Tea Room Cafe

[Dancer]

All my life I have imagined myself running a little tea shop somewhere. Well now the opportunity has presented itself and I am seriously considering chucking in corporate life and buying a fabulous Tea Shop/Cafe which appears to me to have excellent potential.

But..... the accountant thinks that it's not such a fantastic idea. He says it's operating at a loss (it's hard to tell as the vendors have not been trading long and have not presented proper accounts, which of course adds to the accountants suspicions).

Irrespective of his concerns I think the business would be profitable if it was run correctly, and I have so many ideas just waiting for me to put them into practise.

eg.

1.Open earlier than 9.30am and get the on the way to work breakfast trade.
2.Take Away freshly made sandwiches - order them in the morning when you buy breakfast even.
3.Fresh home made cakes with afternoon teas.
4.Whole fresh home made cakes to order for take away.
5.Loyalty cards.
6.Sandwich platters for the local small businesses when they have meeting etc.
7.Open on Sundays.

And I have loads more.

But I'm new to the world of self employment and running my own show. So advice please from those you may be in the catering world. Can a Tea Room/Cafe be a gold mine or are they all hard work with very little return.

I would really appreciate some advice about this type of business.

 

[Gillie]

We have an excellent place just up the road and their main business is delivery to offices etc, and also includes business lunches, even offering and taking special coffees as part of it all.

They open at 8.30am and take the passing trade and also deliveries to offices for breakfast, and shut at 3pm having very few people in after 2.30pm. They employ an average 6 people two of whom are out in company vans delivering, and this particular business has only been open some 6 months after taking over from a very slack style operation that used to get in hardly anyone.

They have a bright clean vibrant and modern look to their cafe with sofas etc and friendly chatty staff ... so yes, get the location right, and most importantly having local business to sell your wares to.

 

[Zenicman]

Dancer i can tell you they are worth doing i have worked in one for the last few years and it is packed all the time every day each day in the summer i would be there for about 8 and then open at 9 and by ten we had made 200+ FROM just tea and coffe andf the odd cake and sandwich.

It is deff workth doing

 

[adam]

As a concept it is well worth doing. I supply to people in this market and of course the markup on tea is huge as you are charging for the service and facilities.

Without wanting to overstate the obvious, it is quite simple. Work out the number of cups you will sell, the profit, the costs and see if it works!

Of course that is simple and you need the right location and accurate predicitions. Just watch your commitments in the early days so if it doesn't work you know what you have signe up for, i.e. fixed lease, equipment lease.

I will quickly mention on the subject of equipment if you want anything, we don't just do vending machines but barista equipment, tea brewing equipment as well as tea and coffee.

 

[Dancer]

The business is in an affluent market down in the south of england. It has recently undergone a complete refurbishment. The kitchen is completely kitted out with everything brand new. The shop interior has over 30 covers and there is room outside for tables and chairs. The lease has 9 years remaining with a break point at 5 years. The lease is approximately £8.5k per annum. The footfall is not as high as I would have like because it is just off the high street. That said it is a cut through (when you know it) from the Waitrose car park to the high street. A good and bad thing is that M&S is opening a Simply Food which may erode some of the take away market. On the plus having an M&S down the end of the lane will increase the footfall.

On the face of it there appears to be no reason why it shouldn't be a winner. But when I do Profit and Loss forecasts I can only use previous trading as a basis and it looks like there would be nothing left after expenses for me to draw a salary for myself. This is mainly due to VAT. Cafe food is subject to VAT but there is very little VAT I would be able to claim back. How do other similar businesses manage to VAT quandary. If I deliberately stay below the VAT threshold I will not make enough to live on, but if I go over the VAT threshold I have to make a very significant turnover to ensure an income for myself.

 

[jan-july]

If you deliberately stay below the VAT threshold, you will never have the incentive to make your business grow. If you intend to offer takeaway as well as the cafe side, then any cold food sold is not subject to VAT and a percentage can be deducted from your turnover. This would apply to the delivery side you also want to develop. Who is to know whether you are selling cold or hot sandwiches/salads, etc. on the takeaway side?

 

[christony]

Dancer
Living your dream is one thing but reality is another.
Firstly may I say the comments above are great and positive but I ran a Convenience store for 5 years and loved it for 2 of them years.
I enjoyed the banter with the customers and the shop made a healthy 22% net profit.
However with working in the business and not on the business 7 days per week 52 weeks per year I was soon shattered.
I suggest you read E-Myth Revisited by Michael Gerber before you start on your journey.
The accountant has suggested caution so do so.
If you go ahead at least use the accountants observations to reduce the asking price.
The E-Myth Revisited will only take you about 5-6 hours to read and will help you set up and run the business with you working on it, not in it.
However which ever path you choose GOOD LUCK.

Tony