Advice for first time cafe owner

[TheFortune8]

I've started looking into the possibility of buying an established cafe that is currently surviving ... paying its way ... not making a profit. The owner is looking to retire after her business partner left the business to start a family.

The cafe is located in a busy little thoroughfare, just off the main shopping area in town.

I have lots of ideas about how they could simplify their menu, focusing on soups, sandwiches, teas, coffee and cakes.

They need to change their name from something which is a bit arty farty to something that includes the word "cafe". The business doesn't say anything like "cafe, welcome, come on in and sample our great menu". It's called "No 282" (not really, but the name is simply it's street number and you're left to guess what goes on inside).

They need to take all those A4 sheets of paper from the window (including the order not to put chairs up against the door!). They need to make it more welcoming, light and friendly and change their 5 laminated menu sheets into a single menu mini-booklet.

I've started work on the business plan, but have yet to see their profit and loss account - will request that from the agent on Monday.

I have bought "Starting and running a sandwich-coffee bar" from Amazon which is a great book written from first hand experience.

I'd really love to turn my passion for fresh simple food into a business, but here's the problem.

I have no professional experience or training in cooking, catering, food preparation or running a business.

But how hard can it be?? HaHa

What's the fastest way I could get up to speed with training myself? Should I just learn on the job from the existing part time staff (There's 10 in total!) Could I get by with minimum safety certification?

Am I setting myself up for a lot of problems by rushing into this, or should I just run with passion, enthusiasm, dedication and a lot of hard work?

Any comments or advice greatly appreciated.

 

[Richie N]

HI,

You should get yourself a Food Hygiene, Health & Safety Certificate. Loads of training companies do these including local colleges.
You could also study NVQ's at your local college, in Food Preparation & Cooking, Catering & Hospitality.

Good luck with the venture.

 

[sysops]

Look closely at the figures. How much of an increase in sales will it take to make this a successful business? 5%? 50%? 200%?

 

[dynamic08]

fortune sysops is right. What is the number?

I would suggest targetting regular customers offer them a loyalty card or something. I used to eat in the same cafe most days.

Friendly staff is key. Prices not so important but people like good value for money. Personally I would make tea and coffea dirt cheap to get the punters in and make the money on the food.

People will see the queues and guess the food mut be great. Just my initial thoughts....

 

[papverpoppies]

I've started looking into the possibility of buying an established cafe that is currently surviving ... paying its way ... not making a profit. The owner is looking to retire after her business partner left the business to start a family.

The cafe is located in a busy little thoroughfare, just off the main shopping area in town.

I have lots of ideas about how they could simplify their menu, focusing on soups, sandwiches, teas, coffee and cakes.

They need to change their name from something which is a bit arty farty to something that includes the word "cafe". The business doesn't say anything like "cafe, welcome, come on in and sample our great menu". It's called "No 282" (not really, but the name is simply it's street number and you're left to guess what goes on inside).

They need to take all those A4 sheets of paper from the window (including the order not to put chairs up against the door!). They need to make it more welcoming, light and friendly and change their 5 laminated menu sheets into a single menu mini-booklet.

I've started work on the business plan, but have yet to see their profit and loss account - will request that from the agent on Monday.

I have bought "Starting and running a sandwich-coffee bar" from Amazon which is a great book written from first hand experience.

I'd really love to turn my passion for fresh simple food into a business, but here's the problem.

I have no professional experience or training in cooking, catering, food preparation or running a business.

But how hard can it be?? HaHa

What's the fastest way I could get up to speed with training myself? Should I just learn on the job from the existing part time staff (There's 10 in total!) Could I get by with minimum safety certification?

Am I setting myself up for a lot of problems by rushing into this, or should I just run with passion, enthusiasm, dedication and a lot of hard work?

Any comments or advice greatly appreciated.

Whilst I understand your concerns...a visit to your website leads me to ask several questions:-

You whole site also seems to be geared up to mentoring people and helping them undestand what they want in life (sorry if I have got that wrong)
Example:-


Are you ready to give more thought to

• where you're going
• what you really want
• what you could do
• the person you could be

So I would have thought you could answer your own questions (especially as you will know the area, and the local cliental) better than anyone of this board..

You also had this on your site (but the links does not work)

Avoid business start up failure

So, why are you not follwing your own advice, and I guess the advice that your clients pay for?

Poppy

 

[TheFortune8]

Just a quick dash in and out here I'm afraid. Many thanks for your comments. I'll read again, reflect and respond tomorrow.

The numbers will of course be crucial to determine the scale of the challenge but I was wondering really whether it would be possible for me to hit the deck running without industry experience. I guess we all think other people's jobs are easy until we try them. I wondered if anyone had any insights on possible pitfalls with cafes. I will of course make sure I get the right Food Safety and Health & Safety Certification ... will need to Google procedures for that - local EHO?

(PS all other websites mentioned in my sig are what you might call thinking aloud and not connected with this venture - it's time to get serious and focus on one thing! Will update profile tomorrow. Other half calling me away from PC to go out for a meal which will of course be part research!)

 

[david9108]

Well I admire you for having the drive to look into however I would flag up a couple of things as someone who grew up in a family in the catering industry.

The biggest problem with a cafe business is staff. You generally need a relatively large number of them and pay them relatively little. As a result you do not get the best 'quality'. The ytend to have a tendency to get sick or (big shock) take holidays. This means running the business can be made more difficult as you are so dependent on these lowly paid, poorly motivated staff. My family got round it by making the staff feel valued - something that is much harder and takes a lot more time and effort than you might imagine.

Another problem is it tends to be a very competitive market - everyone believes because they can cook some soup and toast a sandwich they can make it in catering so you may find that there are a lotof competitors - not just cafes but burger vans, sandwich rounds etc.

One good way to expand the business would be to have a seperate evening menu (but this would depend on the location of the business). Another good way to expand the business would be to get into doing outside catering (i.e. for office meetings etc). Hope thats not all negative and I haven't put you off!

 

[TheFortune8]

fortune sysops is right. What is the number?

I would suggest targetting regular customers offer them a loyalty card or something. I used to eat in the same cafe most days.

Friendly staff is key. Prices not so important but people like good value for money. Personally I would make tea and coffea dirt cheap to get the punters in and make the money on the food.

People will see the queues and guess the food mut be great. Just my initial thoughts....

Thanks sysops and dynamic08. Hopefully I'll be able to see the figures for the last three years by the end of the week, but my "back of a fag packet" calculations say I'll need a £100k loan repaid over 5 years. Sales will need to increase by 120% so that I can pay myself £15k a year ... !!!

Things get more interesting when the loan is repaid ... but is this achievable??? ... I guess the bank manager will decide if my business plan is convincing:|.

I guess the key is to focus on getting simple things right and not to try to be all things to all people. Simple menu, quick service, great coffee, teas cake and light snacks.

Promotions, special offers, loyalty cards will all need to be part of the marketing mix. My "Free Lunch" idea is a winner I'm sure (it's a secret ... pity someone's already registered FreeLunch.com though )

 

[deniser]

There are lots of threads on here about starting or running a cafe. I would search for the words "cafe" "coffee shop" "catering" and read them all.

You will need to consider very carefully why the existing business is not profitable. They may have tried various different things in the past ending up with what they have now.

 

[TheFortune8]

Well I admire you for having the drive to look into however I would flag up a couple of things as someone who grew up in a family in the catering industry.

The biggest problem with a cafe business is staff. You generally need a relatively large number of them and pay them relatively little. As a result you do not get the best 'quality'. The ytend to have a tendency to get sick or (big shock) take holidays. This means running the business can be made more difficult as you are so dependent on these lowly paid, poorly motivated staff. My family got round it by making the staff feel valued - something that is much harder and takes a lot more time and effort than you might imagine.

Another problem is it tends to be a very competitive market - everyone believes because they can cook some soup and toast a sandwich they can make it in catering so you may find that there are a lotof competitors - not just cafes but burger vans, sandwich rounds etc.

One good way to expand the business would be to have a seperate evening menu (but this would depend on the location of the business). Another good way to expand the business would be to get into doing outside catering (i.e. for office meetings etc). Hope thats not all negative and I haven't put you off!

Great post David, thanks. No you haven't put me off and I can see how getting the most out of low paid staff could be a problem. Creating the right working environment and appreciating them as individuals (and not slave labour!) will hopefully help.

The cafe is currently open 8am to 5pm, but there is scope to open in the evening. The shops in the area close at 5 and it's not visible to passing traffic. They do occasionally open up for a local group charging £12/hour for 2 staff plus cost of teas/coffees/cakes. Maybe developing this and doing a special birthday party menu for evenings could work?

 

[TheFortune8]

There are lots of threads on here about starting or running a cafe. I would search for the words "cafe" "coffee shop" "catering" and read them all.

You will need to consider very carefully why the existing business is not profitable. They may have tried various different things in the past ending up with what they have now.

Thanks deniser - I'll start searching now ...

Why isn't the current business profitable? In my opinion it's nothing to do with the credit cruch, the location or the competition. I think it's more to do with marketing and creating a welcoming atmosphere.

First of all you have to look very carefully to see the name of the business. (They've called it the number of the building - for sake of argument lets say it's number 282 - so in tiny writing above a window is "two hundred and eighty two" in classic handwriting). There's a green sign with gold lettering sticking out from the building and if you look carefully it says "coffee house" in small writing underneath "two hundred and eighty two".

Inside, it's very cold and clinical with no music - it's sooooo quiet. The idea was to create a Georgian tea room (I think), but with tables too close together and few customers in the window seats it must be a mystery to most passers by what goes on in there.

A "Cafe open" sign costs just £94. That would be a good investment for a start ... as long as you don't cheapen the place too much! http://www.signbuyer.co.uk/index.as...o.uk/ekmps/shops/bracey77/images/cafeopen.jpg

But it is a great question deniser - I'll give it a lot more thought about what it will take to turn this business around and make it profitable. If it was that easy ... well, surely it would have been tried? But, maybe not!

 

Hi,
I think that you are gaining some superb advice here on the forum. , However, the most underlying thing to remember in business is that business (what ever it is) is 99% marketing ie how to get people to your business, how to attract customers and how to get them coming back again and again - yes?
Everything that you do from making the cafe look appealing to creating the most enticing menu and the best value - stems from understanding who your customer/who are your niche. In today's world `niche` marketing is the way forward, the biggest mistake that you could every make in business is to try to serve everyone. My advise to you then is to start from scratch and ask these two fundamental questions and answer them as fully as possible:-
1. What is your UPB ( Unique perceived benefit) in other words - from your customers point of view, why should they come to your business and not to your competition. What is the biggest benefit they can gain from attending your cafe?
2.What is your USP (Unique Selling Proposition) in other words, what makes your business so unique, what do you offer that is enticing and special and makes you stand out from your competition.
Only when you have understood and clarified these two can you then go on and consider your Branding, your name and any visuals that you will always use to define and tell who you are etc.

If you would like to answer question 1 & 2 and send the answers on to me, I would be more than happy to give your further direction - I offer free consultations and evaluations to small business, it is my speciality
My site is www.bloomingbusiness.co.uk though unfortunately the "new" site launch is not until next week which gives detailed resources and information on my marketing mentoring Programme and course plus free resources and forums etc. However if you would like to sign up on the existing site I will send you my free gift "Social Marketing, Don't Get Left Behind" book and audio - and you will be presented with the full sites services as soon as they are launched - such a drag waiting - but it is going to be worth the wait so I shouldn't moan.
In the meantime
1. Answer and send on to me 1 & 2 above
2. Sign up to recieve your free "Social Marketing, Don't Get Left Behind" book and audio
I look forward to hearing from you
best wishes
Joy

 

[Duke Fame]

You need to look at the figures, but also what sort of business is it. Do the accounts reflect companies house records. If a sole trader / partnership, how does that compare with tax returns.

Go and sit down and watch what is going on. Watch who is comeing in, what they are spending, how long they stay etc.

Then bear in mind if your ideas for the business will still keep these customers. If the clients are all elderly folk who like a tea and scone then are they going to still come in if you change over to emphaisise the Mocachoccadoublepenatationachini with expensive carrot cake type menu.

You need to also look at who's passing by and not going in, are there loads of young professionals / young rich bored housewife types who are passing the cafe by becasue it doesn't currently appeal?

If you are going to make sweeping changes, then you can almost ignore the current figures as you arenn't going to have the same customers. All you need to note in this case is the rent / rates, utilites etc. You are alos hardly caring if it's a going concern, all you care about is the premises

 

[TheFortune8]

Great questions Joy and I don't have an immediate full answer. I do know that when Gordon Ramsey goes into failing restaurants he generally simplifies by specialising. (Although this is not a restaurant sames rules apply I'm sure)

Agree with you on marketing, although I never thought I'd say that - I've been a backroom boy all my life believing it's not what something looks like that counts, it's what it does. Now I know that both function and appearance matter enormously.

David Mitchell in the Observer said that all our purchases "aren't about taste, they're about identity. We flatter ourselves that we buy things based on our judgment of quality and price ... fundamentally we buy the sort of things that feel appropriate, based on the class we come from, the groups we aspire to be part of, or the opinions we find attractive."

So I guess the unique perceived benefit is all about whether the customer wants to be seen in the cafe. Is it a place they can identify with and feel comfortable in? Would they invite their friends and/or their family? Have they found a place where they can relax, enjoy the ambience and simply take time to enjoy their food and drink?

Apparently the existing customers are not the shoppers from the busy centre nearby, but more likely to be office workers, university types, theatre goers, and some students. (Yes, university, theatre, offices all close by). I think this is a great target market for the location - but the present owner hasn't tapped into this with her quaint Georgian tearoom (oops sorry to be dismissive, it doesn't appeal to me anyway).

The name? Already decided upon - It's The Little Dash Cafe. I've been messing around on animoto yesterday ... http://animoto.com/play/0Xd52HVe2tyg8pBnCv1PFw

Will check out your new website when it's launched Joy.

 

[TheFortune8]

You need to look at the figures, but also what sort of business is it. Do the accounts reflect companies house records. If a sole trader / partnership, how does that compare with tax returns.

Thanks for this Duke. The business is a Limited Company. I've just been on to the Companies House website and have come up with this ...

TOTAL EXEMPTION FULL ACCOUNTS MADE UP TO 30/11/06
30/11/07 TOTAL EXEMPTION FULL
30/11/08 TOTAL EXEMPTION FULL
07/11/09 FULL LIST
18/12/09 STATEMENT OF CAPITAL;GBP 100

Hmmm ... should I order these reports anyway or will I be wasting a quid a time?

Go and sit down and watch what is going on. Watch who is comeing in, what they are spending, how long they stay etc.

Then bear in mind if your ideas for the business will still keep these customers. If the clients are all elderly folk who like a tea and scone then are they going to still come in if you change over to emphaisise the Mocachoccadoublepenatationachini with expensive carrot cake type menu.

You need to also look at who's passing by and not going in, are there loads of young professionals / young rich bored housewife types who are passing the cafe by becasue it doesn't currently appeal?

If you are going to make sweeping changes, then you can almost ignore the current figures as you arenn't going to have the same customers. All you need to note in this case is the rent / rates, utilites etc. You are alos hardly caring if it's a going concern, all you care about is the premises

It's a great point about how changing things can lose customers as well as attract new ones. I've been in three times now and current customers are not old ladies ordering a tea and a scone. They're much more like a customer you'd get in Caffe Nero or Starbucks - but those places are so much more modern, brighter, friendlier. This business needs to learn from them ... rather than try to be a Betty's tea room. This is not York or Harrogate - it's Sheffield and the coffee chains are here and people are buying (fortunately they're not next door!)

I think that the Mocachoccadoublepenatationachini with expensive carrot cake type menu will work here. PS can I use Mocachoccadoublepenatationachini or do you have the trademark?

 

[sysops]

Hmmm ... should I order these reports anyway or will I be wasting a quid a time?

There is no point buying accounts from Companies House for a business you're looking at buying. They will tell you very little. You need the full accounts from the company, and they should provide you with this.

 

[Duke Fame]

The companies house report will only give you a balance sheet as it's allowed to provide abbreviated accounts but still will provide the increase in reserves which should give a guide to profits. Viewed with a copy of the accounts provided by the owner, this will at least give you an idea of how genuine the figures are. Ensure you aske the owners for the full accounts!!!

It sounds like you will not be throwing the baby out with the bathwater in terms of clientelle. You do have to bear in mind how many other cafes / coffee shops there are in the area, sadly a Starbusks / Costa would be likely to blow you out of the water so check planning apps.

Finally, do not pay over the odds for the place, the goodwill in the company isn't going to be that great, I'd pay no more than the value to you of the F&F. If you're not planning on keeping the F&F, is the business even worth that amount? WHo owns the buiolding, are you paying a fair rent for it? How much are other units renting out for? Check the market, most commercial rents are subject to negotiation so work on saving 5-10% against similar properties.

 

[patientlady]

but my "back of a fag packet" calculations say I'll need a £100k loan repaid over 5 years. Sales will need to increase by 120% so that I can pay myself £15k a year ... !!!

Hi
My daughter is going through the same process as yourself! Interested to know what your rent & rates are and is the 100k for refurb or puchase of fix & fit? My intitial reaction after reading the above is that to borrow that amount to receive a salary of just £15k seems pretty steep!

 

[*Lexxy*]

can't offer any advice i'm afraid, but good luck if you go ahead with it!

i'd check out Nisbets for supplies, LED Cafe sign £58.74

 

[TheFortune8]

Rent is £30k, Rates payable £14k.

The £100k is for Fixtures and fittings plus some working capital, however from other comments above I think the purchase price and even rent has to be negotiable.

The current owner prides herself on surviving where others have gone to the wall. She's paying her bills. Whereas this may mean she's just breaking even it could hide the fact that she's haemorrhaging money. The accounts will be interesting reading.

Refurb? Hmmm back to my spreadsheet. I'll not change the character of the place much without spending something ...

The £15k salary is not a lot ... but once the loan is paid off all those repayments disappear and £15k becomes something like £40k ... but can I pull off a 120% increase in sales?

How does all this compare to your daughter's suituation patientlady?

 

[sysops]

Rent is £30k, Rates payable £14k.

The £100k is for Fixtures and fittings plus some working capital, however from other comments above I think the purchase price and even rent has to be negotiable.

If I pay £100k for a business, I expect it to return £20k a year, with minimal involvement from me. By that I mean I oversee the business, but don't manage it on a day to day basis. Maximum of 10-15 hours a month.

You're looking to pay £100k to buy yourself a £15k a year job, with a possibility of increasing this.

Regardless of what amazing things you think you can do with this place, it is not worth £100k as it stands. In fact, it's worth nothing - I would pay no more than the working capital included in the sale.

 

[TheFortune8]

Thanks Lexxy. Will keep a note of Nisbets!

 

[TheFortune8]

If I pay £100k for a business, I expect it to return £20k a year, with minimal involvement from me. By that I mean I oversee the business, but don't manage it on a day to day basis. Maximum of 10-15 hours a month.

Are there such businesses around? My expectations have changed since I started looking into going into business for myself. The figures just don't seem to stack up when you're breaking into new territory for the first time. It's the loan repayments that's the problem - but once you've survived that period, well, things start to look a little better.

You're looking to pay £100k to buy yourself a £15k a year job, with a possibility of increasing this.

Yep, it's minimum wage for me for the first few years ... I've just bumped up my hours to 56 a week on the spreadsheet ... (but I'm not giving up 4 weeks holiday a year - yet)

Regardless of what amazing things you think you can do with this place, it is not worth £100k as it stands. In fact, it's worth nothing - I would pay no more than the working capital included in the sale.

I think you're right about the valuation - I'll have to find out how negotiable the figure quoted is.

and er that working capital is what i'm introducing, not receiving! :redface: I'm buying the fixtures and fittings for £90k. SAV, initial purchases (and a small reserve) account for the other £10k ... and all for the illusion I'm a growed up business type person :|

Ahhh if only employent in my core skill area was an option. Anyone looking for a 50 year old VB.NET programmer due to become a grandad this year? Paid leave, sick leave and a small pension would be nice and something over minimum wage for an income ...

 

[sysops]

There are businesses that offer such returns, yes. Generally speaking they are more than £100k, but you do come across ones in that range.

There is nothing wrong with buying this business if you think you can make a go of it, but not at that price.

 

[patientlady]

How does all this compare to your daughter's suituation patientlady?

Hi Fortune 8
What are the current takings per week, this is crucial to your figures!

 

[TheFortune8]

Hi Fortune 8
What are the current takings per week, this is crucial to your figures!

From the sales brochure ...

"turnover peaked at between £6,000 to £7,000"

"the general average is between £4,000 to £4,500"

The previous 3 years profit/loss are going to tell me more!

 

[oldeagleeye]

Sorry Alex but some-one has to tell you. You haven't got a hope in hells kitchen of raising a £100,000 for a refit and working capital for a cafe and to be frank you don't seem to be that clued up on business in general either.

Starbucks for example are dumping 100's of loss making coffee shops in prime locations with rents similar to what you are quoting. Ingoing premium including all modern equipment less than £50K. Would you be able to get a loan on that. First question bank or investor would ask. What makes you think that you have got more experience and better managerial skills that the directors of Starbucks once the darling of the City.

You want to buy yourselve a job that pays minimum wage. You could get something like this and run tourist trips around London. Free wholesome food & beverages included. Your easily make over £1,000 a week. Cost of a pretty decent 2nd hand coach - less than £20,000.


The bottom line Alex is stop wasting your ttime on what is unacheivable and start looking at what is. You might want to start being a bit more realistic too when it comes to logistics.

My company will soon start building a luxury Country Club Hotel. The total cost of a complete stainless steel kitchen including range cooker. Cold room and all equipment less than £30K and that will easily service a 50 cover restaraunt.

And finally mate. Do yourself a favour. Set yourself a higher target than ahlf the minimum wage now and in 10 years time because believe you me you will end up working 60 hours a week in a cafe.

Robert

 

[mpen]

My company will soon start building a luxury Country Club Hotel. The total cost of a complete stainless steel kitchen including range cooker. Cold room and all equipment less than £30K and that will easily service a 50 cover restaraunt.

It certainly won't be a luxury kitchen for 30k, you will be pushed to put one together off ebay for that.

 

Loving your answer. superb, I never thought to compare to Gordan Ramsey, but you are so right
It is the fundamental building blocks, the foundations that build the successful business. Get this wrong and the business will fail regardless of what is built on top.
Interesting - quote David Mitchell in the Observer said that all our purchases "aren't about taste, they're about identity. We flatter ourselves that we buy things based on our judgment of quality and price ... fundamentally we buy the sort of things that feel appropriate, based on the class we come from, the groups we aspire to be part of, or the opinions we find attractive."
Not sure I agree with the word flatter though as to me this insinuates that we are wrong or we are under an illusion, I like to think that we have a large element of choice in there to. I would love to add this quote to my forum next week when my site is live, and see what others think, would you mind? - it is so debatable don't you think? May be you would like to add this as your discussion on there?
Yup I agree that the UPB has something in it in whether or not the customer wants to be seen in the cafe - ie does it give out the right signals to the right people? It would be hugely beneficial to carry out a survey at the university to ask what they perceive as being a great cafe etc?- also ensuring that you log what they are a student of etc ;-) Similarly to check out the theatre and any competition in the area that could well be plugged into this niche? I think also that your niche may be better if it were narrowed down still further ie
1. For the theatre goer, the literate, book loving type
2. The live gig, music loving student so adopting a more contemporary feel
3. The Mature graduate / student / lecturer who wants to escape the rush of it all, and enjoy and oasis in a busy town centre.
You could then really go to town with being so different, simply the best USP. The open sandwiches with theatical names to reflect content and give specialness, the sandwich put to gether combining 3 possible choices - a little like the pizza hut salad bar - I love the idea of "DIY" sandwich personally with everything prepared for me - I just do the fun bit! or how about the signature wall - where you invite actors and actresses to make comment - how you did this would obviously be a reflection on who you frequented your cafe - could go on and on here - loving it, how exciting, you have a blank canvas more or less don't you?
Going on a bit here but I think that you will get may gist. By narrowing down your niche you can then be really focused and channel your marketing to those within.
If it is the student in early twenties then a reward card would do wonders ie 5 visits entitles one coffee free, or a bun to accompany their bought drink
If its the Thespian then a maybe you could offer in the programme one free coffee ( or discount of some sort) on production of the programme at the cafe?
Choice of music, or indeed if there is to be any at all, choice of decor etc will all be directed and chosen with respect to the niche.
Sorry - I think that I am enjoying this a bit too much now ;-) and going on a bit.
Looking forward to your thoughts back.
warmest regards
Joy

 

[patientlady]

From the sales brochure ...

"turnover peaked at between £6,000 to £7,000"

"the general average is between £4,000 to £4,500"

The previous 3 years profit/loss are going to tell me more!

Hi Fortune8
You asked our opinion and I feel a bit of a fraud offering advice when I have never owned a cafe myself. The 90K for f&f will have to be written off over the five year period due to to wear & tear, so this figure needs to be added to your immediate outgoings. With this in mind I do not think the figures add up. The risk factor is high. You asked me what we are up to...
My daughter is looking for a premises - low risk for her first venture, she has three ideas and we are looking for the right premises to fit one of these ideas! The highest rental we are prepared to pay no matter where it is £15k and would also wish for it to have only traded short hours previously. Having said that we are also maybe looking for empty premises with a view to a fit out. My daughter does have some food experience although not cheffing. I myself have experience of the industry in general and have seen the changes in the high street over the passed year. This last year has been frightening! I wish you all the best with your venture.

 

[TheFortune8]

Sorry Alex but some-one has to tell you. You haven't got a hope in hells kitchen of raising a £100,000 for a refit and working capital for a cafe and to be frank you don't seem to be that clued up on business in general either.

Wow! OK. Let me take another look at this. First of all I wouldn't dream of ripping out what they've already got in the kitchen and starting again from scratch. I'll take advice on what the realistic market valuation of their equipment is. Maybe it's a long way off the £90k asking price, I really don't know. It's early days for this project.

I'd need to cost it carefully, but I think money would be best spent on taking out a few dining tables and putting in a sofa and a few comfy chairs. Plants, flowers pictures and music can't be such a huge outlay to transform the ambience of the cold sterile clinical atmosphere now.

Starbucks for example are dumping 100's of loss making coffee shops in prime locations with rents similar to what you are quoting. Ingoing premium including all modern equipment less than £50K. Would you be able to get a loan on that. First question bank or investor would ask. What makes you think that you have got more experience and better managerial skills that the directors of Starbucks once the darling of the City.

OK - thanks for the pointer here, I've followed this up and have found that ... "Starbucks operates 712 stores around the U.K., and has been reviewing underperforming sites for potential closure ... it will be fewer than the 50 widely reported.” http://blogs.wsj.com/source/2009/11/06/starbucks-warms-up-on-uk/

Is there any chance we might be coming out of recession sometime soon ... or are we all doomed Captain Mainwaring?

The bottom line Alex is stop wasting your ttime on what is unacheivable and start looking at what is.

...

And finally mate. Do yourself a favour. Set yourself a higher target than ahlf the minimum wage now and in 10 years time because believe you me you will end up working 60 hours a week in a cafe.

Robert

How does anyone begin in business? Is it possible to have a vision and some hope? Are there any businesses that don't require you to compete? The advice to "think big, start small, move fast" seems really relevant to me.

As far as I know most businesses require you to make sacrifices in the short run in order to make it big in the long run.

Really appreciate your comments Robert ...

"He that wrestles with us
strengthens our nerves,
and sharpens our skill.
Our antagonist is our helper."

 

[oldeagleeye]

One simple question OP. How much of your OWN money are you prepared to invest in this venture.

 

[david9108]

I just feel so bad reading this forum and all the thoughts running around in my head that have built up from my family all over the years. The first thing to think about is your gearing - that is to say the percentage of money that you are borrwoing compared to what you are putting in yourself. If you are borrowing 100% of the money then there is something to think about - you are not working for yourself - you are working for the bank. It's sad but true.

The £100k is so over the top, it will be interesting to see what the GP is but you should be expecting a GP of between 55% and 65% in the catering industry.

There are lots of things you do in the catering industry to make money - giving away drinks for example is not one of them. Most places make much better money out of the drinks - a cup of tea will cost literally a few pennies but can be sold for £1 - that is a GP you can never dream of making from the food, so if you keenly price you main food items then make lots out of drinks and extras like chips and onion rings etc (both provide a very high GP).

One thing I would say is to remember that catering is a mature industry - it is very competitive and there isn't really anything new (unless you can invent the next burger). I hope if you give it a go that you make a huge success of it. All I will say is my parents purchased their place when I was 6 months old - I'm nearly 24 now and they still own it and while they make an acceptable living it was clearly a poor choice. They have worked 6 day weeks for months on end when staff let them down, had to cancel holidays, give money back to the busienss when it can't afford to pay them and so on. Thankfully they are back in a good position and can take a decent wage - but it's not worth it for the stress and hours. My dad went to work on Friday at 7.30 to open for 9, when he got in a water filter on a machine had burst and the whole palce was flooded, my 55 year old father and 50 year old mother had to spend three hours mopping up water out of their life savings before they could even open the door. My dad then returned home at 7.30 at night after having fixed the machine and worked all day.

 

[patientlady]

I agree David which is why I wish my daughter to take on a premises that can pay for itself that closes 3pm. The day is long enough...

 

[david9108]

I agree David which is why I wish my daughter to take on a premises that can pay for itself that closes 3pm. The day is long enough...

In all honesty if you want to be in catering then I personally would recommend trying to get a small sandwich shop - you need very little commercial catering equipment and very little skill. Then focus on good bread and fillings and make the place look attractive - preferably modern. It is then a cheap easy to run catering business.

Oh and I've always thought a great name for a modern sandwich place would be 'Slice'...I'll take 10% royalties if you use it

 

[patientlady]

In all honesty if you want to be in catering then I personally would recommend trying to get a small sandwich shop - you need very little commercial catering equipment and very little skill. Then focus on good bread and fillings and make the place look attractive - preferably modern. It is then a cheap easy to run catering business.

Oh and I've always thought a great name for a modern sandwich place would be 'Slice'...I'll take 10% royalties if you use it

Thanks David I totally agree! thats what we are up to!
7am till 3pm max Mon to Fri (0ffice/Uni hours) - FRESH/CHOICE bread, HOMEMADE soup in the winter, GREAT salads in the summer, coffee and tea made how the CUSTOMER wants it. SPOTLESSLY CLEAN...
We will not be expecting a blackboard outside to do the selling either. I think a sandwich business needs to be sold like any other business and not just rely on footfall. We are waiting for the right premises even if it takes a year
Sorry cannot send the royalties Slice has already been used elsewhere lol.

 

[david9108]

Damn it all the good ideas are used up!

You are totally right to wait for the right site, it is the single most important factor. What part of the country are you looking in?

 

[TheFortune8]

Loving your answer. superb, I never thought to compare to Gordan Ramsey, but you are so right
It is the fundamental building blocks, the foundations that build the successful business. Get this wrong and the business will fail regardless of what is built on top.

A simple menu, great food, friendly and efficient service a relaxing place to enjoy it ... sounds easy, but you have to repeat it and guarantee quality no matter which member of staff is serving.

Interesting - quote David Mitchell in the Observer said that all our purchases "aren't about taste, they're about identity. We flatter ourselves that we buy things based on our judgment of quality and price ... fundamentally we buy the sort of things that feel appropriate, based on the class we come from, the groups we aspire to be part of, or the opinions we find attractive."

Not sure I agree with the word flatter though as to me this insinuates that we are wrong or we are under an illusion, I like to think that we have a large element of choice in there to. I would love to add this quote to my forum next week when my site is live, and see what others think, would you mind? - it is so debatable don't you think? May be you would like to add this as your discussion on there?

Marketing is all about making the decision to buy an easy one. The same product needs to be marketed to different segments with different wants and needs. Toothpaste is marketed in many different ways

http://www.youtube.com/watch?v=8FXv1ico-ac
http://www.youtube.com/watch?v=L9M0i2QqWW4
http://www.youtube.com/watch?v=JwrP2NG4ABs

Maybe we tell ourselves our decision to buy is all about effectiveness of the product and value for money, but people will rarely buy a product that isn't just "right for them" and that's got a lot to do with being made to feel special that the product is tailored for them and not just a "one size fits all" variety.

Be sure to let me know when your website goes live ...

Yup I agree that the UPB has something in it in whether or not the customer wants to be seen in the cafe - ie does it give out the right signals to the right people? It would be hugely beneficial to carry out a survey at the university to ask what they perceive as being a great cafe etc?- also ensuring that you log what they are a student of etc ;-) Similarly to check out the theatre and any competition in the area that could well be plugged into this niche? I think also that your niche may be better if it were narrowed down still further ie
1. For the theatre goer, the literate, book loving type
2. The live gig, music loving student so adopting a more contemporary feel
3. The Mature graduate / student / lecturer who wants to escape the rush of it all, and enjoy and oasis in a busy town centre.
You could then really go to town with being so different, simply the best USP. The open sandwiches with theatical names to reflect content and give specialness, the sandwich put to gether combining 3 possible choices - a little like the pizza hut salad bar - I love the idea of "DIY" sandwich personally with everything prepared for me - I just do the fun bit! or how about the signature wall - where you invite actors and actresses to make comment - how you did this would obviously be a reflection on who you frequented your cafe - could go on and on here - loving it, how exciting, you have a blank canvas more or less don't you?
Going on a bit here but I think that you will get may gist. By narrowing down your niche you can then be really focused and channel your marketing to those within.
If it is the student in early twenties then a reward card would do wonders ie 5 visits entitles one coffee free, or a bun to accompany their bought drink
If its the Thespian then a maybe you could offer in the programme one free coffee ( or discount of some sort) on production of the programme at the cafe?
Choice of music, or indeed if there is to be any at all, choice of decor etc will all be directed and chosen with respect to the niche.
Sorry - I think that I am enjoying this a bit too much now ;-) and going on a bit.
Looking forward to your thoughts back.
warmest regards
Joy

For the location of this particular cafe the niche will be amongst 1 & 3, so having books around, today's quality newspapers, gentle background music are some of the things that will make this group feel at home.

Phew - thanks for all your comments. Sorry I don't have time to respond to each point but I do appreciate the feedback!

 

[TheFortune8]

Hi Fortune8
You asked our opinion and I feel a bit of a fraud offering advice when I have never owned a cafe myself. The 90K for f&f will have to be written off over the five year period due to to wear & tear, so this figure needs to be added to your immediate outgoings. With this in mind I do not think the figures add up. The risk factor is high.

Hmmm yes, I have a figure for repairs and maintenance, but there will be times when this is not enough and replacement is required ...

Hi Fortune8You asked me what we are up to...
My daughter is looking for a premises - low risk for her first venture, she has three ideas and we are looking for the right premises to fit one of these ideas! The highest rental we are prepared to pay no matter where it is £15k and would also wish for it to have only traded short hours previously. Having said that we are also maybe looking for empty premises with a view to a fit out. My daughter does have some food experience although not cheffing. I myself have experience of the industry in general and have seen the changes in the high street over the passed year. This last year has been frightening! I wish you all the best with your venture.

Thanks pl. I'll have to find out how negotiable the £30k rent is. I suspect very little.

Now then, there is an empty unit further up the same road, but fitting out from scratch is surely a much costlier and therefore riskier venture? On the other hand if the rent were £15k a year instead of £30k. I'll make enquiries.

 

[TheFortune8]

One simple question OP. How much of your OWN money are you prepared to invest in this venture.

Well it depends - my research is hardly complete at the moment. However if it feels right and the numbers begin to stack up, I'll stake everything, as you have to do - that means putting up your home as security. [edit] sorry my home! I'd put up your home as security tomorrow