Opening a Tea Room/Cafe

Claytone

Just a quick recommendation, the E-myth business books are really wonderful for people just starting out on their own. They give you a good overview on developing business acumen. They also lay out a really solid formula for keeping a business running when you aren't around. Here's a link:

http://www.e-myth.com/

Haven't looked though the site much, but I've read the main book and it's great.

paulwf

davidjwest wrote: »

OK thanks, looks like you've managed to persuade me to give up on the idea.

However, I'm a persistant blighter who doesn't give up quite that easily - I've come up with a spreadsheet that works out all kinds of figures and assuming a footfall of 80 customers a day spending on average £4 each with a profit margin of 80% I would be able to make a profit of £25k per annum which is about the minimum I'd want to make it worth my while. This is what I'd be looking to pay myself.

Alternatively 105 customers spending £3 at 70% would have a similar result.

You've definitely done the right thing by setting up a spreadsheet to crunch through the numbers. It will enable you to define what sort of premises you need. Basically drill down to how many customers you need, work out what premises you need then update the rent figure on the spreadsheet...then with the new figures work out how many customers you need...and so on

Please remember something very important though: spreadsheets will tell you anything you want them to tell you. Don't rely on them as you have to make a lot of assumptions.

What your calculations about breakeven should show you is that most of your costs will be fixed and there will be a distinct tipping point: if you don't get enough customers you rapidly lose money, if you get more than expected you make a healthy profit. To state it simply if you open up and sell 40 coffees your costs (excluding ingredients) will be nearly exactly the same as if you sell 100 coffees. Even with staffing there is a minimum operational requirement and generally as sales ramp up staffing doesn't increase that much.

Don't underestimate how hard it is to average 100 customers a day. The big chains are busy but they spend huge money on brand building, advertising and promotional activities. They've also spent £100K on shop fitting and have a head office team for support. It is incredibly hard to get 100 customers a day, and as I've said before if it snows one day and you get 30 customers you need a day with 170 to balance it out. Building a brand and doing marketing and promotions to attract 100 coffee/tea customers each and every day is harder than it looks. You will also need a prime location so rent and business rates will be high which will absorb a lot of your profit.

Turning £35K into a £25K a year catering business is a tall order. I second the idea of spending £1K on a catering trailer first and then building from there.

aimingforadebtfreelife

I echo previous comments - start small and work your way up. If you start off big and it fails you will fall harder and will cost you dear. At least on a small scale if it does fail you limit your losses. I'm not sounding negative but 100 people a day is a tall order. I work on a tram network and on one route pass about 3 coffee shops, a couple are in a heavy passing trade shopping area. You never see them full ever, not even a quarter. Often you get special deals boards outside to get people in. You get the mothers having coffee together but its the business people which make the real money.

Sounds crazy but hear me out.

Look on Ebay as to get the picture... type in Piaggio Coffee. These are the French looking vehicle portable real coffee machines. Find out near you if there is a park and ride / train station / coach/bus interchange and set up (legally of course) and sell a cup of fresh ground coffee to commuters who will take on the train etc. Plus you can upsell a breakfast muffin or danish which will increase the profits big time. Commuters will make you the money. Little start up cost and if trade gets poor just move elsewhere... car boots, local parks etc.

Best of luck

s_b

aimingforadebtfreelife ive just looked on the bay and am underwhelmed to be honest
weirdly i pumped a guy for information in cambridge a few months back who was in the square with this setup and i could see he was taking money
he was a bit evasive but i could see the opportunity as you say if its parked in the right location and no business rates etc
they all seem to be trailered to the sites though rather than driven confirmed by ebay advertisers so as like me it was the wow effect that drew me,something another cafe on another street never would in a strange town

just my thoughts

ikati5

Any business today is a gamble, but the big coffee shops seem to be doing getting customers through the door, so there is money being spent on tea and coffee.

Your biggest outlay is going to be premises, I looked into this myself recently with my daughter and an A3 (licensed for food) premises was asking ridiculous money to go in and around £1k a week in rent, obviously smaller places are cheaper but not capable of taking big money.

olly300

s_b wrote: »

aimingforadebtfreelife ive just looked on the bay and am underwhelmed to be honest
weirdly i pumped a guy for information in cambridge a few months back who was in the square with this setup and i could see he was taking money
he was a bit evasive but i could see the opportunity as you say if its parked in the right location and no business rates etc
they all seem to be trailered to the sites though rather than driven confirmed by ebay advertisers so as like me it was the wow effect that drew me,something another cafe on another street never would in a strange town

just my thoughts

As well as it being location location and location again you need to work out who you are aiming at and whether it's a profitable group.

I live in an area where there are independent cafes as well as the big chains. Why do the the independents make money?

My area has a university so is heavily reliant on students. In addition a few of them are also heavily reliant on the footfall of builders, commuters, just shoppers or/and families in general.

For example on the long road I live on (which isn't a high street) there is:
1. A deli which also has a cafe and outside tables. Most of the customers are families with children under 10. On the weekends and in the afternoons around 3.30pm to 6pm it's full as there is a state primary school, a private prep school and 2 nurseries nearby.
2. There is a restaurant which in the day acts as a cafe. It has wifi to get adults who work at home in, or is a decent place for small business owners without their own business premises to hold meetings.
3. There is the more traditional cafe which gets commuters and builders, who can park their van outside, to grab a tea and bacon buttie in it. It has very little table space and is only busy about 7.30 to 8.30 am weekdays and on Saturday/Sunday mornings.
4. One at the station which gets people who want a drink to take with them on the train which sells Danish pastries and flapjacks.

Then there is the trailer in the Wickes car park. This is squarely focused at builders who want tea, bog standard coffee and fried breakfast sandwiches. The other DIY chains aimed at consumers have car washes while the small estate about a mile away from the Wickes with all the trade builders merchant counters has absolutely nothing.

Funny thing is about 6 miles away there is another trade builders merchant estate but actually has a Homebase on it. There is another trailer which sells the same thing in the Homebase car park.

[Deleted User]

So much good info for you,I may have missed it but has an Accountant been mentioned,the have been known to charge also the hire of the credit card machine needs to be be paid for.If you take on a shop that is not a cafe allready can you get change of use to food? Probably a good time for a deal on premises as there are so many empty.

paddyrg

When considering premises, never underestimate the value of a couple of covered but outdoors tables! It means smokers can go somewhere, but so can people wanting to look at the pretty ladies, families with those huge tank-style buggies, cyclists, etc., and it means bypassers can see that you're doing nice coffee and cake. Combine that with the right location, it can make a difference (I know I only ever meet friends for coffee/lunch in the summer at places where we can sit outside - and if the tables outside one are full, we'll go to the next, no matter how much inside space there is.

Also, do me a kindness, and as much as those VERY NOISY coffee grinders are a supposed part of the mystique and experience when paying over the odds for a coffee, they drive me nuts. I want somewhere sociable where I can talk and hear the other person as much as a hot drink - some places are so loud (machines, thumping, 'skinnywinnymochalattechinodeluxtogo' shouting, music) that they mean people have to speak up to be heard, it becomes an arms escalation. I avoid those places too, or use the tables outside (see above!)

Savvy_Sue

paddyrg wrote: »

Also, do me a kindness, and as much as those VERY NOISY coffee grinders are a supposed part of the mystique and experience when paying over the odds for a coffee, they drive me nuts. I want somewhere sociable where I can talk and hear the other person as much as a hot drink - some places are so loud (machines, thumping, 'skinnywinnymochalattechinodeluxtogo' shouting, music) that they mean people have to speak up to be heard, it becomes an arms escalation. I avoid those places too, or use the tables outside (see above!)

:rotfl: while acoustics may be way down the list of things to consider, it really is something which SHOULD be considered at an early stage, and I agree about those coffee grinders. There are some cafes I won't go into if I have to sit near the counter.

I have a mild hearing loss, and most of my family and my in-laws are much deafer than me. We won't use cafes which are too noisy / play loud music.

Owain_Moneysaver

Savvy_Sue wrote: »

I have a mild hearing loss, and most of my family and my in-laws are much deafer than me. We won't use cafes which are too noisy / play loud music.

But if the OP does play music in the cafe, that needs licence fees to!