Opening a Coffee Shop

[altaylor88]

Hi,

I have always been motivated by business and the idea of working for myself and have a basic knowledge of several elements having run my own business in the past.

I have recently worked in catering for a large retailer and can honestly say it was the best experience of my life. Sure it was mega tough and incredibly fast paced, but I loved it, which has turned my focus towards opening a coffee shop

I have completed my Level 3 Food Hygiene certificate and have been present at EHO visits etc, so have a good understanding of the legal compliance side as far as food hygiene is concerned.

I have recently found a coffee shop that is moving premises (away from the high street for some reason!) , so the space is available to rent for the same purpose.

I just wanted to get some advice on areas that I may need to consider further. The set up costs seem fairly low (equipment rent, crockery, tables/chairs etc) on top of rent/elec/water/insurance and of course payroll.

I have also heard a rumour that the current owner wasn't allowed to serve takeaway drinks, is anyone aware of why this might be? - guessing I will need to contact the council to find out more?

The current coffee shop is moving around the corner, off the high street down a quiet road, it is am established tea room and has a loyal customer base, however the idea of moving out the way down a side street seems a mad one, although i believe it was to do with the cost of the rent on the unit.

My plan would be to open a more modern cafe, so targeting a slightly different audience, offering a relaxed atmosphere, free wi-fi and somewhere to chill out. I will also be producing freshly baked cakes and pastries to compliment our drinks offer.

As this is a bit of a dive into the unknown, I would welcome any thoughts or comments as I am sure there are some areas that I haven't thought of

Thanks in advance

A

 

[Scalloway]

A couple of thoughts.

Is there a demand for the type of coffee shop you are planning? Are you aware of your target customers being in the area?

You should prepare a business plan

• What turnover could you achieve? This will be constrained by the size of the premises and the staff you can physically have working
• Are there that number of potential customers?.
• What will be the costs
• What is the margin error if sales go down and costs go up
• Where is your start up and working capital coming from
• How will you market the business
• Are suitable staff avaialable

 

[altaylor88]

Thanks for the reply, some good advice.

The difficulty I am having is actually putting concrete figures next to it all.

Initial expenses:

• Decorating
• Marketing (signage, initial marketing materials, branding)
• Equipment
• Crockery
• Appliances
• Tables/Chairs
• Initial stocks

So far my list of monthly expenses is as follows:

• Rent
• Elec/Water/Wi-fi
• Payroll
• Insurance
• Accounting
• Marketing
• Stock

I am then dividing monthly overheads by profit made on say a regular latte, to work out how many coffees I would need to sell before I make a profit.

Obviously my offer would be more than just a coffee, but this seemed like a good starting point to judge viability? Or is that just a ridiculous way to look at it?

Help haha

 

[Scalloway]

For decorating I suggest speaking to a few painters and decorators for some ball park figures. Similarly try local suppliers for stock.

For catering equipment a restaurant I know uses Nisbets

http://www.nisbets.co.uk/

And Drakes for furniture

http://www.askdrake.com/

Initially you would be better to get some equipment second hand. This came up on google so I can't answer for the value for money of the items available.

http://secondhand-catering-equipment.co.uk/

 

[Twoscoops]

If you can borrow a van then I would definitely suggest buying used furniture and appliances. I have a shop which I fitted with old dressers and bases. I bought every one on Ebay. Once a person (usually a woman, I have found) decides they don't want a piece of furniture any more then they will accept almost anything for someone to take it off thier hands.

In the town where I work the busiest cafes have a point of difference - something like great coffee, or scones fresh out of the oven, which help build the reputation.

I'm not sure I would be looking to offer people a place to chill…get 'em in, get thier money, get 'em out!

 

[Ian J]

I'm not sure I would be looking to offer people a place to chill…get 'em in, get thier money, get 'em out!

That's one of the potential problems of offering free wifi as you could find one of your tables taken up for an hour or so by someone who has only purchased a cup of coffee

 

[fairdealworld]

You may need your food offering to be wider. I was in a cafe yesterday which has just re-opened near to my business, people at the table next to me had been there for a while, were having some sort of family conference, had the laptop working on the table, were taking up two tables and having consumed their coffee and cakes looked to be staying. Then they noticed the light lunch offerings and decided they might as well have lunch while they were there which made things look rather different.

Not offering Wi-Fi especially in a more 'modern' cafe may be a mistake and simply send people off to look for Costa or whatever but if you are going to encourage people to 'chill' or work while in the cafe you need to continue to extract money from them. Someone with a laptop or smartphone and one cup of coffee may be very bad news from a business point of view.

 

[MOIC]

Starbucks seem to be happy to do it and I am sure they have done the research to make sure this is viable.

I suppose it all comes down to the size of the premises.

On to the main point, you have to ask yourself why the current owners could not make it pay and have decided to move to the side street.

I understand that it's a different type of target customer and perhaps more research needs to be done to ensure that the required target customers are there and will use that type of coffee shop.

A small selection of sandwiches and salads (summer), a la Starbucks, would be a good idea.

Spend as much time as possible outside the shop and record the potential target customers.

Time consuming, but necessary.

 

[Gordon544]

Regarding takeaway, there could be a planning restriction preventing this. If you are looking at buying or taking the lease you'll find this out from the freeholder.

 

[john1989]

Alarm bells should be ringing.

If the rent is now unviable for an established coffee shop, why do you think it is a viable business proposition for you? What are you going to do different to ensure you have a larger customer base?

 

[ls0709]

You need a strong USP in the coffee shop industry.

Take a look at 200 Degrees in Nottingham, they opened around October time last year and have done amazingly well. Without a doubt my favourite place for coffee having already earned two loyalty cards since it opened.

 

[Karimbo]

I think a lot of people get sold on the romance of owning and operating a coffee shop. But don't consider a few things.

Highly inelastic demand
Low average basket price
High rents

Also retail/food in general makes me nervous - very difficult to manage personnel, if you're short of staff for people off sick it can cripple your business.

 

[DontAsk]

Hi,

I have recently found a coffee shop that is moving premises (away from the high street for some reason!) , so the space is available to rent for the same purpose.

You really, really should find out why before even contemplating replacing them. Go in as a customer, strike up a conversation with the owner and ask why they are moving.