Opening a cafe - help + advice needed

kweeveen86

Hi there,

I'm close to securing a lease on a premises that is in a prime location but is an empty shell with no track record as a cafe.

Just looking for help and advice on start-up costs, any hidden extras that I might not think of, equipment needed, food hygiene legislation, types of insurance needed, rates, planning permission, fire certs, wine licence info, grants available (extra incentives for being in the Gaeltacht?)

Would really appreciate help and tips from anyone with prior experience.

Thanks!

godtabh

i would suggest holding off on signing a lease until you get your questions answered.

kweeveen86

Thanks for your reply. I sure will but knowing the answers to these questions will help me negotiate a better lease agreement, so want to have a good idea of what finance is needed to get the nuts and bolts sorted before committing to the lease.

etoughguy

You almost have a lease for a business selling coffee and you don't even know what equipment to buy? You know nothing about rates, insurance etc. In my total non expert opinion you should talk to a professional else run the risk of losing your shirt. Best of luck with it but with a list of questions you sound like a total amateur
I don't mean to have a go but if I was you (and I emphasize again I don't know anything about this business) I would at least ask other cafe owners, the local council and enterprise Ireland (assuming they cover this) for input
Hope everything works out and best of luck.

kweeveen86

Thanks etoughguy. I have a lot of experience in hospitality but, no, have never set up anything myself before - and it shows! Haha!

I have a good idea of what equipment I need and costs, etc. Just looking for info from anyone with experience - have already spoken to a few cafe owners and have facts and figures from them but trying to assemble as much info from different places as possible. Huge difference in the start-up costs in the 3 places I've spoken to - regardless of their lease agreement/rental costs.

Have a meeting with an accountant this week to run through insurance, rates, etc - that's the stuff I know very little about. Was just looking for some info from people with experience before then so I'm not going into it blind!

_Brian

Has the property served food before.
Unit close to me was leased only for person to find out it required planning to change use to serve coffee, sandwidges and cakes.

I see so many units and small shops changing hands, opening for a few months and closing again. To me it's obvious people aren't costing and planning out their actions in advance - it must be crushing to put such huge effort in but doomed to fail before the doors open the first day.

OP, get your plans and costings done and checked by someone experienced. Comit to nothing until you have the plan 100% done.

pedronomix

Search " cafe" and then "coffee shop" on this forum homepage (top right) and you will get hundresds of posts and answers on this topic. You have not stated whether your hospitality experience is in the catering field or as to what type of cafe, greasy spoon or Cafe de Paris... this will help you elicit more appropriate advice.

Yogi81

On a premises side, it will need to be wheelchair accessible and there are specific numbers for toilets for each customer seat available.
Check these out as it will be a large additional cost if you need to put in wheel chair access and toilets.

dbran

Hi

My advice is dont do it. I have yet to come across a cafe that makes money for its owner. Most times all of the costs go on staff and food with tiny margins for the owner. With the expected increase in the minimum wage margins are going to be squeezed even more then before.

Having a prime location is simply not enough. You need a unique selling point as to why patrons will visit your cafe for a latte as opposed to just grabbing a sandwitch from the local deli. Once established this needs to be maintained going forward and for this you need to know how a successful cafe operates. I have seen so many people "giving it a go" and now are holding on by their fingernails.

Best of luck with it.

Dbran

duploelabs

dbran wrote: »

Hi

My advice is dont do it. I have yet to come across a cafe that makes money for its owner. Most times all of the costs go on staff and food with tiny margins for the owner. With the expected increase in the minimum wage margins are going to be squeezed even more then before.

Having a prime location is simply not enough. You need a unique selling point as to why patrons will visit your cafe for a latte as opposed to just grabbing a sandwitch from the local deli. Once established this needs to be maintained going forward and for this you need to know how a successful cafe operates. I have seen so many people "giving it a go" and now are holding on by their fingernails.

Best of luck with it.

Dbran

On the contrary, I've met many places that have thrived and are very profitable. Where I appreciate your point about having a USP, but shouldn't every start up business have this?

dbran

duploelabs wrote: »

On the contrary, I've met many places that have thrived and are very profitable. Where I appreciate your point about having a USP, but shouldn't every start up business have this?

Perhaps.

I have come across places that appear to be thriving. But are they profitable? Well when you get to look at the books the answer is sadly no. Profitable for the staff and the suppliers who have to be paid. But for the owners, sadly not.

So all I am saying is you need to have a good idea of how a successful cafe is run. Perhaps OP does, but the questions the OP asked does not fill me with confidence. They should be well passed wondering what equipment they need, food hygene legislation, fire certs, wine license etc on the eve of signing a lease that they may not be able to get out of easily.

But I do wish them luck genuinely.

dbran

odeamarcas

kweeveen86 wrote: »

Thanks etoughguy. I have a lot of experience in hospitality but, no, have never set up anything myself before - and it shows! Haha!

I have a good idea of what equipment I need and costs, etc. Just looking for info from anyone with experience - have already spoken to a few cafe owners and have facts and figures from them but trying to assemble as much info from different places as possible. Huge difference in the start-up costs in the 3 places I've spoken to - regardless of their lease agreement/rental costs.

Have a meeting with an accountant this week to run through insurance, rates, etc - that's the stuff I know very little about. Was just looking for some info from people with experience before then so I'm not going into it blind!

When you visit your accountant, ask him if he has been working for any cafe's / takeaways, food eateries etc, who might be willing to share the workings of their accounts with you.

This will provide you with a foundation to see what the fixed and variable costs and overheads are for a cafe.

Also, you could make contact with any cafe owner who was where you were once, and ask them for advice and information on start up costs. If it would help, I could source a sample business plan for a café for you (I write business plans for a living) and I have access to hundreds of samples.

As previous posters said, you really need to know what you are getting into, and you need to have thought and costed and projected it all out first.

Don't get disheartened, just realise that this takes works and application.

P.S. I grew up in a takeaways and café's, and there is profitability in them, but it's dependent on so many factors, you just need to learn about them and then consider if your potential shop can tick the needed boxes!

pedroeibar1

duploelabs wrote: »

On the contrary, I've met many places that have thrived and are very profitable. Where I appreciate your point about having a USP, but shouldn't every start up business have this?

Yes, it should. It should also have a promoter that has a notion of what is involved instead of sleepwalking onto Boards and posting "haha" clueless comments as done earlier.
To run a coffeeshop effectively you need to do it yourself, be there at 5 in the a.m. to bake fresh stuff, work your butt off for the next 12 hours, close up, clean down, do books and then prepare for the next day. Do all that, understand waste/shrinkage/margins/ marketing/ staff/ etc and it just might make a small profit. The OP has no notion, as shown by earlier posts. The idea that a knowledge of what equipment, insurance, etc is needed to negotiate a price for the lease is a non sequitur and plain daft. The OP's sense of entitlement extends to looking for a grant because it is in a Gaeltacht area(!) Has anyone ever been in any Gaeltacht area in winter? High footfall location ? even the local pubs close down except for weekends! The profit on the take from a few good summer months would not even cover the depreciation sum on a half decent secondhand coffee machine.
There is no point in wishing the OP luck, it cannot succeed on luck alone.

Bigus

Rent should be free for a long period to cover cost of the fit out left behind ( stuff that can't be carried away,tiles, electrical, plumbing etc) if it doesn't work.
Perhaps run your location by one of the franchise chains (even if you don't intend to run with them)to get a feel for these costs and projections.

jimmii

Bigus wrote: »

Rent should be free for a long period to cover cost of the fit out left behind ( stuff that can't be carried away,tiles, electrical, plumbing etc) if it doesn't work.
Perhaps run your location by one of the franchise chains (even if you don't intend to run with them)to get a feel for these costs and projections.

Three years ago maybe. You'll be lucky to get a rent free period in any decent location now.

Bigus

jimmii wrote: »

Three years ago maybe. You'll be lucky to get a rent free period in any decent location now.

any shell unit should have a rent free period in lieu of fit out .

ardinn

Have to agree with the negative comments above - your op fills me with dread. Prime location? Good stuff - prepare to be paying rates of 10k upwards before you sell a coffee - from a machine that will cost you the bones of 4k. That is also a 3 kilowatt machine that will make your eyes water every time you see an electricity bill.

Imro,
ppi,
the hse
Refridgeration
freezers
hot and cold holding counters
Tables and chairs costing about €175 per person seated.

Also, a decent combi oven is about 10k and whatever cookers/fryers you will need will be about 8k. Proper industrial microwave 1.5k - proper heavy duty sandwich toaster €600 - salamander €500 - Is the unit fitted for gas?

Although the markup on coffee is good, your initial outlay could be €50k on equipment. Then everything else mentioned above. Being in business isnt easy - you obviously havnt so your friendly accountant will be in or around 3k for his services.

Pest control
Waste costs
Wages - dont forget prsi - someone on €500 a week costs you more than that.
Water rates - coffee shop, about 3k PA
Signage and advertisements - starting at €2k

I recommend you go do a business and finance course for 2 years before you even consider giving this any sort time.

duploelabs

ardinn wrote: »

Have to agree with the negative comments above - your op fills me with dread. Prime location? Good stuff - prepare to be paying rates of 10k upwards before you sell a coffee - from a machine that will cost you the bones of 4k. That is also a 3 kilowatt machine that will make your eyes water every time you see an electricity bill.

Imro,
ppi,
the hse
Refridgeration
freezers
hot and cold holding counters
Tables and chairs costing about €175 per person seated.

Also, a decent combi oven is about 10k and whatever cookers/fryers you will need will be about 8k. Proper industrial microwave 1.5k - proper heavy duty sandwich toaster €600 - salamander €500 - Is the unit fitted for gas?

Although the markup on coffee is good, your initial outlay could be €50k on equipment. Then everything else mentioned above. Being in business isnt easy - you obviously havnt so your friendly accountant will be in or around 3k for his services.

Pest control
Waste costs
Wages - dont forget prsi - someone on €500 a week costs you more than that.
Water rates - coffee shop, about 3k PA
Signage and advertisements - starting at €2k

I recommend you go do a business and finance course for 2 years before you even consider giving this any sort time.

Op is opening a coffee shop, not a restaurant. why'd they need all that food production equipment?

ardinn

OP is a cafe - which presumably will serve lunches - or maybe not - if they are they will not get away with household appliances. If not then I stand corrected.

But it says cafe in the title, I expect some lunch in a cafe!

duploelabs

ardinn wrote: »

OP is a cafe - which presumably will serve lunches - or maybe not - if they are they will not get away with household appliances. If not then I stand corrected.

But it says cafe in the title, I expect some lunch in a cafe!

And there are perfectly good solutions out there that give you good quality produce that you just have to heat and serve without having to spend the initial budget for that equipment and then the labour budget to employ a chef to utilise said equipment

ardinn

duploelabs wrote: »

And there are perfectly good solutions out there that give you good quality produce that you just have to heat and serve without having to spend the initial budget for that equipment and then the labour budget to employ a chef to utilise said equipment

Absolutely, but such solutions are usually poor quality short lived experiments - fine get a merry chef oven for 3.5k and be happy with mediocrity, get your boil in the bag meats, prepped veg, and canned sauces.

You dont need a chef either, a good cook is what is required. And service staff to act as kp's and food preps also when needed.

The op will also be working in the cafe all day every day to further cut wage costs - I presume the menu is allready completely planned out and the op is capable of doing it on their own with their eyes closed!

jimmii

Bigus wrote: »

any shell unit should have a rent free period in lieu of fit out .

Possibly true in gaeltacht areas but definitely not true across the board I hadn't noticed that earlier. Given its location that does seem likely.

_Brian

Even if OP goes ahead..
By using sub standard equipment and a myriad of pre-prepared sludge then the venture is definitely doomed..

Even for a basic coffee shop there will be substantial equipment needed...

One of my first jobs as a student was in a cafe. The owner fitted it out beautifully, had an amazing menu for a cafe, was beside a shopping mall and a cinema. He worked extraordinarily hard to make it work. His background was business and he'd earned a lot of money in consultancy. His family were successful business people. He tried everything under the sun to get it profitable and pay off his initial investment - affiliate deals, wine and beer licenses, intriguing menu additions.
It basically ruined him, and since then I have seen that type of business as a graveyard. Even if you do all those things Pedro has said its still not guaranteed to work. Going into it without even the basics, chances of success are extremely slim I believe.

kweeveen86

Thanks for all feedback and responses - both constructive and destructive ;-)

Obviously just throwing up a quick post on here isn't the extent of my background work/ research and I obviously come across as a tool but I know what I want the place to be. Little more than a coffee bar, 10am to 6pm, that has 4 or 5 different salads, sandwiches and cakes on offer with the possibility of future expansion into making 5 evening meals (possibly with wine licence) available after 6pm from Year 2.

I know about the equipment needed and the existence of HSE certs, IMRO, furniture, electricity, charges, rates, water charges, insurance, WiFi costs, staff costs, fire certs, etc, etc. What I was looking for was ballpark figures for those based on people's experiences. As I said, I have costs from 3 other similar outfits but some differ wildly - the more figures I have, the tighter I can make my business plan. That's all!

As for "sense of entitlement", I live in the Gaeltacht - I'm not starting a business there just to avail of a grant! Enterprise grants, etc exist for farmers and similar in the region, so if I'm entitled to such, I'd be a fool to ignore it!

Thanks again for all your comments. I really do appreciate them.

ardinn

To answer some of those

IMRO - also PPI (They may have merged now) €250 guesstimate
furniture - Again depending on what you want but anything decent is the amount I quoted above about €175 per seat
electricity - Depends on equipment - but heavy coffee machines and ovens are, well, heavy - €1500 bi monthly
rates - depends on location - high st in busy town? 10k+ per annum
water charges - 1.5 - 3k per annum
insurance - 1-2k - Serving alcohol - up to 3.5k per annum
WiFi costs - regular household charge unless you have a very large premises requiring extra routers
staff costs - 9:15 ph - chefs up to 15 ph - Waitresses, kp's chefs.
fire certs, free - but you will have to pay for a fire alarm and extras- if one is in the building, insist it is in perfect working order before lease

etc, etc.

Rentokil - 200 - 700 per annum, depending - if you start having serious issues this will rise dramatically.
Sky tv for commercial premises - 6k per annum (alcohol)

I will edit this again with more when I have time

brianblaze

I run a small cafe in Carlow, opened last February. Happy to answer any questions Op, just send em in in a mail and I'll get around to it tmro

delahuntv

As always these days here you'll get a lot of comment from some with little substance.

Without knowing where you are, i and no-one else can comment on your business.

People told a friend in a small west kerry town he was crazy for moving from Dublin to set up a cafe - He's crazy busy especially in tourist season and still does well in off season.

Anyway here's what you need to look at...

Planning - probably needed especially if you are doing cooking, but not a major obstacle.

Ventilation - essential even if you are doing panini. Est €2,000

Toilets - two needed + separate staff toilet. Extra needed if over 40 seats.

Hse registration + regulations. (no cost but a lot of learning)

Pest control - fairly cheap. About €70 every quarter.

Imro - you can get royalty free music online

Water charges - circa €1500 for small cafe.

Equipment - refridgerated serve over, hot serve, soup kettle, panini, salamander, microwave, dishwasher, fridges, freezers (a huge amount of goods are delivered frozen), stainless steel prep area, utensils, crockery, coffee machine (can be rented as a package), tables & chairs.

Overall I'd guess about €20k -25k for set up especially if you get deals on equipment (2nd hand tables and chairs)

There's a huge failure rate on coffee shops so 4 other options are...

1 - look for a good franchise.

2 - look to manage one on a profit share

3 - look to work for a few weeks in a similar size unit in a different area to see the pitfalls.

4 - see if there's a large premises that could hold a coffee shop as a concession - Michael murphy furniture store in Newbridge is a good example as are coffee shops in many garden centres.


Suppliers like musgraves or pallas foods cam be very good on advice.

pedroeibar1

kweeveen86 wrote: »

T......and I obviously come across as a tool but I know what I want the place to be. Little more than a coffee bar, 10am to 6pm, that has 4 or 5 different salads, sandwiches and cakes on offer with the possibility of future expansion into making 5 evening meals (possibly with wine licence) available after 6pm from Year 2.

Some of the people giving “advice” here should smell the coffee! Talk of a few rent-free months is just BS, that cost is meaningless in the scale of things.:rolleyes: Creating yet another generic coffee shop is a dumb idea.

Pushing you kweeveen, I agree with you! . You actually do "come across like a tool" from your posts. If you did have the necessary experience why have you not been more specific with the info? How could anyone with a basic knowledge of the industry expect appropriate answers without providing the number of covers? How many seatings? What seasonality? What catchment area? These have a huge influence on standing charges and operational costs.

You need a USP, fat chance of achieving that with what you have written, no hope of survival whatever without heavy front-end investment supported by deep sectorial knowledge (which you have not shown and underscore by thinking you can sell dinners without wine). Apart from indicating a lack of marketing knowledge it also illustrates a lack of knowledge on margins!

Generally speaking, before the end of their first year, 20% of start-ups will fail. (That figure is international, not just Ireland, but the stats are remarkably similar across the EU and USA.) Almost half of those that fail will close because of inadequate cash flow or sales. Looking beyond year 1, the biggest cause of failure is incompetence. That is because no experience in record-keeping, coupled with no planning and an ignorance of pricing & financing costs leads to non-payment of taxes. Revenue takes no prisoners. This reason alone wipes out about 50% of start-ups before year 5.

The next cause of failure is a lack of management experience, hitting about one third of start-ups before year 5. That lack of experience leads to inadequate financial planning, credit control (inward/outward) and taking on too much borrowing (expansion/trade/overdraft & cash management).

The most likely companies to fail before reaching their fifth birthday are cafés/restaurants. Frankly, from what you have written you have ticked most of the wrong boxes.

delahuntv

delahuntv wrote: »

As always these days here you'll get a lot of comment from some with little substance.


There's a huge failure rate on coffee shops

So what are you trying to say exactly?

RoryW

Money is hard earned and easily lost

Be careful