Things to think about before opening a café
Cafés and casual restaurants are where some of the biggest growth is happening for the hospitality industry. New Zealanders want to eat out more often, but they don’t want to spend a fortune. So the time may be ripe for creating a stand out café or small eatery that provides tasty, affordable food in an attractive (preferably unique) environment.
Of course you could go the franchise way, which makes the start-up easier and gives you a proven system for running your café business. But this article isn’t about finding a franchise. It’s about creating your dream café from scratch, including brand invention, budgeting and business planning.
Step 1: Write a business plan
If you fail to plan, you plan to fail…as they say. A detailed business plan should be your starting point if your intention is to make a living from your business. To help you along see our quick guide to writing a business plan. It talks about defining your audience, checking out competitors, planning a budget and much more. However before you get stuck into writing your plan, check out the other steps below because they will all contribute to the plan in some way.
Step 2: Define your target customers
This is a chicken and egg situation. You could start building your café concept around a particular type of customer, then select a location that has lots of those sorts of people. For example, if you want to target business people you’ll need a location that’s in the middle of a business district. Or if you want to target groovy young hipsters, your café will need to be in a groovy, hipsterish part of a city.
Alternatively, you could build your café concept around a specific location, like the small country town you live in. With this model, you’ll need to understand the sorts of people who will be the best targets, i.e. tourists travelling through, young mums with kids, empty nesters and so on. Doing some research is essential for this location-led approach, because the look and food style of your place needs to be appropriate for your target audiences.
Step 3: Come up with a name and theme
This is the exciting part of starting a café that everyone enjoys, but you need to remember that it’s not about what you like; it has to be focused on what will attract your defined customer groups.
If you’re going for a general audience, i.e. everyone in NZ who needs food and coffee, your café concept will probably need to be generic. It can still be gorgeous and attractive, but it might be best to steer away from extreme themes (like gothic art, steam punk and robots).
If your audience is quite focused, your search for a name and theme will be more challenging (but also more fun). Use the internet and sites like Pinterest to see what’s happening in the world. Believe it or not, there’s one café that actually suspends diners and their table high in the sky with a crane lift! Other unexpected café ideas include:
- A ‘no laptop’ café that demands customers pay attention to their food and friends
- Café/laundromats that let customers enjoy waiting for their washing and drying with good food and coffee
- Cat cafés, which you’ve probably already heard of, with tame pets that keep customers entertained
- Rooftop cafes with amazing views
- A beach café that gives people a free coffee if they pick up a bucket of rubbish from the beach first
- A coffee cart that is operated out of a vintage VW Beetle
When you have a shortlist of names and themes, use all your social resources to run the ideas past relevant people to choose the best concept. Of course you’ll need to swear them to silence, because you don’t want your idea getting out there before you’re ready to launch.
Step 4: Be honest about the costs
When your heart is set on starting your own café, it can be easy to talk down any obstacles that stand in the way – like cost. But you need to be frank with yourself about the financial outlay required to start a café business and keep it going while you’re building your clientele. Put on your thinking cap and write down absolutely everything that will or might cost money. Then add a contingency for the things you never thought would happen.
Your budget needs to cover:
- Premises lease or rental
- Interior decorating to bring your café to life
- Kitchen set up and improvements – tools, pots and pans, appliances, cookware and serve ware
- Espresso machine
- People – cooks, wait staff, check-out operator
- Utilities – electricity, gas and water
- Stock – ingredients, coffee beans and any products you’ll be selling that are made by other companies
- Tableware – plates, mugs, bowls, cutlery, salt & pepper, sauce bottles and anything else your customers need for meal happiness
- Music – you need permission from music creators to use their music. Go to OneMusic to find out about music licensing for cafés and restaurants
If you don’t have enough cash reserves to cover all the costs, you might want to look at a business loan. Shop around, because interest rates vary. If you own a home or some land, a business loan secured against your property can bring borrowing rates down a lot.
Step 6: Make the leap!
When the weeks (or months!) of thinking and planning are over, it’s time for action. Make a list of things that need to be done and put dates next to them. Enlist the support of friends and family if they’ve offered to help in any way. And ask your accountant about getting set up with online cloud accounting, like Xero or MYOB – it’s intelligent to get your number crunching under control from the beginning.
You could also consider joining a relevant business organisation like the Restaurant Association of New Zealand, they have resources and people who can assist during the crucial start-up weeks.