2057401 16-Jul-2018 22:35

I've done it buying property but never selling pizza!

There is a pizza place in Siem Reap in Cambodia called Happy Pizza. The stuff that looks like Oregano..isn't! You can order "Extra Happy". Perhaps these guys have been doing that kind of pizza...!

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#2057404 16-Jul-2018 22:45

^weird since you can't just eat that stuff for any effect. It has to be decarboxylated first which turns it brown/black.

Apparently.

Journeyman

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#2057405 16-Jul-2018 22:46

hio77:

It's all the high costs of transporting pizza to our office.

I'm serious too, we get it alot :D

Where's your office, Hamilton?

hio77

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#2057408 16-Jul-2018 22:49

Journeyman:

hio77:

It's all the high costs of transporting pizza to our office.

I'm serious too, we get it alot :D

Where's your office, Hamilton?

am in head office, for context..

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UHD

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#2057420 16-Jul-2018 23:09

6-12 months of not paying suppliers, delinquent on loan repayments, and behind on GST/PAYE will dig you more than a million for a lot of businesses. I guarantee their accountants have been warning them for at least 12 months or more.

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#2057487 16-Jul-2018 23:44

When working at Vodafone we use to have a monthly technology all hands meeting and use to always get these Pizzas and loads of them it was for like 400 people

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#2057504 17-Jul-2018 07:21

UHD:

6-12 months of not paying suppliers, delinquent on loan repayments, and behind on GST/PAYE will dig you more than a million for a lot of businesses. I guarantee their accountants have been warning them for at least 12 months or more.

Most likely. Suppliers should not accept long delays, they would often suspend sales (then lose business) or go cash only. The pizza company probably changed suppliers an until credit ran out, rinsed and repeated. Unsure if credit checks would indicate bad or no paying in recent months, if prior to that they were ok

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#2057510 17-Jul-2018 07:45

Had pizza from this place once at work. It was okay but not exactly the second coming of Christ or anything. How long have they been in business for?

eracode

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#2057522 17-Jul-2018 08:15

It’s the BMW M5 delivery vehicles.

Sometimes I just sit and think. Other times I just sit.

Quinny

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#2057535 17-Jul-2018 08:42

Fit out, rent, advertising, marketing costs all add up. Slow trading start or change and quickly wages and costs exceed income real fast. Survive by skipping GST/Paye and wham.

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#2057538 17-Jul-2018 08:42

Its not just Pizza, they touted themselves as a "group catering company", so there would be various other operations.

Its actually pretty easy, wages, holiday pay, supplier accounts, rent etc. 1 million gone.

Fred99

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#2057549 17-Jul-2018 08:51

Mark:

Just read an article on the NZHerald about the Toto Pizza restaurant in Auckland racking up over $1.3million dollars of debt .. how do you even go about generating that much debt while selling pizza ? You'd think they'd have flagged things after $100k or less! (I'd be suicidal at the $50k mark I think) .. fleet of Audi pizza delivery cars ?

The pizza is really good so would be a shame for them to go under forever.

It's quite easy and surprisingly common in the hospitality/restaurant business.

The usual "main issue" behind it is the business not making a profit, then rather than reduce costs which might reduce turnover, you try to "turn" the business by investing more.

Suppliers are already in hock, they've got the choice of cutting supply but will be told that they'll never get any business again if they do that, so they'll be working on extended payment terms. The proprietor begs the landlord for extended credit on the basis that if they go bust there's no money to pay the lease anyway, and it'll cost them to re-lease the premises. Commercial kitchen equipment/fitout is expensive and probably on hock. The wages are probably up and down, with casual workforce, IRD doesn't catch on quickly enough that PAYE and GST payments have dried up, then one day - and inevitably - "boom". Someone pulls the pin, the business can't function any more - close the doors.

I'm actually surprised that someone tried the "meter of pizza" model in NZ. Was done very successfully in Melbourne in the early '80s in Lygon Street, but they've got 3x the population and a much more vibrant / dynamic street life than Auckland. Stuffing people with large volumes of food at low profit margin can only work if you've got massive turnover.

trig42

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#2057583 17-Jul-2018 09:30

Toto has been doing Pizza by the Metre for quite some time now (years).

There used to be a restaurant (on Nelson St I think), but they have moved to Hardinge St and are delivery only now.

Not sure what has caused this liquidation, but they did have it up for sale - just didn't add up I guess.

I think Dr Rudi's in the viaduct also does Pizza by the Metre (they certainly did some pretty massive Pizza when I was last in there).

Fred99

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#2057595 17-Jul-2018 10:07

trig42:

I think Dr Rudi's in the viaduct also does Pizza by the Metre (they certainly did some pretty massive Pizza when I was last in there).

They do "pizza by the foot!".

Quick - someone call the metric measurement standards police.

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