Have you ever felt a desperate need for a change in your career? Have you ever wanted to quit your job instantly, and start doing something that fulfills you? You may be sitting at your desk right now thinking about starting your own business. Mind flooded with memories of times spent hanging out in cafes, it brings you to a realisation: “I would like to open my own cafe!”
Adela, co-owner of Dos Mundos, Prague-based speciality coffee roastery, puts down key topics to realise and think about, before opening your own cafe. Dos Mundos have been on the specialty coffee market since 2013. The roasters have cooperated with several cafes, sweet-shops and other hospitality establishments throughout the years of business cooperation. As such they collected ten objective truths that might come handy, and help you open your business with realistic expectations.
Adela put those truths down in 10 categories! Read on before you pick up the keys of your new location!
I – It will not happen overnight
The very first thing you should take into account! Even if the place you have chosen to be your future cafe is in a perfect condition, you cannot just open it for business immediately. In case you decide to do that anyway, there is more than a 90% chance that you will fail before reaching six months of operation. Why? There is a reason the person selling their business to you is leaving that space. The neighborhood might be going through radical changes, customers may dislike some parts of their service; bad management and other issues could impose challenges for new business being started there. Even if the previous owner claims opposite. You will need to find this bug, deal with it, differentiate from the previous owner, or at least make changes that will be registered.
It is realistic to open a cafe within three months (a very optimistic option) to eight months (a pessimistic option) from the moment you rented the space. For this period of time it is reasonable to have a discount for rent negotiated, or simply have enough money to start with.
Here are few examples of things you might need and their estimated delivery times: a new espresso machine (3 – 5 weeks), a customised bar and furniture (8 weeks), branded cups (4 weeks), a by-law approval of the construction from the Department of Hygiene (4 weeks), outdoor seating authorisation (up to 12 weeks). Further regulations will depend on your location and country legislations.
II – You must offer an extra value to your customers
To make customers search for you, you need to create a unique concept. Have a business plan ready, go the extra mile to make your customers experience something new and unexpected. They will come back for it.
First of all, define your target customer and create a concept that meets his needs. When you are ready, create one strong sentence saying why is your café unique. This will help you concentrate in the future.
Let me be a bit sarcastic here: homemade desserts and lemonades are not enough of a concept. They are delicious, but it is kind of a standard service nowadays. Here are a few thoughts on what you could do to establish a unique concept business. Take into consideration the development of your market! Offer a sort of technological innovation, feature a brand new product, a unique design. Specialise in a service that is nowhere to be found in your area, such as french pastries bakery. Perhaps you are opening the first cafe in the city serving filtered coffee. Become known as the best fruit sorbet shop serving specialty coffee in town! Surely, there are more ideas in your head!
III – Explore new areas of high potential rather than keeping it in safe and established neighborhoods
We dare to exaggerate a little bit with this rule. Yet, we mean it in the best way. Some city areas might be exhausted with competition already. There are others that might be of a better value to you, financially, and they might be the future hip spots in the city if you bring new breeze in the area. The potential of the originally chosen area can be explored easily. A simple search through reality estate medias can help you find out the number of cafes that left the area. If there have been many, it probably is not going to be an easy location to run a cafe from.
IV – Know your numbers and be prepared
There is nothing more important than to know the funds you need to have in order to sustain with your business. So remind yourself of the basics of working with Microsoft Excel, and try to predict turnovers, revenues, costs of materials and costing of employees. To finish the equation increase all costs by 20%, and if on-paper the business is still in black numbers, you have a good foundation. Once you open, confront your business plans with reality. In case your bills do not match your expectations of paying and earning, do something about it. If you fear it is impossible, you might rather close the cafe down.
You will not be able to overcome this issue yourself. There can be many reasons for a setback: a poorly chosen location, lifestyle change of locals, not finding a customer base for your concept. The others will be hesitant to tell you, of course, but you can be the problem as well.
V – You cannot do it all by yourself
You need a strong support from your close surroundings, both financially, as well as mentally and physically. You just cannot stay all day long behind the bar, bake desserts in the evening, clean up the cafe, deal with the financials on weekend nights and go supply shopping on Sundays. You better count with some part timers from the beginning. Those can help you, if you are ill or in case of emergency. Not to mention that everybody needs a day off, sometimes.
VI – You need to have money for equipment
This relates to statement no. 4. Cafe equipment costs money. Opening a cafe is a long term investment. If you see it that way, you will agree it is worth it getting a new, quality machine that will last and will allow you to serve the coffee you want, without compromises. Why? Because coffee is the heart of a cafe business!
New coffee machines might be more expensive, but you pay the price for endurance of the machine’s service. In case the machine brakes, you get a profi service on it. A new basic 2 group espresso machine can cost 2 300 – 4 000 EUR without VAT. You can find better coffee machines for about 3 000 – 5 500 EUR, the great ones are priced at about 4 500 – 9 000 EUR and the fantastic ones up to 11 000 EUR without VAT. It does not end with buying a coffee machine, though. You need one grinder – if you want to serve only one coffee. In case of two options for espresso you will need two grinders. Count in one more for filter options. Grinder prices range between 500 – 3 000 EUR, depending on what do you expect from them, and what amount of coffee do you want to grind with them. If you want to offer decaffeinated coffee, you will need another grinder.
Next thing you want is a water filter. You can purchase one at 100 – 300 EUR, based on the water quality at your water source. It needs to be changed every 6 – 12 months. Well and then you need to equip your café with such things as a cooling showcase, fridges, ice machine, dishwasher, freezer and so on.
VII – There are no millions in cafe business
If you think you will have a big profit (not revenues) in the range of tenths of thousands EUR, you will be most likely disappointed. Not that many cafes become so successful, and if they do, it is because of the very experienced people behind the project. Those people must have taken an advantage of a favorable situation, they understood a specific trend, or realized a potential of a place. If you open your first middle sized cafe (15 – 30 seats) have in mind that earning 150 – 400 EUR/day is a success. This is an example based on our experience from the Czech republic, where an espresso is sold for €1,40, and the minimum wage is €2,20/hour.
If the business goes extremely well you might even hit 800 EUR on some occasions. You need to accept that it goes slowly with an espresso being sold for that price!
VIII – Be aware of administrative demands and regulations
There is nothing worse than starting a business and finding out that not a single seat is allowed for this type of business by the Department of Hygiene of Food and Non-Food Products. There are specific regulations (HACCP) and charges regarding the general conduct of the business. There are not known to someone who just entered the business environment. OSA, the association for rights to musical work, is one of the organisations you might struggle dealing with.
Osa is going to be your first customer as well. They will count the number of speakers at your cafe and fine your business for not paying enough money for public distribution of music. There are other administrative things and demands that can differ, depending on the administrative and geographical areas. Therefore, you need to have papers to prove your word concerning: equipment, music, outside seating. An affirmative nod won’t do it! Ideally sit down with someone who has got experience in running a food business and can help you get through it. Or hire a consultant. This money will return in no time.
IX – Work at a cafe to know what it is all about
Everyone has got a (optimistic) idea of what “working at a cafe” means. Most people think it is about chit-chatting in a peaceful environment. The reality is different though, and more so in those cafes that are successful. To sell 100 espresso-based coffees/day could mean steaming milk about 50 times, washing up about 100 cups, 100 saucers and 100 water glasses. You would spend most of the day cleaning, not chit-chatting. You prepare the cafe before opening hours, clean a lot of equipment throughout the day while distributing and pouring coffees, and in the evening you need to put everything in place, ready for the next day. It is not for everybody and the hardest part is only coming; the communication with customers.
Coffee customers are a pretty diverse group of people, you can expect loads of different opinions, criticism and complaints included. To deal with this you need to have a reasonable level of self-confidence, authority, and experience. Now that is a combination that not everyone possesses, and sometimes you find out only when doing the work yourself. Every customer can share his experience on social networks nowadays, especially if it is negative! Facebook, Twitter and Tripadvisor are some of those networks.
X – Do it the honest way, people will appreciate it
We find that people come back to places that do their job with honesty. They are more likely to recommend the place to friends then. You do not need to have the best cakes in the world, but if you use quality ingredients to make your products with, people are happy to pay for the great effort. The same rule goes for coffee brewing as well. Buying expensive equipment is not enough. If you buy good machines and start a contract with a great roaster, you are on the best way to make a good cup of coffee. Nobody is perfect though!
Invest in yourself and your staff. Pay for good espresso and filter coffee brewing courses. You can try to convince an experienced barista to help you out in the beginning. If you want to learn to make nice latte art, you will need to buy 40 liters of milk, and practice. Just be ready for demanding customers and have high demands on yourself as well! Healthy self-criticism is good for you. For a wider range of opinions and feedback we recommend you to consult your skills with your roaster, too.