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Could you run a cafe

Could you run a cafe?

The humble cafe offers a low risk entry into catering

A cafe , whether in the heart of a bustling city centre or the more genteel streets of a historic market town, is for many people the perfect distillation of what they are looking for in a business.

They are no longer associated exclusively with cheap English food, thanks to a proliferation of continental-style cafes with outside seating and a range of coffees.

Nevertheless, traditional businesses are still going strong and represent the mainstay of the market in working class areas.

Tony Franklin, regional director of Redwoods Dowling Kerr, a business broker - which means it sells businesses, rather like an estate agent sells houses - explains: "People often say that 'greasy spoons' are on the way out. Not as far as I'm concerned - 'greasy spoons' are as popular as ever."

Another traditional type of cafe, the tea room, can be found in market towns, where older people pop in for a cuppa and tourists flock in, attracted by the quintessential English atmosphere.

You might expect anything attracting American tourists to be extremely lucrative, but that isn't necessarily the case.

"They are generally the easiest to sell," says Franklin, "but they are the least profitable."

"A lot of people just go in for a cup of tea and a cake, whereas it's easier to make money if you're selling eggs, chips and the works. It's a good idea to sell food, and not just have people sipping drinks."

Lifestyle

Specialist coffee shops work best in city centre locations and affluent areas, although be prepared for much heftier leases than elsewhere. If your cafe is in a prime town location, a student or young professional area, or even near to a shift-working factory, then providing food in the evening could be a good idea.

As always, it is important to tailor your menu to the market - there is no point in offering ciabattas if your customers want fry-ups.

But don't just think about your customers - think about your lifestyle, too.

You have to be prepared to work weekends, for a start. If you prefer to get up early and have your evenings free then a cafe specialising in breakfasts might suit you.

Deciding to open for evening meals - where a drinks licence would be a bonus - means long days. Some operations could open at 7am and run until three or four in the afternoon, and then open later in the evening for a second shift.

Such fitful hours would leave you in limbo midday and mean that work consumes your morning and evening. The exact times you open will depend on your preferences and the demand in your area.

Having enough staff to alleviate this burden is affordable to only a lucky few.

"If you want to employ someone to cook for you that will immediately cut into your profit margins," says Franklin.

And if you're pitching for the top end of the market, he adds, experienced catering staff can be difficult to find.

Why open a cafe?

First, it can be surprisingly lucrative.

Franklin cites the example of a cafe on the north Norfolk coast that provides food throughout the day. The leasehold is valued at around £100k, but the business, which is just a husband and wife operation, makes a net profit of £70k per annum.

Of course, not all cafes will be as streamlined or as popular as this, but it does give you an idea of what can be achieved given the right location and requisite energy levels.

Paradoxically though, it may sometimes be more difficult to sell businesses that are performing well. There is a severe lack of freeholds in the sector and many prospective owners balk at the idea of paying over £100k for a lease, particularly if half of that has to be available up front, yet leases in more popular locations can be worth several times this.

But, given the right market, there is serious money to be made. This is particularly true if you can turn around an underperforming business, but bear in mind that extra investment in equipment and decoration may be necessary.

One of the main reasons people want to run this type of business is the chance to meet different people every day. As Franklin says, "You have got to be a sociable person. If you don't like people, there isn't much reason to do it."

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Jon Neale

About the author

Jon is a freelance journalist and has done a substantial amount of work for Dynamis. Before going freelance he worked at Estates Gazette, and has written a number of articles for the Sunday Times, the Telegraph, the Independent on Sunday, Retail Week, The Grocer, Square Mile, and Regeneration.

@FranchiseSales_

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