For many people, opening a cafe is a dream; it’s both a lifestyle and career choice.
But, it is tough. Just like any hospitality-based business, cafes and coffee shops require a huge amount of work to both start up and ensure long-term profitability.
However, get it right, and your dream of running your own busy cafe will become a reality. More importantly, it’ll provide you with more opportunities than you thought possible to grow into this fascinating, vibrant sector.
There are expected to be over 32,000 coffee shops in the UK by 2023. Are you ready to number among them?
If you’re right at the start of your cafe journey, this guide is for you. And that’s because there’s probably one thing on your mind.
How much is all this going to cost?
5 things to keep in mind before opening a cafe
1. It’ll take time
If your cafe becomes successful overnight, you’ve either been very lucky or know a magic formula that is yet to be unveiled to the rest of us.
In reality, opening a cafe takes time, persistence and acceptance that you’re going to hit a few roadblocks along the way.
2. It’ll take more than coffee to keep them coming back
Modern cafe customers want more than great coffee (although that’s very important, of course).
From the WiFi to the type of seating you choose, it all adds to the experience - and that’s what will keep people coming back for more.
3. Know your numbers
If you come away from anything after reading this blog and doing your own research, make sure the numbers you’ll need to start up and sustain are ingrained into your plan.
4. Don’t do it on your own
You’ll gain strength from your cafe’s plan and your desire to see it through, but there’s nothing like bringing someone else in for moral support.
Whether it’s a business partner, friend or loved one, get them involved and run your ideas, fears and frustrations by them.
5. Focus on happiness - not millions
There are very few millionaire cafe owners. Most are in it for the love of the industry and the desire to make a difference in their community.
Go into it focusing on the latter, and you’ll be happy, and that’s far more important than the constant pursuit of fortune.
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Is opening a cafe a good idea?
Opening a cafe isn’t for everyone. If it’s something you’ve decided to do on a whim, or because you like the ambiance of your favourite local coffee shop, make sure you research the realities thoroughly.
People often jump into opening a cafe without really knowing what the experience will be like. And, while that’s like any big venture, it really does pay to get some real world experience of this sector before taking the plunge.
If you can, try working a few days at a local coffee shop first, or at least grab a few minutes with the owner to quiz them about their experience.
Opening a cafe in the UK: how much does it cost?
Setting up a cafe isn’t cheap. Depending on your location and the requirements of the venue, you can expect to pay anywhere between £20,000 and £100,000 in startup costs.
You’ll have to spend money on rent, refits, furniture, technology, staff, stock and all the other elements that go towards creating a great cafe experience.
Here are the most common costs you’ll need to take into account, but please note they are for guidance only.
You can’t run a cafe without premises, and this will be one of your biggest expenses. However, the location and type of lease you opt for will determine how expensive it’ll be.
For instance, in London, a leasehold cafe can be anywhere from £100,000 to £500,000. In the rest of the UK, that drops to between £50,000 and £150,000.
The licenses the property holds, it’s condition and the price of similar properties in the area will all have an impact on the price you’ll pay.
Furniture and fittings
You can really drive down the cost of this element - particularly if you’re going for a mismatched chic look or vintage interior.
However, if you’re buying new fixtures and fittings, budget for a maximum of £3,000 if the premises are already fitted out, and up to £10,000 if it’s just a shell.
You’ll need a point of sale (POS) system, but you won’t have to spend a fortune on one. There are some great options on the market now, and you can pay as little as £30 per month for the ability to take payments and record stock movements. Shop around!
Don’t forget your WiFi, either. It not only offers an expected guest service - it’ll provide you with plenty of marketing opportunities, too.
Staffing and payroll
Second only to your rent, staffing and payroll will be a large overhead, but an essential one.
The average hourly wage for baristas will be anywhere from £7 to £9 per hour. If you’re offering food, expect to pay around £20K per year for a chef.
As a rough guide, if you’re running a small cafe with two baristas outside of London, they’ll cost you around £30,000 per annum.
When running a cafe, you’ll get used to paying out regularly for stock. From coffee beans to milk, flour and cooking oil, you’ll get through it rapidly (hopefully - that means you’re busy, after all!).
You can keep costs down, though, which starts with great supplier relations, so make sure you shop around and look for those who offer bulk discounts.
When first stocking up your cafe to get yourself off and running, budget for a maximum of £3,000 outlay.
You’ll need to make everyone aware of your existence, and the good news is that, these days, you can make an awful lot of noise without spending a penny.
The trick lies in starting early with your social media efforts. Make sure you’re set up on Twitter, Instagram and Facebook and begin posting daily about your startup progress and expected opening.
Take as many photos as possible and get involved in Facebook groups. The more time you invest, the less money you’ll have to invest, but if you fancy dipping your toes into social media pay-per-click (PPC) advertising, budget no more than £1,000 during those early days and get some advice from a friend or family member who knows about that stuff.
Insurance and licences
You’ll need the following before you can open up:
- employers liability insurance;
- public liability insurance;
- gas and electrical safety certificates; and
- food hygiene certificate.
There may be more, though. We recommend checking out the government’s licence finder to suss out exactly what you need before assessing the cost.
How can I lower the cost of startup?
There are some smart things you can do to avoid overspending during those early days:
- spend only on the stuff you absolutely need;
- buy second-hand furniture;
- lease equipment (espresso machines can cost as little as £5 per day leased, versus up to £10,000 purchased); and
- aim to keep your staff bill at less than 35% of turnover.
Food for thought: delivery service costs
Online delivery is gaining significant prominence in the cafe industry. In fact, it’s so important that you’ll often be lagging behind the competition if you don’t offer it.
The good news is that it’s pretty easy to get started with and won’t cost you a fortune. As you might expect, we’ve put together a handy guide to help you along the way!
Don’t forget to read this
We hope this guide has proven useful during your cafe startup journey. Just remember that the figures quoted are advice only, and there are of course other items to take into account.
Keep researching, speaking to other cafe owners and run all of your ideas past a trusted friend or family member. That dream business is just around the corner.