Cafe Business Start-up

[Gina25]

Hi everyone. Pretty new to the online forum world, but figured it could be a great resource to get feedback and meet some fellow entrepreneurs!

So, my husband and I have been talking for a while now about opening a cafe. Is there anyone who has ever started a cafe or business in the food/beverage industry? If so, how would you recommend we begin this process?

All feedback is the welcome. Thanks so much! :)

[Harold Mansfield]

Hi Gina,
That's a pretty long answer with a lot of variables.

How about we start with what you've done already, where you're located, what your menu entails ( just pastries and coffee, or a full menu and alcohol?), and whether or not you have any money saved, or can realistically borrow a significant amount to get started.

Also, do you have any experience in Food and Beverage or running a restaurant?

[Gina25]

Hi Harold,

I'm located in the metropolitan area of Atlanta, Georgia. Our menu would be very simple: sandwiches, pastries, few flavors of smoothies, coffee/tea. At the moment, we don't have any real capital saved. We just recently got serious about the idea. I have a food amount of experience working in the food industry, but no actual manegerial experience. However, I'm confident I can learn this skill.

[Harold Mansfield]

Hi Harold,

I'm located in the metropolitan area of Atlanta, Georgia. Our menu would be very simple: sandwiches, pastries, few flavors of smoothies, coffee/tea. At the moment, we don't have any real capital saved. We just recently got serious about the idea. I have a food amount of experience working in the food industry, but no actual manegerial experience. However, I'm confident I can learn this skill.

Your first step is to figure out where you want to be located, find out what kind of licensing is needed, price real estate and leasing rates in that area, figure out what kind of start up supplies, furniture and remodeling costs are involved, and then sit down and plan out your ongoing expenses from rent, utilities, garbage pick up, insurance, and so on. Be generous and realistic. Opening a restaurant is NEVER done on the cheap and cost over runs and unknown expenses are normal.

If you think you need $150k, you'll probably realistically need $225k.

After that, figure out your menu and food costs to help determine pricing and then come up with a plan of how you will meet those sales goals and attract and keep customers over time. Those are the basics.

There are 100 other things that will pop up that you won't be able to account for ahead of time, That's just how restaurants are. Codes change, new rules happen all of the time. Things like...you'll be required to put in a floor drain somewhere that the previous owner wasn't required to do. There goes a couple grand and now the opening date is pushed back 2 weeks. Contractors charge new restaurants with opening deadlines full price for everything. In many cases everything is rush job pricing. This can bleed you dry because you're still paying rent with no money coming in. Little things like that.

I've been on the opening staff, or have been the opening manager of at least 8 Bars, Restaurants, Nightclubs and one Casino in 3 different states and they always run over cost.
After that, most failures are because a complete lack of marketing, kitchen management, and customer service knowledge. Most new owners put everything on opening night, and then have no idea how to get customers in the door after that.

It's a risky undertaking even with experience. Marketing, Kitchen Management, Customer Service and Accounting are your best friends. Suck in either area and it's a recipe for failure.

It's hard. It's exhausting. You will never work harder than opening a new restaurant. You will hate the health department. You will hate suppliers ( at first). You won't get much sleep.

But when it all comes together and you get it right, it's awesome!

[Gina25]

That was very informative Harold. Thanks so much.

Quick question: What marketing strategies would you suggest we use to grab the attention of customers prior to a grand opening?

[Harold Mansfield]

That was very informative Harold. Thanks so much.

Quick question: What marketing strategies would you suggest we use to grab the attention of customers prior to a grand opening?

Hard to jump to that without having all of the other underlying things in place like When, where, and what you will have to offer. To me marketing is the fun part, but you can't come up with a marketing plan without the product and a defined target market.

[Gina25]

Yes, indeed you are right. I think we will start by figuring out start up costs, as you suggested, and then go from there.

What do you think about consulting with family first for potential investment, and how should family be approached? I assume the approach would be different from that of a bank.

[Harold Mansfield]

Yes, indeed you are right. I think we will start by figuring out start up costs, as you suggested, and then go from there.

What do you think about consulting with family first for potential investment, and how should family be approached? I assume the approach would be different from that of a bank.

That's a little more personal than giving business answers. Sure, if you have family who can invest, believe in you, that you want to borrow from, and have realistic expectations...go for it. Borrow from people who can afford to miss the money for a while ( or forever). Not people looking for immediate returns.

Just make sure you set realistic expectations on both sides and put on paper if they do or don't have a role in managing the business. Don't promise smashing results and return on investment goals that will be difficult to meet unless everything goes perfectly. Most restaurants aren't profitable for a while and very few things go according to plan. Even if you do everything right, opening the doors is still a crap shoot that you cannot prepare for.

[stephanj54]

Man...where to begin. Before I started my website and home remodeling, I worked Waffle House for years. I even managed one... that alone was a headache, but I really enjoyed it. Here are some questions you may want to ask yourself:

Am I really ready for the hassle? - If you and your husband are prepared to deal with customers and employees alike, then Yes, you are ready. Some customers always look to make things difficult, and some are difficult to deal with due to something going on in their life. Sometimes you just need to know when to turn the other cheek.

What location will I use? - Depending on your area, some locations are expensive or just do not fit a food business. If you are close to a major highway or interstate, they usually generate the best response(In my state they place food logos on the exit signs to let the people know if there is a restaurant at that exit!).

What will be on the menu? - This is where a ton of Cafes/Diners/Restaurants fail! What has made so many "breakfast diners" a success has been the overhead cost of food. Eggs, Bacon, Sausage, etc are cheap when buying from a supplier, therefore they can mark it up to $3.99 for a breakfast and still make money!

Also be advised on local laws and state laws on license and permits. A business license is generally cheap but permits to run anything in the food industry can be pricey. The best way to save some money sometimes is to use an already existing building to open your diner and remodel. If the existing building has tables/chairs/etc. find a way to refurbish them so that you do not use all your assets in making the place look good, but not having the funds to make your first food order or pay employees.

[DeniseTaylor]

My advice is to patiently seek out the right location. A cafe in a well-trafficked area, especially one with foot traffic, is going to have an easier time than one that is off the beaten path.

Also, if/when you undertake this venture, I recommend you doing everything you can to over-deliver to your customers. Word of mouth is essential for restaurants and positive feedback will make others want to try you. I'd also use a Facebook page to interact with the community. You'll get some exposure there as well.

Good luck, whatever you decide!

[beetee]

Harold Mansfield gave a really exhaustive answer. I just add that also you'll need to find good suppliers, that's one of the key components. Make a list of what you need (and you need a lot): kitchen supplies, janitorial stuff, packaging, cuttlery, etc etc, it will be an overwhelmingly long list. I can recommend https://mcdonaldpaper.com/ as a site where you can find at least a half of what you need. I bought kitchen equipment here myself, it was a relief to cross things off the list.

OLD post from 2015 !

[KBloom]

Man...where to begin. Before I started my website and home remodeling, I worked Waffle House for years. I even managed one... that alone was a headache, but I really enjoyed it. Here are some questions you may want to ask yourself:

Am I really ready for the hassle? - If you and your husband are prepared to deal with customers and employees alike, then Yes, you are ready. Some customers always look to make things difficult, and some are difficult to deal with due to something going on in their life. Sometimes you just need to know when to turn the other cheek.

What location will I use? - Depending on your area, some locations are expensive or just do not fit a food business. If you are close to a major highway or interstate, they usually generate the best response(In my state they place food logos on the exit signs to let the people know if there is a restaurant at that exit!).

What will be on the menu? - This is where a ton of Cafes/Diners/Restaurants fail! What has made so many "breakfast diners" a success has been the overhead cost of food. Eggs, Bacon, Sausage, etc are cheap when buying from a supplier, therefore they can mark it up to $3.99 for a breakfast and still make money!

Also be advised on local laws and state laws on license and permits. A business license is generally cheap but permits to run anything in the food industry can be pricey. The best way to save some money sometimes is to use an already existing building to open your diner and remodel. If the existing building has tables/chairs/etc. find a way to refurbish them so that you do not use all your assets in making the place look good, but not having the funds to make your first food order or pay employees.

I would also add
How much employees do you want? I bet you and your husband won't handle the business alone. You'll need a few extra pairs of hands.

Where do you want to place you business? Do you know the right place to rent?

Also you need to know what food and beverage you will be serving. I would suggest getting and installing Connected coolers (https://nexocoolers.com/connected-coolers/)so you could control the storage.

[lindseyt]

Looking to buy a business? But don't know where to find the right resource...let Business Exchange help you! Visit: https://thebizex.com/search-results/business-for-sale to browse all of our listings. We have over 1000+ business for sale listings for sale, be sure to find one that's suitable for you!

[SkyWriting]

I would suggest ChooseFI.com to get your finances in line with your goals.

[MikeSimon]

My friend used to own a coffee shop. It is a tedious and you need to always think about different types of permits and city regulations (it depends on your location though)
Don't expect huge profit right away. But there are positive sides as well. It has a kind of social part, you talk to people, make new connection. Also, you can optimize your finances using business deductions.

[SkyWriting]

New startups can expect to loose money for five years. So a business plan should reflect this.
Unless you are already showing a profit in a similar venture, then this number might be shorter.
This is general information considering the age of the question.

[Fulcrum]

New startups can expect to loose money for five years.

Can you explain your reasoning behind this? It's a very generic response that I usually only hear spoken by those who have never run a business.

[journalist55]

Hi Gina, that is awesome, are you offering anything special unique at your cafe? Or just the typical food and beverages? Interested to know!