Owning and operating a cafe??

[cookie33]

Looking for those who have been involved in this form of business.

The story is my self and the girl are looking at entering the populated yet extremely popular cafe market here in Melbourne. We have done a little research and know of friends who are in this field but I'm also keen to hear from others and to know of positive outcomes and not so positive outcomes.

* initial start up costs?
* monthly costs?
* suburbs or city?
* unique selling points?
* profits and margins?

I am looking at inner city suburbs with a business feel, you need your morning traffic and regulars. I am also thinking it may be an idea for me to still work whilst she rubs day to day operations, at least it provides some security for the both of us. I will handle financials but also have advisers and accountants I will consult with.

Basically looking at mutual povs weighing in with positives and negatives as well as any ideas or advice! Can cafes be a sustained profitable business??

Cheers

 

[Simon_Nesbit]

Looking for those who have been involved in this form of business.

The story is my self and the girl are looking at entering the populated yet extremely popular cafe market here in Melbourne. We have done a little research and know of friends who are in this field but I'm also keen to hear from others and to know of positive outcomes and not so positive outcomes.

* initial start up costs?
* monthly costs?
* suburbs or city?
* unique selling points?
* profits and margins?

I am looking at inner city suburbs with a business feel, you need your morning traffic and regulars. I am also thinking it may be an idea for me to still work whilst she rubs day to dayoperations, at least it provides some security for the both of us. I will handle financials but also have advisers and accountants I will consult with.

Basically looking at mutual povs weighing in with positives and negatives as well as any ideas or advice! Can cafes be a sustained profitable business??

Cheers

One way to be profitable I guess. Are you comfortable with that though?


Seriously, my wife and I looked into purchasing a "franchise" - essentially the "we really like drinking there, I could do client interviews from there, we've got the money - could keep our "real" jobs whilst we did it" type thoughtlines.

Once we started putting numbers to paper (well spreadsheet) however, it became obvious that without working 50+ in it yourself it's a very inefficient (and risky) proposition.

From dealing with clients previously who have run similar businesses, the time it takes to build reliable clientele is a major hurdle to overcome. The best barista, with the best eqiupment and finest coffee won't make you any money (indeed their attitude to the "perfect" cuppa could cost you $$$ and time), unless you get the quantity through the door first.

I've seen one extremely successful coffee shop go belly-up simply because they decided to stop the "discount" (ie cost price) coffees for the nearby accounting firm. Employees stopped going there, and that small (<5%) difference in quantity started a chain reaction.

Look around at the busiest cafe's - they usually are the ones with the biggest/brightest signs, sweetest coffees/syrups, and often not a lot of 'charm' or charisma.

If your partner is the sort of person who genuinely loves the interactions (or as evidenced by other threads on here exceedingly beautiful and/or flirtacious) then it can be very successful. But early doors can be very time-consuming.

 

[morgoth]

Looking for those who have been involved in this form of business.

The story is my self and the girl are looking at entering the populated yet extremely popular cafe market here in Melbourne. We have done a little research and know of friends who are in this field but I'm also keen to hear from others and to know of positive outcomes and not so positive outcomes.

* initial start up costs?
* monthly costs?
* suburbs or city?
* unique selling points?
* profits and margins?

I am looking at inner city suburbs with a business feel, you need your morning traffic and regulars. I am also thinking it may be an idea for me to still work whilst she rubs day to day operations, at least it provides some security for the both of us. I will handle financials but also have advisers and accountants I will consult with.

Basically looking at mutual povs weighing in with positives and negatives as well as any ideas or advice! Can cafes be a sustained profitable business??

Cheers

New a bloke in Sydney, very, very good operator. He took out a lease in the MLC centre food court, spent $250,000 on up front's, fit out, lease etc and sold it 14 months later for a million. I estimated that he was bringing in about $40 to $50k a week in gross cash flow. Keys for him were:

1. Location, location, location - above a underground station with a 70 story building above it packed with white collar professionals. You can have the best cafe but if the location is bad or you have too much competition you will struggle.

2. Made sure he serviced his market well. His highest margin items were coffe and toast. He did 800 coffees a day at $3 and went trough about 12 dozen loafs of bread at $2 a slice. Key was to be fast, people did not want to wait around. He ran the coffee and his business partner ran the toast to make sure it was run properly.

3. He had a great selection of pre-made sandwiches, sold 500 wraps, 500 turkish and 500 roll a day, plus made to order and drinks. He as a chef by trade so had it set up well, baked his own bread on site and cooked most items on site.

From my accounting back ground (sounds like you might be one too) it is about working out your break even point plus your return on capital, and seeing how much you have to sell to reach that point and then determining whether that is acheivable.

Failure to plan is planning to fail.

 

[cookie33]

Interesting replies.

My background is estimating but in the building industry but am now in b2b sales and management with my family business.

The thing that is critical in this form of business more than anything else us location! Not many careers/business opportunities could have you 5k gross through the till by 3pm, this is why I see this as a genuine money maker.

I live in a nice suburban cafe district in inner northern suburbia of Melbourne and the local cafes here all 'seem' to be quite successful. They service there regulars as well as the random foot trafic, most importantly all the cafes here get fantastic exposure.

Not quite sure I'd be overly keen on working 50+ in the cafe with the mrs, think it would drive me nuts although I would be willing to do what's required.

To be honest I'm more looking at taking over a already viable and working business but with the idea of making it my own with our own key selling points. It seems the safest way to go although I'd love to have the finacial means to spend 250k on fittings and stock and doing it from scratch. I would be happy to invest 100k, maybe a little more and giving it a go.

Location, location, location. The key!