Author Archives: admin

Things to Do When Opening a Cafe

1 Reply

Opening A CafeThere are countless things to get done when opening a cafe, from getting the premises and renovating it to hiring a team and buying a coffee machine.

Here’s a useful 17 point Checklist of Things to Do When Opening a Cafe:

  1. Write a Detailed Business Plan
  2. Find Partners and Investors to Help Finance and Run the Business
  3. Find a Good Location for the Café’s Business Premises
  4. Negotiate the Lease or Purchase of the Outlet’s Property
  5. Choose a Cool Name for the Café
  6. Incorporate a Company to Operate the Café
  7. Sign the Lease for the Property and Pay the Required Deposit
  8. Get a few Proposals & Compare Costs for Different Renovation Options
  9. Choose a Designer & Contractor for the Design & Build of the new Café
  10. Purchase all Bar, Kitchen and Service Equipment to fit the design plans
  11. Make sure the Electricals and Plumbing are planned at the same time
  12. Confirm the Food and Beverage Menu Items, their Recipes and Costs
  13. Hire all the necessary staff in the kitchen, bar and for customer service
  14. Train the new team in their areas of specialty and Refine their skillsets
  15. Order and Purchase all the Food, Drinks and Stocks needed to run the bar and kitchen
  16. Conduct a Food and Drinks tasting session with the whole team
  17. Do a trial run serving friends and family before opening to the public

If you’ve started or managed a cafe before, this process will be a lot easier than if you’re doing it for the first time.

For new owners who don’t have the startup experience, it would be a good idea to hire a manager who comes with the necessary knowledge to setup systems, train the staff and get the cafe opened.

Start Up Costs for a Cafe Business

1 Reply

Start Up Coast

The startup costs for a cafe can vary greatly depending on whether you’re buying an established business or setting up a small little coffee shop.

Here are some of the major costs of opening a cafe:

  1. Company Setup – Incorporation, Licenses, Legal, Finance and Tax Fees
  2. Business Acquisition – Purchase of existing business (if buying a business)
  3. Franchising Costs -Franchise fees and startup costs (if franchising)
  4. Property Acquisition – If buying the business premises
  5. Property Rental Deposit – If leasing the business premises
  6. First Month Rental – Be prepared to pay the first month’s rental in advance
  7. Utilities Deposit – A deposit is often required when opening an account with the utility companies
  8. Outlet Renovation – The interior design, renovation and decorating costs will vary according to the plans
  9. Furniture & Fittings – Furnishing the café will be a large part of the start up costs
  10. Kitchen & Bar Equipment – Another major cost to bear in mind
  11. Point of Sale & Service Equipment -Don’t save on these essentials
  12. Marketing & Branding Items – Cups, Uniforms, Menus, Namecards, Flyers, Napkins, Coasters, etc
  13. Food & Beverage Stock Items – A key cost that will depend on the menu items and inventory size
  14. Minimum 2 months Working Capital – As cash to rollover and cover wages and essential expenses in the first few months

The main factors that will significantly affect the total capital required are:

  • The Premises – Buying vs Leasing
  • Equipment – Buying New vs Used
  • Working Capital – Budgeting for 3 or 6 months
  • Rental – The Size & Location of the Cafe

Experience is Absolutely Essential

Leave a reply

Experience

In order to open a successful cafe, you really need to know how to run and operate it profitably. Like all other businesses, experience is absolutely essential when opening a cafe.

Cafes are operated in various different ways depending on the owner’s experience and level of involvement.

Many are family operated small businesses with time-tested recipes and systems that have been handed down over generations. Others are spearheaded by one or two owners who are very hands-on in running the business and solving problems as they arise. At the same time, there are an increasing number of corporate owned cafes and franchised brands that compete with the smaller coffee shops.

Relevant Experience

Regardless of what type of cafe you intend to set up, it’s important to have the relevant experience in order to be able to plan and manage the business effectively.

As the owner, it is essential for you to know every part of the operations in detail. Ideally, you have worked in a cafe or better still, you’ve managed the operations for a small restaurant, bar or any food and beverage outlet.

If you havn’t got this knowledge, try to make sure that at least your business partner is experienced in running a cafe. If you don’t have a co-owner, hire a good manager with years of industry know-how.

In fact, where possible, you should try to hire team members who all have experience to contribute towards the individual sections of the new cafe from the kitchen to the customer service areas.

Gaining Experience

Once you’ve got a great team, the next step is to combine all their experience to create your cafe’s new brand, operating processes and better ways of doing things.

In the bar and kitchen, the chefs and baristas should formulate recipes and menu items that offer the cafe’s fundamental appeal. The service team can refine tactics to generate sales, while the admin team devises ways to control costs and run a tight ship.

One of the best ways to gain the specific experience necessary for your cafe, is to formulate a plan with your team and then continually fine tune it from week to week.

Buying vs Leasing a Retail Property

Leave a reply

Buying vs Leasing

The question of whether to buy or lease a property for your cafe largely depends on your business plan, financial circumstances and mindset.

There are a lot of advantages to owning your own property but in many cases, it may be more practical and strategic to enter into a well structured lease.

Advantages of Buying

  • Overheads: Potentially lower monthly operating costs from bank loan repayments compared to rental expenses
  • Rental Increase: No unexpected increases in rental rates when it comes to renewing the lease
  • Lease Renewal: No unexpected need to move out if the landlord chooses not to renew the lease
  • Sunk Costs: Lower risk of wasted renovation costs as improvements to the premises will contribute towards an enhancement of the property’s value

Advantages of Leasing

  • Required Capital: Lower initial capital investment for the property to provide more funds for the business
  • Maintenance: Lower cost of building maintenance where the landlord normally has to pay for these repairs
  • Flexible: Flexibility to move and change locations more easily if there are unforeseen issues with the first property

For first time operators, it would probably be wise to lease a property first and focus the company’s limited resources on building the business, which is in operating a cafe and not real estate investment.

For experienced cafe owners who would like to expand their business after starting in a small way, buying may be worth considering as it does offer greater benefits in the medium to long run.

The Rental, Location and Size of a Cafe

Leave a reply

The Rental

Rental of the business premises is normally one of the most significant running costs of operating a cafe and it is wise to choose carefully when starting up.

The monthly rental cost will depend on the location and size of the actual property.

From the business plan, it should be clear whether the cafe requires a large space or if a small shop lot is sufficient. At the same time, the concept should also help to determine the ideal location for the business.

For example, city-based cafes are often very compact and located in central areas with lots of natural foot traffic and correspondingly high rental rates. In contrast, some cafe’s are destinations at the edge of town where patrons can spend a leisurely time to sip coffee or have a relaxed meal.

Here are some useful points to consider when deciding on the rental location for your cafe:

  1. Concept – confirm your concept, size and location requirements
  2. In the City – choose to be in the city for more potential business but be prepared to pay higher rental costs
  3. Outskirts of Town – get a bigger space by opting for more affordable locations outside of the city center
  4. Advertising – create better awareness by being located in a prominent position in the high street
  5. Marketing – save on rental and spend more on marketing and promotions by opening outside of town

Getting the right location is a critical decision when opening a cafe that could make or break the business from the outset.

Take your time and view as many properties as possible. Try not to rush when making this decision, especially if none of the shops you’ve viewed are suitable.

Remember, you’re going to be spending a lot of time there in the future, so don’t make a rash move just because you’re impatient to start the cafe.

 

A Step-by-Step Guide to Opening a Cafe

Leave a reply

Step-by-step

From business plan and design concept to staff recruitment and confirming your menu pricing, here’s a 25 step guide on how to open a cafe or small restaurant.

While we’ve tried to cover most of key areas when starting up a cafe, there are likely to be topics that havn’t been included in this guide.

Please feel free to share ideas, suggestions and requests for us to cover any of the points in more detail or ask about things that are not listed, by making a comment below.

  1. Concept: Confirm the Concept
  2. Business Plan: Write the Business Plan
  3. Financial Projections: Do a detailed Financial Projection
  4. Profitability: Make sure the Business can Make Money
  5. Funding: Find the Capital Required to Startup the Venture
  6. Location: Look for an Ideal Location for your Business Premises
  7. Rental: Sign a Lease to Rent a Retail Property or Buy it if you can Afford
  8. Renovation: Renovate the Space you’ve rented for the Café to suit your Design Style
  9. Equipment: Purchase all food and beverage equipment for the Kitchen, Bar and other areas
  10. Decorations: Buy Furniture, Fittings and Fixtures to decorate and furnish the café
  11. Coffee Machines: Invest in good coffee making machines that can cater to your café’s size
  12. Signboard: Design an attractive Signboard and place it in a prominent place that’s visible
  13. Branding: Get custom printed menus, napkins, paper bags and drinks coasters with the café’s logo on them
  14. POS: Install a Point of Sale system or some sort of manual way to track and record daily sales
  15. Cash Register: Buy a Cash Register to keep all the money received and make sure there’s a daily float available
  16. Notice Boards: Put up an internal Special’s board with the main menu items so that it’s easy for takeout customers to order
  17. Flyers: Design promotional flyers featuring special offers and an attached discount voucher
  18. Team: Hire and Train the Service staff, Baristas, Kitchen helpers and Café Managers
  19. Uniforms: Get impressive uniforms, aprons, and other accessories for the staff to wear
  20. Supplies: Get all the stocks and supplies necessary to operate the cafe
  21. Tasting: Hold a Food and Beverage tasting session with the team to verify your product quality
  22. Menu: Refine your menu items, their pricing, recipes, ingredients and costs
  23. Licenses: Make sure you have all the required business licenses and health & safety approvals
  24. Bank Account: Open a bank account to deposit daily earnings and pay suppliers for goods supplied
  25. Open: Open your café and start doing business

What Type of Cafe Are You Opening?

Leave a reply

Opening a little coffee shop is a lot easier than trying to start a restaurant type cafe with a full kitchen and food menu.

It’s important to be clear about your concept from the beginning as this will affect many areas of your business plan and financial forecasts.

As a retail business, one of the most significant decisions and expenses for the company is the rental for the cafe’s premises. The rent will be determined by the size and location of the property, so entrepreneurs will need to carefully consider the trade-off between paying higher rates to be in a popular area or finding a cheaper alternative in a quieter part of town.

These decisions will normally depend on your cafe’s concept, which in turn affects all the other areas of the business.

Here are some things to consider:

  1. What’s the Concept
  2. Who’s the Target Market
  3. What are the Opening Times
  4. What’s the Premise Size Required
  5. Where’s the ideal Location for the Cafe
  6. Do you serve Premium or Gourmet Coffee
  7. What other Beverages do you Offer
  8. Do you provide a Snacks or Food Menu
  9. How do you Intend to Prepare the Food
  10. Will you have a Kitchen to Make Fresh Meals
  11. Does the Cafe Offer a Take Out service
  12. How many Staff do you need to Run the Cafe
  13. How many Baristas do you need
  14. Do you serve Alcohol or have a Bar in the Cafe
  15. Is Food available throughout the Day or only at Meal times

 

SWOT Analysis for a Café Business

1 Reply

A vital part of your café’s business plan should be the SWOT Analysis which looks at the various Strengths, Weaknesses, Opportunities and Threats to the venture.

A general rule of thumb is to develop your business and marketing strategy to take advantage of your strengths and minimise exposure to the weaknesses while always being wary of the threats which could affect profits or even the viability of the company.
business
When doing your SWOT, it’s useful to reflect back on your reasons for wanting to open the café. In many cases, the urge to start the business will arise from your potential strengths and/or the opportunity, so these will be easy to do.

However, when it comes to the weaknesses and threats to the business, a lot of people spend too little time in analysing these issues and addressing them, which is why most new businesses fail.

Budding entrepreneurs are optimistically focused on the opportunities and profits when starting a business. If you can, try to spend more time looking at the problems, weaknesses and limitations of your business model, so that you’re fully aware of all potential downsides where possible.

How to Write a Café Business Plan?

2 Replies

business-man

The structure of business plans are almost the same for every company. It’s just the content and strategies that vary from business to business.

Here are 10 of the most important sections in a business plan:

  1. Executive Summary
  2. Company/Background
  3. Management & Team Profiles
  4. Business Activities
  5. Products & Services
  6. Unique Selling Points
  7. Marketing Strategy
  8. Financial Projections
  9. Capital Requirements
  10. Financing Requirements

Depending on your financial position, you may or may not need external investments to open the business. A lot of people who have the money to invest in the startup themselves, often make the mistake on not being as careful in the planning and projections, as there is no one to scrutinise them.

Even if you intend to fund the café with all of your own money, it’s a useful exercise to tighten up the plan and present it to potential investors to see their feedback. By talking to as many people as possible, you’ll get a range of comments to provide different perspectives for you to refine your plan.

Always refine your plan. Your company’s business plan is dynamic and can always be tweaked and improved as you become more experienced in the business.

Do not make the mistake of writing it once when starting up, and then never referring to it again. You business plan should be the blue print for your café that you use as a reference to grow the business and overcome problems along the way.

Write a Business Plan for your new Café

Leave a reply

business plan

Once you’re clear about your goals and objectives for opening a café, it’s time to document an official business plan.

Some business plans can be very long and detailed like a telephone book, while others may be succinctly summarized on the back of an envelop. Where possible, try to avoid waffling on about non-essential information.

Keep it brief but cover all the essential items so that it is a comprehensive solution. It’s fine just to make bullet points of key details without trying to write a literary masterpiece. Concentrate on facts that are relevant and do your research.

Included in the business plan, should be the financial projections for the new business, as well as the capital requirements to fund the venture. At the planning stage, the financial forecasts should try to be as accurate as possible. Along the way, as each of the estimates are confirmed, the financials should be updated regularly.

For example, rental costs will be one of the main expenses for a café. Initially, the plan should have a budget for paying rent, and once the actual premises have been confirmed, the actual true cost should be included to tighten up the business plan.

If you’ve never done a business projection before, ask family and friends for advice from someone who has experience in running a business. He or she doesn’t need to have knowledge in operating a café, although that would be ideal.

In particular, seek feedback from someone who has financial or entrepreneurial experience. Drawing up your business plan will be a lot easier if you get proper guidance and furthermore, the end result will probably be much better than if you tried to do it yourself.