Cafe

ElkyElky

My local Spar shop had a cafe within it, ran by themselves which closed last Friday because they weren't making enough money from it. They are planning on putting it up for rent along with everything inside (tables, chairs, all of the kitchen equipment etc).

When I asked Spar why their cafe wasn't making any money, they mentioned that they didn't advertise it so there wasn't much people who knew about it - other than the shop's regular customers.

Because this was the only cafe in the area (there isn't another one for a few miles), I'm thinking this could be a good opportunity provided it is advertised well enough. Though my instincts are telling me to stay well clear considering they weren't making any money.

Because I've never ran a business before, I'm not sure whether I should make a formal enquiry or run for the hills. Opinions?

paulwf

Personally I'd run for the hills...

- if it requires advertising that will be costly, a single advert in a local paper that will have any impact will be hundreds of pounds. I'd much rather invest in a prominent location and good premises than throw the money at advertising instead.

- you'll be severely limited by what Spar allow you to do, I'd rather have my own space.

- I bet it didn't work because it is in a Spar. I wouldn't want to go there (though to be fair I avoid all supermarket and in store cafes) and it will determine the type of cafe you can run. Most supermarket cafes rely on a high footfall in the store itself (what's the footfall like in Spar?) then rely on low prices and high volume to get punters in and make money.

- You'll be hindered by the previous occupants. Perhaps it didn't work because it was badly run? If that is the case it will take years to change that reputation, much better to start afresh somewhere else.

ElkyElky

paulwf wrote: »

Personally I'd run for the hills...

- if it requires advertising that will be costly, a single advert in a local paper that will have any impact will be hundreds of pounds. I'd much rather invest in a prominent location and good premises than throw the money at advertising instead.

- you'll be severely limited by what Spar allow you to do, I'd rather have my own space.

- I bet it didn't work because it is in a Spar. I wouldn't want to go there (though to be fair I avoid all supermarket and in store cafes) and it will determine the type of cafe you can run. Most supermarket cafes rely on a high footfall in the store itself (what's the footfall like in Spar?) then rely on low prices and high volume to get punters in and make money.

- You'll be hindered by the previous occupants. Perhaps it didn't work because it was badly run? If that is the case it will take years to change that reputation, much better to start afresh somewhere else.

It was just a thought since I had a couple of pound sitting in the bank, but since you put it like that, I don't think I'll bother. The Spar certainly doesn't get as much custom as they'd hope, there is a Farmfoods and 3 newsagents next door to it.

paddyrg

If there is window frontage then you can make the place look different and put up notices so people know you're new, but with no frontage i wouldn't bother. Seeing as they want rid and will havea tough time selling you could always offer to run it revenue share for 3 months, see jc you can turn it around? You do a deal that you don't pay rent or leccy, but will give then say 20% of your net profit. If you make nice cake and turn it around, you cab rethink the lease, if not, you've played shops for free for a while and hopefully had fun?

ElkyElky

paddyrg wrote: »

If there is window frontage then you can make the place look different and put up notices so people know you're new, but with no frontage i wouldn't bother. Seeing as they want rid and will havea tough time selling you could always offer to run it revenue share for 3 months, see jc you can turn it around? You do a deal that you don't pay rent or leccy, but will give then say 20% of your net profit. If you make nice cake and turn it around, you cab rethink the lease, if not, you've played shops for free for a while and hopefully had fun?

There isn't any frontage unfortunately. Customers are forced to walk through the shop before entering the cafe area, so they may not even know there was a cafe inside the shop until they are actually in it. Probably not the best location to set up a business, especially for a first timer such as myself.

I had considered opening a little newsagents although there is one on every corner here so finding a location that's deprived of one would be hard. I assume something like a newsagents would be easy to start up since everyone wants bread and milk?

paddyrg

No frontage, probably not worth bothering with. All you would have to draw new customers would be an A-board on the street, it may get a few, but they won't hammer down the door. And frankly if I'm going for tea and cake, I like a view or at least some natural light...

Newsagent - huge amount of work, you have to be up VERY early for all the paper deliveries, and have to really make sure you differentiate yourself from the others around.

What you may be looking for is a franchise business - there are good and bad franchises out there, but buying into a bigger brand also buys you their marketing power and ways of working, so you know when to be where and why, and purchasing decisions are simplified. Take Subway for instance - you end up making identikit sandwiches, but they have a strong brand and promotion, loads of experience of helping new franchisees, etc., so you may be able to make that work as a first foray into retail? Hand-held and well advised (they want you to succeed as it makes them money too!!) :-) You may be surprised to know just how many shops you see and know are actually franchises, owned and operated under license.

Pennywise

Don't run for the hills just yet. It's quite possible, if not likely, that the reason it wasn't profitable was VAT. Because the shop would be VAT registered, the cafe would be losing VAT on all its sales, effectively losing about 15% of its sales value. If it's rented and operated by someone else, and asssuming turnover is under £70k p.a. it wouldn't need to be VAT regsitered and could keep all its sales, not having to pay over 15% to HMRC. On £70k of sales, 15% is £10k which is the difference between profit and loss for a small cafe! Of course, it's not that simple as there's the new VAT rate and some vat to reclaim on overheads, but the basic point is valid. A client of mine did this a couple of years ago - they had a guest house which opened all day as a cafe and they rented out the cafe & equipment for 8 hours per day. Now neither the guest house nor cafe is VAT registered, so it's a win-win for all concerned. Just get the paperwork right to make sure it is completely separate.

Re advertising and signage etc., you need to ask what the Spar shop will allow you to do and also ask what the local council view is of external boards, pavement signs, etc. I don't think being hidden in a Spar is a particularly bad thing if you can get decent signage. Could even be a benefit if you were allowed, eg, to sell take aways like bacon buns that a customer would prefer to a dross pork pie from the Spar chiller cabinet.

Undoubtedly, someone will go for it and make it pay its way. Do a bit more research to see if that's going to be you.

Savvy_Sue

If you don't have any catering experience, nor any retail experience, nor any experience of employing staff, and you were my friend, I'd say "run for the hills, there must be easier ways to make money!" And as someone who's no good at early mornings, I'd say that even more about a newsagent ...

But what everyone else has said is also true.

Personally, I think that running your own business works best if it's your passion. And certainly there are easier ways to make money than in catering / retail / employing staff ...

ElkyElky

Savvy_Sue wrote: »

If you don't have any catering experience, nor any retail experience, nor any experience of employing staff, and you were my friend, I'd say "run for the hills, there must be easier ways to make money!" And as someone who's no good at early mornings, I'd say that even more about a newsagent ...

But what everyone else has said is also true.

Personally, I think that running your own business works best if it's your passion. And certainly there are easier ways to make money than in catering / retail / employing staff ...

I have retail experience and some members of my family have catering experience, so combined, I think we would be able to manage it. I also have accountancy experience aswell.

You might have read my previous post wrong. I'm a crack of dawn type of person, meaning I'm always up 6/7am including sundays.

I don't think I'll proceed with the cafe idea after some of the excellent points raised here, lack of frontage would be something that would bother me. I've wanted to start a business for a while and have some money to do so though I don't want to rush in to anything without thinking it through entirely.

Savvy_Sue

ElkyElky wrote: »

You might have read my previous post wrong. I'm a crack of dawn type of person, meaning I'm always up 6/7am including sundays.

I think for a newsagent you'd need to be up earlier than that. we used to live next door to one, 4/5 am every morning, until we learned to sleep through it!

paddyrg

Just a thought but maybe an important one - if there is no independent access, is the cafe limited to the Spar opening hours too? Some types of cafe do major regular business from commuters wanting a bacon buttie on their way to work, so serving by 6.30 or 7am, prep from 5.30/6am. If the spar opens at 8, say, you would not be able to pull that crowd.