Café Franchise vs. Independent Café: Which to Buy

Ready to make your entrepreneurial dreams come true? Starting a café enables you to take advantage of an industry that’s gone from strength to strength over the last ten years. According to the latest industry trajectory, the UK is set to have more coffee shops than pubs by the end of the decade.

One of the big decisions you’ll have to make is whether you’ll take advantage of instantly recognisable brands by taking on a franchise or starting your own brand and forging your own destiny.

Each has pros and cons, which we’ll discuss as part of this comparison guide for aspiring coffee house owners.

The difference between buying an independent café vs. a café franchise 

Let’s start with the obvious question: What’s the difference between an independent café and a franchise café? 

An independent café means launching a unique business with its own model and brand. It’s up to you to define your path and decide what works. It’s café ownership with the guardrails off. 

In contrast, a franchise café means you’re buying the right to operate a café from an established brand, like Starbucks, Costa Coffee, etc. Not only do you get access to their name and brand, but you also get access to a proven business model and system. 

Of course, you’ll have to stick within their guidelines. That means you won’t put up your own signage outside a Costa Coffee franchise café or add your own concoctions to the menu. However, with over 7,700 café and coffee shop ventures in the UK, a franchise is often a great place to start, even if it means giving up a little creative freedom.

The pros and cons of buying a franchise café

Starting a franchise café gives you the extra support startups often need. Don’t underestimate how enormous the mountain of entrepreneurship is. If this is your first time, an element of hand-holding can give you what you need to make your café successful. 

Of course, running a franchise isn’t for everybody, which is why it’s wise to bear in mind some of the downsides of being under a franchisor’s control. 

Pros 

• Existing Brand – Franchise cafes are already existing brands, meaning you don’t really need to worry about brand awareness, as people already know who you are. Moreover, that existing brand translates to a built-in customer base, giving you that head start. 
• Established Business Model – It’s not just about the brand but the business model attached to it. All franchisees gain access to the franchise’s proven business model, which takes out much of the uncertainty. 
• Extra Support – Alongside your decision to become a franchise, you receive training and ongoing operational support to ensure you’ve covered every base and given yourself the best chance of success. 
• Marketing Assistance – Did you know that you also benefit from the parent company’s marketing campaigns? Whenever Costa Coffee runs a regional ad, any outlet in that region also benefits. Essentially, you’re getting free marketing at a level you wouldn’t have otherwise been able to access. 

Cons 

• Limited Creativity – All franchisees receive a set of guidelines they must follow. Typically, this means a certain element of décor and branding. You may also be forced to adapt your outlet to the region or locality you’re in. 
• High Startup Costs – Expect to put down a significant amount to get started, including franchise fees and royalties. Many franchisees spend just as much on getting started as they would if they opted for an independent coffee shop. 
• High Fees – Expect to pay fees for the rest of your franchise’s lifespan. As part of the deal, you must pay a portion of your profits or contribute to marketing funds. This will decrease your overall long-term profitability. 
• Marketing Assistance – No, this isn’t an accidental copy-paste. Alongside marketing assistance being an advantage, it can also be a disadvantage. If there’s a negative story about another outlet or the franchise as a whole, it reflects on you. And you’ve got no control over that.

The pros and cons of buying an independent café 

On the other hand, why not join the UK’s growing independent coffee shop market? With so many consumers opting to support locally-owned businesses or outlets offering a twist on the classic café experience, there’s never been a better time to let your imagination run wild. 

Here are the advantages and disadvantages of going down the independent route. 

Pros 

• Creative Control – You run everything and must answer to nobody, meaning you get full creative control. That applies to everything from the menu to your brand identity. 
• Community Connection – The independent coffee shop is the hub of communities up and down the country. Be that community connection by providing one-of-a-kind experiences. 
• Make Your Own Decisions – You’re the sole owner, meaning you have the power to experiment and take advantage of the latest trends. 
• Higher Profits – Since you’re not paying royalties to anyone or paying those extra startup fees, you keep more of the profits. Independent cafes don’t have the glass ceiling of franchises, meaning they can continually reinvest for greater success. 

Cons 

• Brand Building Challenges – Starting a brand from scratch has its own challenges. Establishing that recognisable brand can take years to accomplish. Essentially, you’re starting from ground zero. 
• Steep Learning Curve – Your first foray into the coffee business with an independent store means you’re left to learn everything yourself. You gain no support, meaning suppliers, management, and day-to-day operations all fall to you. 
• No Network – Franchisees have the benefit of a network they can leverage, but independent coffee shop owners are left alone. It’s a massive amount of extra work. 
• Extra Risk – Since you have no support system or tried-and-tested business model, your risk of failure is higher than a franchise outlet. Plus, you might actually be competing with those same outlets in close proximity.

How to know which café business is the right one for you to purchase

Deciding which café business makes sense is largely a matter of personal preference, experience and risk tolerance. There are no right or wrong answers here. Some newbie entrepreneurs are set on building a brand, whereas others prefer the security blanket of an existing support network around them.

Ask yourself the following questions: 

• Do I care about creative control?
• Do I have previous experience running a customer-facing business?
• How large is my appetite for risk?
• Will I benefit from having a proven business model around me?
• What’s the independent café market like in my area?

Your answers to these questions will put you on the right path. If you’re ready to purchase a business, Cogogo can help you find your next business venture. To find out more, look for cafes for sale listings today.