Any advice please

[matthew1972]

I have been running my own design business for 11 years that is doing well and providing myself with a good wage, so I decided I would use some of the money to try something different and purchased a small cafe/ice cream bar in the town where I live. It was in a run down state and only taking around £70 a day operating part time. I took advice, saw business advisors, completed cash flow plans with the help of the experts and budgeted £7000 in April this year, which ended up coming out at just under £15000 as the equipment/electrics were useless and had to be replaced as kept breaking down. Everyone I spoke to, including businesses in the town told me it should do really well as in a good location next to a river, so I took everyones advice including the business manager at my local Barclays bank and was even given a small enterprise loan - and since opening end of April the weekly turnover is only around £900-£1000 max. Have 3 full time and 2 part time staff to cover the opening hours of 7.30am-6pm, 7 days a week, did have more but had to cut down, and at the moment making a loss of around £300 a week. Cannot cut any more staff down as would not have enough to cover the opening hours which have already been cut back from a 9pm close. My other design business has been supporting the shortfall, but I am now close to being skint and cannot fund the £300 a week loss for much longer (a few weeks). The bank will not extend my overdraft so I am now in an unauthorised overdraft with large charges, bills are getting behind and I cannot see what to do next. I have now got to a point where I could not pay all the staff on time this week which is not acceptable as they have families and I cannot let any more staff go as there would not be enough to run the business. I put in a lot of my own time, unpaid at the moment. Any advice on what I should do next as I am almost at the point where I cannot pay suppliers, staff, bills and I signed a 3 year lease at £100 a week for the building and do not want to give up after just 2 months of trading. Done all the advertising, leaflets around town, social media pages but it is just not getting the customers in. Today the takings were £75.00 for a 10.5 hour day with 2 full time staff to pay.

 

[Doodle-Noodle]

How awful for you - you must be worried sick.
Still, you haven't got time to wallow so you need to get a plan of action together asap.
Can you identify what's going wrong? Be as objective as you can, don't be emotional or sentimental - you can't afford that.
Ice cream must be a waste of time at the moment with such awful weather - can you ditch it and replace with something else?
Are your prices competitive?
What's the competition offering? How are they doing in comparison to you?
Do you get good feedback from those customers who do come in? Are they returning customers?
Is your cafe warm? Inviting? Accessible? Comfortable?
Is your food amazing? Average? Different to what everyone else is offering? This might not always be a good thing of course, other cafes might not be serving what you are offering because they know it won't sell.
What sort of people are you hoping to attract? Are there enough of them to make a successful business or are you targetting a market that isn't really there?
So many questions .... sorry!

 

[internetspaceships]

Don't be sorry Doodles, those are some great questions to ask.

 

[kelvin1950]

Doodles makes some good points.

I'd also want to know what the footfall was passing the shop and what percentage of that comes in. If the percentage is high then maybe you're not in as good a position as other traders suggested

 

[Swisaw]

Do some special advertising. Be creative, design creative advertising leaflets and distribute a lot of them according to certain critieria like distributing say 500 every day, each day at a different locality. Advertise in local papers and magazines. Put a large permanent advertising sign on your car. Make a big advertising board on wheels. Whenever you have times tow it behind your car and take it around town. Well you are a designer and designers are creative. So put your creativity in action to save your investment.

Good luck.

 

[voyage]

Yer I agree with all the questions so far.
I might be on the wrong line totally but do you do takeaway sandwich's etc. Warm sausage sandwichs and bacon do well when its cold weather and people don't want ice cream. Have a board outside offering these at say £1.50 each and then sell tea/coffee as a second purchase which has a really good mark up.
Hope this helps in some way and best of luck, but don't give in and as doodles says get cracking straight away with changes. Try not to get into the it will pick up eventually or its the weather etc. Do something about it

 

[owas]

If the advertising is not working, hit the street with small samples, interact with people, if they like them, tell them were they can find them.

 

[Swisaw]

If the advertising is not working, hit the street with small samples, interact with people, if they like them, tell them were they can find them.

If that is not advertising what do you call it?

 

[Rhyl Lightworks]

I suspect the wet summer is affecting ice cream sales, and the menu needs to take into account of the weather conditions - for example on most days this summer soup would be a more approproriate dish than ice cream.

Also, I don't suspect this business will entice people to come and seek it out if they are not passing anyway, so such things as leafleting will be a waste of time and money. Attracting passing trade is important, so advertising boards outside the premises and attractive displays/premises are, I feel, what is called for.

Most research suggests it takes at least 3 years for new businesses to become really profitable.

Barrie

 

[PrestonLad]

Doodle's upbeat message is spot on. Time to take a deep breath, and thoroughly review (especially your menu)

If you're by a river, is there any possibility to put small outdoor tables on the pavement? Even across a road (assuming there is one), on some grass or something? That can definitely attract customers who want to sit there... but equally, they act as a perfect advertisement for you... they catch the eye far more than any A-board.

If you think there might be some opposition to you putting tables out, it might be time to be bold and take the risk anyway.

Good luck.

 

[Moneyman]

The cafe was taking £75 part time before. you seriously need to cut the staff and everything to a minimum.
It is better for one person to lose a job than all three.

Protect you design business and keep it ring fenced financially. Do not risk it no matter what.

 

[billycan]

Matthew, You MUST pull the plug NOW - believe me I've been there!

Years ago I took on a small petrol filling station with a tyre bay and a shop. All the advice I got was positive, my bank gave me a decent overdraft facility, Anyway the long and the short of it was the running expenses were too much for the income.

I tried trading back into profit by diversifying, cutting back on hours, getting rid of part-timers, advertising and so on.

Reading your post describes exactly what I went through. I kept on in the face of mounting losses - reluctance to shed too many staff, bank overdraft sky high and difficulties paying for stock - eventually I had to accept that if I was going to survive then the garage would have to go.

I think the signs were already apparent that your cafe did not present the most profitable prospect when you bought it - open part time using old and knackered equipment.

This is not what you wanted in terms of positive advice but I really feel that it is your only course if you wish to avoid further losses.

 

[kzandco]

who supplies your ice cream movenpick, bindi, disottos?

 

[NoxProperty]

Are there any local businesses nearby? Could you do them deals for lunchtime or catering for meetings etc?
May be you could offer to deliver lunches to them if they phone through an office order before a certain time?

 

[arcon5]

The problem is cafes are all above location, location, location. Whether that location is in a city center, near a main road with parking or surrounded by office blocks.

Unfortunately @ £100 per week I cannot imagine the location to be ideal for run a business like this. It could make a profit as a husband/wife setup perhaps but not necessarily on a more commercial scale.

You need to look at many factors including your menu, footfall, location, target market and much more and determine whether a) you are doing something wrong or b) the business is not on a commercial level.
If a) then this can be turned round with hard work and dedication, with b) you need to make some serious changes such as laying staff off and working there youself, closing down or selling (remember, just because you're not making money from it doesn't mean it wouldn't be an attractive proposition to somebody looking to work and run the business themselves).

If you are taking so little, how are staff spending their day? Have them out on the street trying the drag people in with the aid of samples and deals.

We have a small cafe near us that was handing out 'free coffee' leaflets which got us in - and whilst in there we bought a bite to eat and upgraded to a large (about 30p extra if I remember correctly).
It was lovely, the only downfall being the decor and feel of the place was cold and unwelcoming. Had it been a littler 'warmer' we may have been regulars.

 

[megamuel]

I agree with moneyman, you shouldn't need 2 full time staff on if you're taking £75 in a day. Have one person on and another part timer come in to help out at lunch time and to give the full timer a lunch break (or do that bit yourself). Have fewer staff but working harder. They must have been twiddling their thumbs all day if they only took £75. You should see it at the pub where I work, the boss under staffs it to the max every time and we all rush around like blue ars*d flies, he couldn't get any more work out of us if he tried but we're all just happy to have a job at the end of the day. So number of staff is one thing that needs to be addressed, I think you're going to have to be ruthless I'm afraid but it's either that or getting yourself into serious financial issues....

As for getting and keeping customers. I'm not sure what lines of advertising work for cafes, but for me personally I like to see the following:

Hygeine/tidiness - Sounds obvious but it's amazing how many places I'm put off going into because of the way they look from outside. I want the place to look clean inside and out. Make sure you don't have those horrible yellow strip lights! It should look bright and airy. Keep work areas tidy and clear tables down and wipe ASAP! Hate going into a cafe and sitting at a table and noticing it hasn't been wiped down. Also if you look through the window and there are numerous un-cleared tables, it's not very appealing. You need to get a bit OCD about it!

Welcoming - I want the place to look open and welcome me in. If the door is closed, it's poorly lit and I can't see anyone in there then I won't go in. Have door propped open or a big open sign. Make sure its well lit inside and that you and staff aren't hidden from view at the back.

Friendliness - This is so important. Try not to let your worries affect how you treat your customers. If I get exceptionally friendly service then I'm pretty much guaranteed to return to a place, regardless of cost. Make an effort to learn customers names and have a laugh and joke with them. But don't be too obvious!

Something different - If you are offering the same sandwiches, drinks, and ice creams as all the other cafes then I'm just as likely to pick theirs over yours. If you have something different, and I like it, then I'll have to return to your cafe to get it! Maybe offer some speciality sandwiches. Doesn't have to mean expensive ingredients, could be something like spicy falafel wraps or something like that. Just something a bit different. I'm sure the guys and girls on here might have some ideas. Then put it on a big board out the front - "Best_________ in town!!!".

Do you have wi-fi? That's usefull to keep people in your cafe. If so make sure you advertise it outside. Newspapers should be available. You could also do those little stamp cards that I think costa or starbucks do/did. Everytime you have a coffee you get a stamp, once you have 6 you get a free coffee.... You could even go around your local town and give people vouchers for free tea or coffee. I'd think the majority would buy something else or at least return if they had a pleasant experience. Deals, people like deals. 2 for 1 on ice creams or sandwiches maybe, you might lose a bit of money offering the deal but people will buy drinks as well etc. You need to establish a customer base to begin with then keep it!

I'm sorry I don't have any better ideas but I'll let you know if I do. I really feel for you and hope it works out. Good luck.

Sam.