There are many reasons why an individual may want to start a café business. Perhaps you want to create a unique atmosphere for customers, it could be for financial rewards or even to have a greater social impact on your local community.
Among the coffee giants such as Costa and Starbucks, there is a growing market for independent, boutique coffee shops and cafes all across the UK. However, in order to be successful in the cafe market, you need to do your research.
Once you know the fundamentals for setting up and running a profitable cafe business, you’ll be in a much better position to start.
We understand what a cafe needs to do in order to be profitable and most importantly, be valuable to future buyers. At Cogogo, we have many cafes for sale and have previously sold countless businesses in the hospitality industry.
In this guide, we aim to break down the key things to consider when opening a cafe of your own, including funding and how to run a cafe business.
Research the hospitality industry
Research is the all important first step in every business plan. Understanding the industry and your own vision is key.
The vision for your cafe
If you don’t have a picture in your head of what your cafe is going to look like, start to get imaginative! Before undertaking such a large responsibility, like running a cafe, it’s always good to have an idea of what you want the end product to be.
The vision could be:
- A financial goal
- An artistic direction
- Customer satisfaction
- Position in the market
- Quality of products
- Impact on the community,
… the list goes on! Whatever the vision for your cafe is, make sure to define it. The clearer the picture is in your head, the better chance you have of turning it into a reality.
The concept of your cafe
Standing out in an already overcrowded market can be difficult. To compete with the cafe and coffee titans such as Starbucks, Costa and Caffe Nero, you need to have your own unique concept that makes it different from the rest. This is completely down to you and it’s always good to inject your own personality into it, whatever that may look like.
Modern coffee shops in the UK, and other parts of the world, are more than just places to fuel your caffeine fix. From yoga and gaming to plant based and sustainability-focused, cafe owners are finding interesting ways to differentiate themselves from their competitors.
You could simply specialise in and focus on certain products. Some cafes focus on espresso only, whilst others will have a variety of quality sourced coffee beans. You could make the food your focus and choose to offer only gluten-free or vegan options. There are many angles to come at it from, so you need to work out what people will enjoy and what will also be profitable for you.
Get inspired and find out what the predicted cafe trends are for 2024!
Creating a business plan for opening a cafe
As with any business, it’s crucial to have a business plan in writing. This can give you the reference you need to make those important business decisions further down the line.
Business is all about preparation. It’s really useful to have:
- Cash flow projections;
- An understanding of your overheads and other costs;
- Information on gross and net profit;
- Market research data;
- Location and footfall information;
- Recruitment plans.
The above, and any other important documents you may need, should be put into one simple document that you can refer back to. If you are seeking investment for your cafe, you will need to present your business plan (most importantly, the financials) to any potential investors.
Focus on collecting solid information that can assist your decision making and help to inform your strategy going forward.
Learn How To Write a Cafe Business Plan in our Complete Guide
Financing and funding options for opening a cafe
With any business, there can be fairly substantial costs to cover before you even serve your first customer. When you start a cafe, it’s no different. You will need all the equipment to produce the best drinks – where will your customers sit and enjoy these drinks? Do you need a solid WiFi network set-up? Not to mention the branding and marketing of your new cafe venture.
So, what are the financing options available to you when opening a cafe?
Our specialist team of finance experts have created a guide to funding your new cafe, so take a look and assess your options!
Learn all about Business Loans & Funding to Open a Cafe
Choosing the right location for your cafe business
You need to think carefully about where you want the location of your cafe to be. The location of any business can be the deciding factor between staying profitable and having to close the shutters.
Make sure to do research on a few possible locations that you could operate in and then weigh up the best options.
You should consider:
- Local competition;
- Daily and weekly footfall;
- Public transport nearby;
- Location of suppliers;
- Weather; and much more.
You’ll also need to consider the differences between freehold and leasehold and figure out which one would work best for you and your business plan.
Once you have decided on the ideal location for your cafe, you can now start to turn your vision into a plan!
Find out the Best Places to Buy a New Cafe Business!
Plan the layout and design of your cafe
The layout and design of your cafe is important to both you and your customers. Ensuring that you secure your vision whilst appealing to customers is crucial.
The importance of the premises
We’ve spoken above on the location of the business and the importance of footfall, but now we need to look at the actual premises themselves.
If you choose to open a cafe in a building that is too small, it could affect the volume of customers you see and the number of sales you make at certain points in the day. If you do have a smaller premises, then it’s a good idea to have processes in place and well trained staff that can serve customers effectively and efficiently.
You also need to consider the user experience, layout and functionality of the premises. You can always use a floor planner first to map out potential layouts of your cafe and plan the locations of:
- The queue
- Doors
- Bathrooms
- The position of the counter
- Seating areas for customers
- How wheelchair access could work
… and many more logistical considerations.
Contacting a floor planner would be the best bet here to get professional recommendations that will make the most sense for your premises.
Decor and atmosphere of your cafe
Whilst your cafe needs to be structured in the correct way and be logistically sound, it also needs to generate a feeling for your customers. What that feeling is, is completely up to you.
Through sights, smells, tastes and touch, you can create an unforgettable experience for the customer that will keep them coming back.
Perhaps your cafe makes customers feel more connected to their friends because you’ve invested in comfortable seating and a relaxed atmosphere. Maybe you create a very tranquil atmosphere that lets people get their work done in peace and leaves them with a sense of accomplishment.
The decor and atmosphere are crucial to get right in a cafe. Following a customer-centric approach to the design of your cafe will ensure that your customers leave satisfied and hopefully, feeling different to when they walked in.
Here’s a couple of things to consider when it comes to the atmosphere of your cafe:
- Lighting
- Music
- Temperature
- Cleanliness
- Visual noise
- Colours
- Textures
Choosing the best products for your cafe
It’s crucial that you source the right products for your cafe. There’s a lot to factor in, so let’s break it down.
Products and services
One of the most integral factors of your coffee shop will be your products. You will need to source affordable, profitable stock that customers will enjoy and be satisfied with. It’s always useful to find suppliers that are affordable and that you can build up a solid working relationship with.
Now, you need to think about what you will offer, whether that is certain types of coffee, sandwiches, cakes etc. Here is where your concept and vision for the cafe can come in handy. Think back to the type of atmosphere and environment that you wanted to create and also look in your business plan at your financial goals.
With these in mind, you need to put a plan together for how you are going to source your products and how you are going to price them appropriately. Food and drink is one of the most important things to get right in a cafe, so ensure that your products are enjoyable to your customers and also profitable for your business.
Planning your cafe’s menu
When planning your menu, you need to consider your concept, your customers and your finances. Some cafes tend to start off with a smaller menu and then expand into more products as time goes by.
One good way to work out which products you should sell is to do some market research. By conducting market research, you can understand current trends and find out what your target audience has an affinity towards.
When your cafe is up and running, it’s very important to have good stock management strategies in place so that you can reduce any waste and leave yourself with more profits in the long run. Unused and wasted stock is one good way to eat into your profit margins, so you want to avoid that at all costs.
One of the most popular cafe menu items is coffee. Choosing what coffee you want to serve can be an important element of creating an effective menu for your cafe.
Deliveries and insurance
Cafes and coffee shops are beginning to understand that people like the freedom of ordering something from their home and receiving coffee or food directly. This could transform some retail businesses as they would no longer need to rely on customers coming in store and they could do more of their activities online.
If you don’t already have insurance cover for takeaways and deliveries, that’s something that you will definitely need to get in place. If you plan on going ahead with deliveries and takeaways for your cafe or coffee shop, you need to get insurance on your delivery vehicles and your drivers will need to be insured on the cars for commercial use.
Choosing the best equipment for your cafe
As with any retail business, your equipment is vital; especially when you start a cafe or coffee shop, as you need to have specialist equipment in order to fulfil the orders.
Typical equipment that you may find in a cafe or coffee shop could include:
- An espresso machine
- A blender
- A coffee bean grinder
- A filter coffee brewer
- An oven
- A Wi-Fi router
- A cash register
- A card machine
Not only do you need to source your stock in the most effective way possible, but you also need to source your equipment in a logistically sound and cost effective way. You may have to prioritise the equipment you need when you start a cafe or coffee shop, depending on your finances.
Prices can vary drastically between higher and lower-end equipment. This is why it’s so important to have a budget in your business plan and calculate all the costs of products and equipment.
It’s also important to refer back to your floor plan when you are looking at equipment to use, as you will need to factor in the flow and functionality of the cafe floor.
Our Dedicated Guide can Help you with Sourcing the Right Equipment for your Cafe
Recruiting staff for your cafe business
Like with any successful business, hiring the right staff is crucial when you start a cafe or coffee shop to ensure future profitability and long-term success. After all, your staff are the people who look after your customers and interact with them on a daily basis.
A good way to ensure you hire the right people is having a recruitment strategy in place. How this looks is completely up to you; however, most businesses will have some form of staged interview process where they can get to know more about candidates and their previous experience in business.
When you start a cafe, customer satisfaction should always remain your number one priority. Hiring the right people who have empathy, consideration, good communication skills and disciplined work ethics is the best way to go about it.
Read about Hiring the Right Candidates for your New Cafe Business
We hope this guide has provided you with some value and inspiration to open a cafe or coffee shop of your own. You now have a basic outline of how you can plan and open a cafe, but more importantly, run a profitable business. Once you have your plan figured out, you can start to take action and make your dream become a reality.
At Cogogo, we have 100’s of businesses for sale including cafes, coffee shops, pubs and much more. You can search for cafes for sale in the UK by using our business search tool.
Ready to open your own cafe? We can help every step of the way.
