£1 Cafe

[BizGurl]

I think this is fantastic! Not that I eat fry ups too often. I am wondering about the quality of food plus the economical side of it though as I assume they employ staff and rent the premise. Why has it not been done before? I've never looked into the costs of running a cafe before though so perhaps it's totally doable. :/

http://www.dailymail.co.uk/news/art...atery-Britains-deprived-areas-fry-just-1.html

 

[superdooper500]

I've always been guilty of whenever I visit the local ikea to get their 99p breakfast with free coffee (discounted using ikea family card), and sometimes even going to ikea just to cure a hangover. They have put the price up to a scandalous £1.50 or something now though haha!

Good luck to them, I can't imagine its the best food in the world, but I know you can probably put together that plate of food for around 20p worth of ingredients if you have decent buying power and buy cheap cheap cheap.

If it employs a few people, gets a hot meal into a few people and takes over what was otherwise an empty shop, then its not the worst idea I've ever heard, pile 'em high, sell 'em cheap.

 

[Ryan McFadyen]

Interesting but it can't be comfortable running a business on such incredibly thin profit margins, if any. Staff costs alone are gonna wipe out most of your takings most days surely.

 

[BizGurl]

I've always been guilty of whenever I visit the local ikea to get their 99p breakfast with free coffee (discounted using ikea family card), and sometimes even going to ikea just to cure a hangover. They have put the price up to a scandalous £1.50 or something now though haha!

Good luck to them, I can't imagine its the best food in the world, but I know you can probably put together that plate of food for around 20p worth of ingredients if you have decent buying power and buy cheap cheap cheap.

If it employs a few people, gets a hot meal into a few people and takes over what was otherwise an empty shop, then its not the worst idea I've ever heard, pile 'em high, sell 'em cheap.

I agree.

RE: IKEA, we used to pass by fairly regularly just for the meatball meal

 

[superdooper500]

Interesting but it can't be comfortable running a business on such incredibly thin profit margins, if any. Staff costs alone are gonna wipe out most of your takings most days surely.

I think the fry up was the headline, but by the looks of it people were going for sausage/bacon baps, teas and coffees, which I envisage have higher margins, and people run in to purchase and then take away. No reason why they couldn't get out 150 tea and bacon bap combos an hour every hour between 7am and 11am, which is £1200 turnover, plus the eat ins, upsells and other sundries. Before you know it that shop could turn over £500,000 a year just on the breakfast trade provided they got their systems right.

 

[alwaysinamess]

Interesting but it can't be comfortable running a business on such incredibly thin profit margins, if any. Staff costs alone are gonna wipe out most of your takings most days surely.

Exactly where this country has gone wrong, aka min wage, if you could serve £1 brekkies then you could have the much lower wage staff who would buy these brekkies

A win win, Minimum wage and Taxation causes much less social interaction. That is what I have noticed since I grew up in this country, others who do not have this issue I think the eateries and bars and shops benefit.

 

[Richie N]

I'd give it 6 months if that, it won't survive on those charges.
They will need to consider when customers are having more sausages or bacon. That's where it will hit their margins.

 

I'd give it 6 months if that, it won't survive on those charges.
They will need to consider when customers are having more sausages or bacon. That's where it will hit their margins.

It will be the extra's that they make money on.

You would be surprised how cheap you can get food for if you know the right sources.

 

[garyk]

It will be the extra's that they make money on.

You would be surprised how cheap you can get food for if you know the right sources.

Yes I hear ikea meatballs are quite cheap given the ingredients....

 

[WHARTY]

Well i think as soon as others catch on to this concept they will open another one as competition in the same town (99p Bakery, 99p Cafe) more than one in the same town and the concept is dead.

I can only see this concept works on volume sales. One more shop opens and suddenly the takings halve. Maybe a case of first in makes a killing but can only see this concept lasting a couple of years at most.

 

Well i think as soon as others catch on to this concept they will open another one as competition in the same town (99p Bakery, 99p Cafe) more than one in the same town and the concept is dead.

I can only see this concept works on volume sales. One more shop opens and suddenly the takings halve. Maybe a case of first in makes a killing but can only see this concept lasting a couple of years at most.

You mean like this guy.

"Tesco, which this week announced record profits. Tesco's origins date back to 1919, when the hucksterish Joseph Cohen opened a market stall in London's East End. In marked contrast to Sainsbury's, Cohen's guiding philosophy was "pile 'em high and flog 'em cheap". By the 1960s, he had built Tesco into a chain capable of rivalling Sainsbury's."

 

[Talay]

I once had a cafe near me which did cheap but very small breakfasts which attracted people in but then they loaded the plate with staff very good at upselling "an extra bacon love ?" or "you sure you don't want another sausage with that ?". Also, the tea or coffee wasn't included.

It was a greasy spoon but great after a session.

 

[AlexandraS]

Cohen's guiding philosophy was "pile 'em high and flog 'em cheap". By the 1960s, he had built Tesco into a chain capable of rivalling Sainsbury's."

Probably paid more tax in 1960 too if we're talking low margins/low profits/low wages/low taxes as being the original business model!

As for the quid cafe, I'm not convinced. I think it will attract a demographic with fewer readies, the prices will need to go up at some point - they'll run off to whichever pound shop/cafe/cardboard eatery has replaced them and it will be hard to then lure in a more discerning customer.

 

[MOIC]

A Great Novel Idea !

The sign is the attraction.

As long as the quality is decent (given the costs), it will thrive anywhere.

Will lead to many 'copycats' in many industries.........

lets get the ball rolling...............

PoundCosmetics

PoundUnderwear

PoundFashionAccessories

..............or could this be a start of a new thread?

 

[Richie N]

It will be the extra's that they make money on.

You would be surprised how cheap you can get food for if you know the right sources.

I owned a eatery a couple of years ago and this Pound cafe won't last long. Food prices have increased and so have overheads, wages etc.

 

[Deleted member 162294]

Beans (if you don't buy heinz) and eggs are reasonably cheap though I do remember there was a time when the price of eggs suddenly jumped. Meat however is a different story and I would be worried about the cost. None of the items are hard to cook and can be done with little skill. They would probably just need 2 people running the whole thing, 1 to cook and the other to work the till. Considering the skill involved I can't imagine they are getting much above minimum wage.

They are making their money back on the extra items, deserts and drinks, the £1 breakfast is just the bait. What I would be concerned about is with people taking their sweet time sitting at the tables and just chatting, slowly sipping up their last bit of tea.

 

[fisicx]

I like decent food. I prefer to pay a bit more and eat things that taste good and sit in a pleasant atmosphere.

This is just going to be the cheapest junk they can buy. It's not going to be a pleasant experienace.

It's also indicative of what's wrong with everything. Instead of paying a reasonable price everyone wants things as cheap as possible. All you end up with is people working on minimum wages who have nothing left to invest. End result: little or no growth.

 

[vvaannmmaann]

Didn't Tesco do this some time ago? IIRC they didn't last too long.

 

[groovyjon]

more than one in the same town and the concept is dead.

That's not what happened when poundworld and 99p stores opened up in the same towns as poundland. That concept seems to be very much alive and kicking.

 

[AlexandraS]

Didn't Tesco do this some time ago? IIRC they didn't last too long.

Some time ago for sure. 99p breakfast back in the early90's - using tesco value products. Lord alone knows which factory sweepings would constitute a 99p breakfast 20 years on!

 

[Chris Ashdown]

Sainsbury's used to offer a full breakfast at I think £1.99 with very large portions and good quality, but i guess they did it as a loss to get people in

Hard to imagine at £1.00 the quality of the food must be quite poor sausages full of bread etc, but around here one cafe sells bacon rolls for £0.50

 

[NicholasTaylor]

I'd have to see someone else's brekkie before I ordered mine...simply to get over the thought of 'What the hell is it made of!?" A quid...haven't paid anything less than 4quid in Brighton!

 

[JoeyCart]

Sounds like an interesting idea - not going to be easy on those prices.

 

[XLIN.Ltd]

I think it should be possible to offer breakfast for £1 if the buying is done with proper care and in bulk. There was recently some news on BBC where the savings adviser / dietitian demonstrated that the proper meal could cost less than 50 p.

It should also be possible to get premises at very reasonable rate since many commercial premises are lying unused.

Volunteers / Apprentices could help keep the wage bill down.

I think it is a good idea and may find more such cafes opening up

 

[Scott-Copywriter]

Let's figure it out! I'm using some online wholesale and supermarket prices here.

You can get 15 eggs for £1.30, so that's about 9p each.

Half a tin of value baked beans is about 12p.

12kg of cheap bacon is about £40. If we assume each rasher is about 25-30 grams, that's 480 rashers, so that's about 10p for one, rounding up.

20 smartprice sausages are £1, so that's 5p per sausage.

1 egg = 9p
bacon slice = 10p
beans = 12p
sausage = 5p

Total cost = 36p per breakfast

Profit margin = 64p

300 customer on first day = £192 profit

Extrapolating that across a 6 day week but only counting 5 days to factor in a possible reduction in sales = £960 per week.

I've seen some small shops getting by on much less! Plus, this doesn't include the potentially much larger profit margins on toast and cups of tea or coffee. They cost pennies too.

 

[groovyjon]

300 customer on first day = £192 profit.

That's gross profit of course. There's a lot of other costs to consider, wages for one. Assuming 2 x youngsters on minimum wage for 6 hours a day, that alone will take £59.76 off the profit.

 

[Scott-Copywriter]

That's gross profit of course. There's a lot of other costs to consider, wages for one. Assuming 2 x youngsters on minimum wage for 6 hours a day, that alone will take £59.76 off the profit.

Of course, but I'm not going to spend time figuring out an entire business model of a cafe.

There will be plenty of other costs too. Staff, rent, rates, accounting etc. However, with gross profit anywhere near £192 per day, there's room to swallow a number of costs.

Even if you wiped an entire £100 per day off that profit in costs unrelated to the meal itself, it would still be almost £500 per week net profit. That also fails to include any additional profit made in tea, coffee and toast. They're usually sold as add-ons to a cheap meal to lure people in, so in reality, most of these breakfasts are probably coming to around £1.50 all in, or maybe more.

 

[Richie N]

Sorry I don't agree with the prices of sausages and bacon, it's definitely more than that trust me..
Smart price sausages most probably contain horsemeat....

 

[Philip Hoyle]

Let's figure it out! I'm using some online wholesale and supermarket prices here.

You can get 15 eggs for £1.30, so that's about 9p each.

Half a tin of value baked beans is about 12p.

12kg of cheap bacon is about £40. If we assume each rasher is about 25-30 grams, that's 480 rashers, so that's about 10p for one, rounding up.

20 smartprice sausages are £1, so that's 5p per sausage.

1 egg = 9p
bacon slice = 10p
beans = 12p
sausage = 5p

Total cost = 36p per breakfast

Profit margin = 64p

300 customer on first day = £192 profit

Extrapolating that across a 6 day week but only counting 5 days to factor in a possible reduction in sales = £960 per week.

I've seen some small shops getting by on much less! Plus, this doesn't include the potentially much larger profit margins on toast and cups of tea or coffee. They cost pennies too.

Missed a few things such as wages, vat and overheads.

Firstly, VAT on the £1, so that's 17p, leaving net sales 83p less cost of food 36p gives 47p. 300 customers gives total gross profit £141. Even with just two employees (which is verging on the impossible for 2 people to serve 300!) on say £6 per hour for 7 hours is £84, leaving just £57 before rent, power, rates, water, wastage, crockery, cutlery, cleaning, bank charges, administration, insurance, etc.

They're making no profit at all on just selling the £1 breakfasts.

They're relying on people "topping up" with drinks, extras etc. and also buying other things in the shop such as cakes, sandwiches, pies etc to takeaway for later.

It's nothing more than a "loss leader" to get people in the shop.

 

[JonathanSEO]

Interesting but it can't be comfortable running a business on such incredibly thin profit margins, if any. Staff costs alone are gonna wipe out most of your takings most days surely.

I'd give it 6 months if that, it won't survive on those charges.
They will need to consider when customers are having more sausages or bacon. That's where it will hit their margins.

I owned a eatery a couple of years ago and this Pound cafe won't last long. Food prices have increased and so have overheads, wages etc.

Gotta love how on this forum that everyone is writing off this business and saying it won't last.

Yet when someone posts about wanting to start a new search engine using WordPress on a tight budget they get a ton of encouragement

Clearly this will work, it has significant backing, it's owned by Sayers, one of the largest outlets in the North, who run multiple chains. Do you think margins are going to be a problem here? I'd expect more to open up in the coming months, not less.

It will be the extra's that they make money on.

You would be surprised how cheap you can get food for if you know the right sources.

Indeed Earl.

 

[Chris34]

Let's figure it out! I'm using some online wholesale and supermarket prices here.

You can get 15 eggs for £1.30, so that's about 9p each.

Half a tin of value baked beans is about 12p.

12kg of cheap bacon is about £40. If we assume each rasher is about 25-30 grams, that's 480 rashers, so that's about 10p for one, rounding up.

20 smartprice sausages are £1, so that's 5p per sausage.

1 egg = 9p
bacon slice = 10p
beans = 12p
sausage = 5p

Total cost = 36p per breakfast

Profit margin = 64p

300 customer on first day = £192 profit

Extrapolating that across a 6 day week but only counting 5 days to factor in a possible reduction in sales = £960 per week.

I've seen some small shops getting by on much less! Plus, this doesn't include the potentially much larger profit margins on toast and cups of tea or coffee. They cost pennies too.

They had 300 customers in the first 1.5 hours, so the total for the day was higher, probably a lot higher.


...'I think we've had around 300 people in the first hour-and-a-half and we've been rushed off our feet.' ....



Chris.

 

[Richie N]

Gotta love how on this forum that everyone is writing off this business and saying it won't last.

Yet when someone posts about wanting to start a new search engine using WordPress on a tight budget they get a ton of encouragement

Clearly this will work, it has significant backing, it's owned by Sayers, one of the largest outlets in the North, who run multiple chains. Do you think margins are going to be a problem here? I'd expect more to open up in the coming months, not less.



Indeed Earl.

I've owned an eatery and I know the costs involved.
Food costs have driven inflation to rise, wages have rised, etc
Everyone is entitled to their opinion, it is a forum after all.

Revisit this in 12 months and see if they have changed their pricing structure or still around.
I wouldn't be surprised if it's £1.00 per item in 12 months...

 

[directmarketingadvice]

I think this is fantastic! Not that I eat fry ups too often. I am wondering about the quality of food plus the economical side of it though as I assume they employ staff and rent the premise. Why has it not been done before? I've never looked into the costs of running a cafe before though so perhaps it's totally doable. :/

I went past a pub yesterday lunchtime that was advertising any pint or any burger for £1 (1pm - 5 pm).

I don't know how well it's working for them, or how long they've had the offer. (Not my part of town.)

Steve

 

[Scott-Copywriter]

Missed a few things such as wages, vat and overheads.

Firstly, VAT on the £1, so that's 17p, leaving net sales 83p less cost of food 64p gives 19p. 300 customers gives total gross profit £57. Even with just one employee on say £6 per hour for 7 hours is £42, leaving just £15 before rent, power, rates, water, wastage, crockery, cutlery, cleaning, etc.

They're making no profit at all on just selling the £1 breakfasts.

They're relying on people "topping up" with drinks, extras etc. and also buying other things in the shop such as cakes, sandwiches, pies etc to takeaway for later.

It's nothing more than a "loss leader" to get people in the shop.

The cost of food is 36p rounded up, not 64p. That's the gross profit margin.

At 83p per meal income after VAT, the gross profit would still be £141 per day. Minus wages and running costs, there's definitely room there for a slim profit. It's small, but profit nonetheless with all costs covered.

It certainly isn't a loss leader if you run the business right.

You can then add on the top ups such as drinks, toast and other things, which would only add more profit to the existing breakfast profit.

I know many high street businesses which desperately struggle to break even, so if the cafe is covering all costs and making a small profit to give them some leeway, then it's a viable business model.

PS: As a disclaimer before anyone else wants to start throwing figures my way, this is obviously just a simplistic look at the business model to see if the numbers add up.

 

[groovyjon]

Gotta love how on this forum that everyone is writing off this business and saying it won't last.

I'm more intrigued than writing it off.

They also have the "hugely successful Poundbakery, which has opened 60 stores in the north west in two years" so they're not complete novices.

To give further food for thought (pun intended), their last filed accounts show:
£1,037,000 cash balance
£5,596,000 current liabilities
£3,327,000 current assets

 

[JonathanSEO]

I've owned an eatery and I know the costs involved.
Food costs have driven inflation to rise, wages have rised, etc
Everyone is entitled to their opinion, it is a forum after all.

Revisit this in 12 months and see if they have changed their pricing structure or still around.
I wouldn't be surprised if it's £1.00 per item in 12 months...

Yes, but you can't compare a sole trader to a company that has hundreds of stores in the UK.

 

[Richie N]

Yes, but you can't compare a sole trader to a company that has hundreds of stores in the UK.

This is the first cafe that they have done, the others are bakers.

So what about Woolworths, MFI etc, they all went under, regardless whether they are a multi-national or sole trader, if they don't make a profit then they will go under.

 

Revisit this in 12 months and see if they have changed their pricing structure or still around.
I wouldn't be surprised if it's £1.00 per item in 12 months...

They may well change their pricing in 12 months,by which time the will have a nice customer base.

 

[Scott-Copywriter]

To be honest, my rough cost estimation is probably on the high side. If you really haggled for some good bulk deals, I reckon the breakfasts could cost as little as 30p each for the ingredients.

Plus, my calculation takes into account arguably the most expensive options for the breakfast. Don't forget that you can choose from egg, bacon, sausage, beans, hash brown and tomatoes. If you chose egg, sausage, hash brown and a tomato, the price would be even less.

Then you can take into account top-ups. They could probably quite easily make 10-20p profit per slice of toast and per cup of tea or coffee if they also sell those incredibly cheap.

It's not a bad business model when you look into it. They just need high volume.

 

[MOIC]

It's the novelty that will attract the customers.

Like any business, they must maintain decent quality, even allowing for the price, to be successful, and last.

The food business takes along time to build your reputation...................and a very short time to ruin it.

Lets hope they give good value for money and succeed.

I am sure they have done thier costs and calculated a profit margin, they also have the bakery next door.

Best of luck to them.