People often approach me and say, “I want to open a café, but I don’t know where to begin.” It’s an excellent question, and I believe that people often jump into opening their café without first getting the correct advice. It’s a long read, so grab your favorite brew and settle in.
The Cafe Dream Essentials
If you’re here, I’m going to assume you already have a vision of your ideal cafe. You don’t want or need me to explain in detail what I believe works and what does not. You’d better start putting together a business plan if you haven’t already. There are many templates and advice available online on how to create a business plan, so I will not go into detail. I won’t be discussing ‘industry-wide trends’ or ‘what type of cafe to open.’ Instead, I will focus on the practical challenges that prospective cafe owners face.
First, I would recommend that anyone who wants to open a cafe first work at a restaurant. Try to work in a similar cafe as the one you want to open. If you work in a café, this will bring you closer to realizing your dream. If you have never worked in a cafe before but you plan to be hands-on with your own business, you should get some experience. Even if you have trouble finding paid work, it is still worthwhile to offer your services for the occasion at your favorite local café. Commonfolk has hosted several prospective cafe owners, and they all found the experience helpful.
Cash Monies?
The decision on how to raise capital is one of the most difficult parts of opening your café. Do you save your own money? Are you looking for investors? Do you contact the bank? The answer will depend on your goals and circumstances. You might be able to finance a small coffee shop yourself with basic equipment and a limited fit-out for $50K. The modest profits you make will go to you. If you are looking to open a full-service cafe with all the bells, whistles, and the latest equipment, it could cost you $500K or more. You may also need a mortgage. It is possible to find business partners to help fund your cafe. However, you will need to get the right legal advice and define roles clearly for all parties involved. Prospective owners often ask me, “Where can you find business partners?” It’s an excellent question. If your idea is really good, you should have the courage to ask a friend or successful business person. Even if the person doesn’t want an investment, they might know someone else who is. Never underestimate the power of networking. You have to choose what is best for you. There is no single solution that fits all.
The Fit Out
After you have experience, funding, and a place to open a café, the hardest part is the fit-out. I have opened many venues and have helped new cafe owners navigate the jungle of tradies and deadlines.
Contact your local council to find out which building permits and food licenses you will need for your new cafe. You’ll have to seek individual advice for your situation, as each municipality has different rules. Remember that even rule-makers make mistakes. I suggest documenting all your interactions with the council so that you don’t make costly mistakes later. You are the only one who cares about your project, so keep an eye on it.
After you’ve submitted all of your applications, you can begin the transformation. There are a few options for how to do this. Engage an interior designer or architect? It can be expensive (often 10 percent of the total fit-out), but it can be well worth it. A professional opinion from someone who has done it before can be invaluable, especially when you are dealing with an expensive fit-out. If you are confident in your layout and design and want to save some money, hiring a draftsperson may be a better option. If you are planning to spend over $100K on the fit-out, I recommend hiring a designer. You can do it yourself if you are planning to spend less.
It is also necessary to hire a tradesperson to help with electrical, plumbing, and carpentry. The best tradies can be as rare as gold. Ask around for recommendations from those who have completed similar projects. I’d spend more time searching for the best tradesperson rather than the perfect coffee machine. Yet, they are often the last thing that a potential cafe owner considers. At the same time, it’s easy to find an amazing coffee machine; a bad tradesperson could cost you tens or even hundreds of thousands of dollars. It’s important to find tradies who are reliable, creative, and have a good reputation. Avoid a tradesperson who is overcharging, takes forever, and complains the whole time. You could use a building firm to manage your entire fit-out if you are struggling to find tradies. However, this would cost more than hiring an architect.
Coffee is important when opening a cafe.
Your coffee supplier will (depending on the business model you use) be responsible for a product that can make up to 50% of your revenue. It’s therefore important to get this right. I always put quality first when it comes to buying coffee. It doesn’t mean you need to use $100 per kilogram of gesha for your house blend. But you can’t pass off mutton as lamb. You may be tempted to choose a corporate brand that offers free equipment such as umbrellas, barriers, and cups. They might also offer cash or other incentives. But remember, they are only offering these things because they are selling cheap, crappy coffee. If your product is poor, customers will speak with their feet. You won’t get many people coming back for another cup. Look at the most popular cafes around you and note the coffee that they serve. It will come from a locally-owned roaster that is focused on quality. Cafés that serve bad coffee are being forced out of business at a very rapid pace.
You’re going to use good coffee. What is the best coffee to use? There were fewer great specialty coffee roasters in the past. This made it easier to choose one. There are many great coffee roasters to choose from today, so it’s important to find one that fits you. It is important to consider the size of the business. You might be disappointed if a large company has a lot of cafes.
If you go with a smaller business, you may be treated as royalty. However, you are exposed to more risk in the event of equipment failures, etc. Personally (and perhaps in a self-serving way), I believe that partnering up with a small company has more benefits than disadvantages. They can tailor the coffee to your needs and offer a better price.