In our last article – link here - we talked about new coffee shops and cafe startups' opportunities.
One of the questions we get asked is - 'What makes a great site to open?'
It's such a big topic, full of bear traps, that we devoted a whole chapter in our best selling book, 'The Daily Grind - how to open and run a coffee shop that makes money.'
The pandemic has changed the metrics of every location. City centres and business areas are quieter, commuter towns are bustling, and your guests' demands have evolved.
The potential for any site to generate a profit is 100% dependent on what it sells, matching the locals' needs. Our analogy of not expecting a Vegan cafe to do well in the middle of a meat market is an extreme example of a new place getting its offer wrong.
Often the potential of a site to attract customers exceeds its capacity, leaving sales capped, which stops costs as a % of sales from decreasing. Therefore there is an optimal balance between the size of a cafe and the rent it pays. Unfortunately for startups, this is not an exact science but an art that the best operators learn.
Small sites that have an attractively low rent are available everywhere. The low risk comes with a trade-off that means that the owner will need to be heavily involved with the day-to-day; in effect, their business becomes a job. Often this job is a low paid one requiring lots of hours as well.
Startups tend to be put off by the capital outlay needed for the bigger sites and are blissfully unaware that Starbucks or Costa will spend £250k on a new site and still get a great return on investment.
The opportunity at this moment is to take over a fully fitted out existing cafe or restaurant. There are thousands of these types of businesses for sale. There are also thousands of reasons why they are up for sale. The underlying reason for the sale is frequently that the business has become stale and has not generated profits for their owners even before Covid.
We have taken over failing businesses and tripled sales in 12 weeks because we identified what the local population wanted and gave it to them!
Like many startups we meet, you may have little experience dealing with landlords and leases. This adds to the challenges of opening your first site. Commercial leases are very favourable to the landlord; they could bankrupt an unwitting Tennant and, therefore, are dangerous beasts that must be tamed by an experienced commercial property lawyer.
Through our online training course www.startupacoffeeshop.com and our 1:1 coaching, we work with hundreds of coffee shop and cafe startups worldwide. Our community benefits from interacting with others at either the beginning, middle, or end of the journey they are taking.
Meet us and watch Claire's Keynote speech ' Why NOW is the time to start a coffee shop', at The Coffee Shop Innovation Expo this November at Excel London
Andrew & Claire Bowen
Coffee Shop and Café Coaches and authors of the #1 best selling book ‘The Daily Grind – How to open and run a coffee shop that makes money’