5 golden rules for opening a café
The café game is hard. It’s a business with as many hard luck stories as culinary pioneers – but there are things you can do to improve your odds.
Opening a café is something people dream about when they’re stuck in their cubicle at work, but often the reality of running a café doesn’t match the reality of it.
The bug is something which bit serial café owner turned industry consultant Ken Burgin.
He told The Pulse recently that although the business is tough, it’s one of the best things you can be involved in.
“In terms of being a people person, it’s one of the best businesses to get satisfaction from,” said Burgin.
“It was a little thing beating in my heart and so I went and did it, and was successful at it – but there are things I wish I did differently.”
How to start a café in five simple steps:
- Start with market research, pre-launch planning and preparation
- Create stand-out marketing and promotions
- Design for menu efficiencies
- Set up financial reporting systems and processes
- Consider opportunities for diversification
The following article goes into each of the above points in detail to help you best plan your new café experience.
1. Plan right or plan to fail
“In this industry, people aren’t necessarily numerate,” said Burgin. “They’re people-people. They’re good at making things or talking to people, but if they would crunch the numbers at the start a few may be in a better position.
“There’s so much about hospitality on TV that’s romanticised with cooking shows, so people love the idea of it.”
Unfortunately, spreadsheets don’t make for compelling TV.
He also says doing mock pay runs and figuring out your overheads early on is something that the cafes that go out of business often forget about.
Burgin also said one of the common pitfalls new café owners fall into is not having adequate storage.
“Sometimes people can set it up too cheaply and find that there’s no room to actually store anything,” said Burgin.
The ability to store as much as possible has the potential to dramatically reduce wastage, which in turn improves running costs.
Of course, having a great accountant, bookkeeper or business adviser on your side from the start can really help you avoid common financial pitfalls.
2. Stand out
Just doing great coffee isn’t good enough anymore. Burgin says good coffee is just the price of admission into the game.
“Doing good coffee isn’t hard if you just follow the steps,” said Burgin.
The café industry is incredibly crowded at the moment, so you need to think about what you offer that nobody else can.
It’s a principle that’s important in any business, but even more so in a competitive industry.
Burgin says food is one area where cafes can try and separate themselves from the pack.
“You’ve got to have something better – and often the food side is where cafes can find their point of difference,” he said.
3. Menu efficiency
People may love to have extensive choice when it comes to a café menu, but this shouldn’t equate to an extensive list of ingredients.
“A clever chef knows how to take ten ingredients and turn them into 20 menu items,” said Burgin.
If you offer too many things though, your storeroom is going to be filling up with too many ingredients and there’s going to be a lot of wastage.
He said Thai Beef Salad has been held up in the café industry as a particularly wasteful menu item – as it involves a lot of perishable ingredients.
“It’s a symbol of something where people think ‘it’s got to be on [the menu]’, but they haven’t checked how many people were eating it,” said Burgin.
4. Know thy numbers
Burgin says one of the more positive developments in the industry in recent times is owners getting their heads into the books – powered by the likes of MYOB.
“Now we’ve got MYOB Online… it makes me happy to see café owners sitting out the back on their laptop with all the bank feeds coming in,” said Burgin.
“They have results coming through to their mobile phone and they have automated reporting.”
He said some owners were even able to take a day off because they had cameras installed in their cafes and real-time data coming through their point of sale software.
5. Diversify or die
Like it or loathe it, Starbucks set the bar for diversifying its business by offering retail items such as CDs and bags of take-home coffee beans.
Since then, ‘multiple revenue streams’ has been in vogue.
After all, the margin on a cup of coffee may be good, but it may only a couple of dollars per cup sold.
Burgin says running a catering side-hustle is something to consider.
“There’s a whole other income stream that can develop from the same kitchen, same staff,” said Burgin.
“The orders are coming from people who come into the café and get their coffee, but then think ‘I’ve got a sales staff meeting tomorrow and I need to cater for 20’.
“Businesses that diversify in different ways are really well-positioned.”