So you are thinking of buying a café!
So often clients look at a café as a great lifestyle business.
Personally, I would love to consider that a café on the beach serving hot strong coffee and cakes, as idyllic and a great way to settle into early retirement. Unfortunately, it is far from that and in some cases hard work especially if it is a seven days a week businesses. Successful cafes run via a successful formula propped up by an owner who has a vision and a personality to entice the customers on a regular basis.
Here are a few pointers we have seen via our clients when they have started to purchase or when they are establishing a café.
Make a list before you start of want from your café. Eg. Size, and Location. Hours open, Equipment and fittings. Do you want to walk in Monday morning and start running the café or are you looking for a more run down one that is cheaper and needs renovation?
Next and most importantly review the lease and the terms. Other than wages and food, rent will be one of your biggest outgoings and may be the first thing you fall behind in if you are not making money. It is important to understand your obligations under the lease such as how long are the lease terms and renewals. Check out the any make good provisions if you exit the lease. A good lawyer can help you here.
If you are in business to serve food, as well as coffee, then understand the food safety regulations about your business. Heath inspections are critical to customer confidence and a smooth operation. When was the last inspection done in the business? Are there any outstanding issues and is there a food safety program that still needs addressing? If you are to purchase the business, are you taking on headaches or can you improve efficiency?
Make sure the café or premises you are leasing has a complying grease trap! Check if there is one, as if not you may be up for a significant outlay depending on local laws.
Equipment: who owns what and is anything leased? It’s common for coffee machines and grinders and sometimes outdoor settings to belong to the coffee brand that the café has alignment too via an agreement and not necessarily owned by the cafe owner. Check if any equipment is under a lease arrangement; as there may be a payout figure that may need to negotiate or taken over from existing owner. Often the payout amount doesn’t reflect the value of the equipment in question.
When taking over any business, staff and keeping the existing or get new ones is always an interesting matter to address. If it’s your first time running a café and you are purchasing a cafe with existing staff, take caution in this area. While existing staff can be fantastic, it can work reverse sometimes. Staff will know that you are new to the industry and may take advantage in both the backend of the kitchen or walking away with customers to the next café they choose to work. Look at whom you are employing and if its family then make sure you set rules on rosters etc. and free lunches.
Finally look at your menus. Remember the more elaborate the menu the harder to keep the café operating at a productive pace. Too many suppliers mean lots of paperwork. Too many choices on the menu also mean lots of work in the kitchen. There are lots to be said about a basic but smart menu
Lots of luck with your quest in finding a café that works for you. If we can help you with a start up plan, structure or ongoing financial guidance lets hook up for a coffee and discuss your needs. Best wishes Geoff