The 5 steps to opening a successful cafe

 

At some time in our careers, we all usually reach the point where we question what we’re doing and if we’re really happy. It’s not unusual that during this time of self-reflection, people decide to make a change. Often that change involves making the leap from employee to employer, opening their own business. For many Australians, a café is their choice of business, with an annual growth rate of 7%pa and a country fixed with coffee, cafes in Australia are booming.

 

Owning a café has always been one of those dream jobs that people wonder about. The appeal is understandable; The freedom of being your own boss, building an asset to secure your financial future and working in an engaging non corporate environment. Like any small business, running a café is not rocket science, anyone can do it, some are just more successful than others.

 

As food consultants we are asked all the time about how you open a successful café. So here is our 5 step process to ensuring you set yourself up for success.

 

Step 1 Finding the right location

As the real estate saying goes, it’s all about location, location, location! The right location is crucial to the success of your café. Visibility for passing trade, adequate parking, street level access, weather protected outdoor seating and a northerly aspect are some of the location gems that need to be considered.

 

Step 2 Negotiating a great lease

The golden rule to leases is negotiation. Like any business transaction, a lease agreement is always open to negotiation. Never pay the base rent that’s being asked without negotiating. Set yourself up for success by researching the local market and having a strong understanding of current rental prices. Your ability to negotiate can save you thousands. Our top tips for saving you money include;

  1. Ask for a rent free period during fit out and the first few months of trade (don’t ask – don’t get!)
  2. Ask for a fit out contribution (usually 10% but can be substantially more)
  3. Once you have reached a verbal agreement, get it in writing ASAP, this can be a MOU while you wait for the formal lease documentation
  4. Always get a disclosure statement about the premises/centre/future plans as well as outgoings and any other potential costs
  5. Make sure that your ‘permitted usage clause’ suits your business and any additional categories that you might want in the future
  6. Always ensure you have a demolition clause in the case of the site being demolished (meaning the end of your business!)

 Above all else, have various sites in mind and remove the emotion from the transaction – be prepared to walk away.

 

Step 3 Conduct a comprehensive market review

The two main market forces that will directly influence your café’s success are the demographics (people) and competition of the local area. If you understand the people in the local area, how they live, what they earn, where they shop and what they spend, you can tailor your café to meet their needs. Understanding the competition in the local area will provide you with great insights into what trades well; what customers want and what they are willing to pay!

 

Step 4 Developing the right café concept

One of the keys to success is making sure your café’s “concept” is right for the area. Examples for different café concepts may include; Vegan, Organic Wholefoods, Italian or French Patisserie. They are all cafes with very unique concepts. The style of food, the prices, the fit out, the brand all have to be a good fit for the customers in that area. Use the demographic and competition analysis of the area to help you to determine the right café concept for your location.

 

A great example of concept fit is a vegan café that trades really well in a vibrant inner city area, where there is a strong existing market for people wanting wholefoods and plant based menus. A café will always trade better in an area where there is an existing market for the concept rather than having to educate and “convert” customers to a concept. As the saying goes, a business has a greater chance of success if there is an existing hungry market, no pun intended!

 

 

Step 5 Develop your menu offering

Now you know your market and have landed on the concept for your café, it’s time to determine your F&B menu. Without doubt the most successful cafes have a very well defined menu, usually concise, that is a great fit for their concept. The food and beverage offering are complementary and can be efficiently produced given the size of the premises and the kitchen equipment on hand. Always determine if the menu requires a chef to produce as this can be a very big consideration for a small business. Our top tips for a cracking menu are;

  1. The menu takes into consideration the demographics of the area, for example, kids & families, students, high/low income earners, retirees etc
  2. Price the menu to ensure adequate profit margin for all items
  3. Keep the menu limited for kitchen ease & efficiency and innovate with specials
  4. Update seasonally to take advantage of produce quality and the best prices
  5. Ensure the menu covers all “day parts” according to opening hours; breakfast, brunch, morning tea, lunch, afternoon tea, afternoon drinks (if licensed) and dinner
  6. The menu can be produced given space and equipment limitations
  7. You have the skills to produce the menu items

 

With the right insight, opening a café doesn’t have to be as daunting as people assume. As with all small business, success is in no small part due to knowing and understanding the local area and tailoring your café to meet the needs of your customers. To dramatically improve your chances of success, look at our online Cafe Startup Success program which will outline all the secrets to running a successful cafe.

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