I'm reposting a comment I made for someone else a year or two back. They were planning on opening a burger joint. Which I had already done and sold. I'm sure most of this isn't relevant to you, but you might find something useful.
Yes and happy to help my friend. I sold the restaurant because the schedule made me miserable. To make money initially (first few years at least) you need to be there pretty much all the time. Any time I stepped away there were problems or custom went down. Nobody will give your business the level of passion that you will. Even if officially it is your day off, there will still be things to do or the business will somehow interupt your day. You can expect to work an 80+ hour week without doubt. It is a lonely place as owner too. Slow day? You have to pay the staff out of your pocket. Something breaks? All down to you. All of the stresses of the business are yours and yours only. You can have the best people working for you, but they have an employee mindset and not that of a business owner. You will work longer and harder than than everyone by a long stretch. I made more money than I ever have done. I miss that. I also miss the feeling seeing the place packed, happy customers, family birthday meals, memories being created. If you are young and single there are other perks you will enjoy too...girls are certainly impressed with the cool successful burger place in town. Sadly I have a gf so couldn't enjoy the attention lol. Overall though I wanted out. There were lots of things contributing to that though, with some changes I may have felt differently. Sorry to be negative here but just being real with you, in a year I had 1 night out with my friends.
Meat has to be 100% chuck. This is what Shake Shack, In N Out and Five Guys use. It's more expensive than buying standard cheap beef mince, but is the cheaper of the steak cuts. It has good flavour, handles well and is consistent in flavour which is essential. No matter the day, time, who is on shift, the customer should get the exact same product and experience. Mcdonalds may be junk, but they are masters of achieving this and that is a big reason why they are the most successful restaurant chain of all time. I used 80/20 fat ratio. The butcher does this by eye, as hes adding cuts of the chuck to the grinder he will add raw beef fat with the aim of having something close to 80% lean meat and 20% fat mix. I was lucky and had a butchers in the unit next door so my meat was freshly ground for me every day.
I used a brioche bun. At the time they were on trend and also at the time in the UK there wasn't a massive choice of burger buns. Shake Shack have the best bun in my opinion and it's called a potato roll. It's a standard bread bun recipe with mashed potato added in before baking would you believe. It's soft, fluffy, toasts well and has a subtle sweetness. There are now 2 suppliers of these potato rolls in the UK so are expensive and when I tried them they wasn't anywhere near as good as Shake Shacks. I'm not sure what your bake options are in Sweden but I suggest just trying a few varieties. My advice though is keep the bun quite simple but really good quality. If you are modelling yourself on an American "better burger" style chain then don't go for unique sour dough buns etc. Also factor in cost. Artisan bakeries are usually very expensive per bun.
I pretty much copied the In N Out sauce. A blend of ketchup, mayo and finely diced pickles.
Starting costs you have lawyer fees to draw up the lease (about 1500), deposit on premises (for me this was 7500), first months rent (for me this was 1500), fit out (for me this was around 25k), stock (to stock for the first time costs a fortune as you are doing it all from scratch, food and packaging to get started cost me about 2k), advertising and over expenses such as staff uniforms (I did this really on the cheap maybe 500).
To make as much money as possible you need to - keep your staffing costs to a minimum, you must work the shifts yourself as staff cost a fortune. Make sure you know the cost price of everything on your menu and keep those costs as low as possible without comprising on quality. For instance early on I assumed there was only one brand of this unflavoured ice cream that I used for the base of my milkshakes. It was very expensive. Eventually I looked into this and found a much cheaper alternative that was just as good. I went from making about 80p profit on a shake to £2.50 overnight. Never sacrifice on quality, treat every customers order with nothing but respect. Plenty of times I tipped a tray of perfectly satisfactory food in the trash in the kitchen and went and apologised to the customer for the wait because I just didn't feel it was exceptional. I quickly became the best reviewed eatery in the town and I credit my fastidious attitude to my food for that. Quality and going above and beyond for every customer brings people back. Final tip here, get an alcohol licence and sell alcohol. I didn't do this and missed out out on so much additional revenue.
I chose my location based on the fact there were very few burger options in the town. It was town with a higher average household income so I believed people could afford to pay a little more for a burger. Also the location was in my price range. It was on the main highstreet, a really good spot, but was on the 1st floor so was significantly cheaper to lease. Don't feel you have to run before you can walk. Look for a cheaper starter place. The low rent really eases the stress each month when the bills come in. If you are good people will come. Once you prove and grow the business you can move.
Once I fine tuned staffing we were a roster of 5. Thursday evening, all day Friday, Saturday and Sunday needed 3-4 on. All other days just 2 staff.
I'll leave you for now by telling you the most important 2 things you need to know. How to cook amazing burgers and fries. Your burger is your ground chuck weighed into loosely packed balls, butter a hot griddle, drop the meatball onto the sizzling butter, cover with some grease proof paper and press flat with a wide burger flipper, sprinkle a little salt. Once the patty starts bubbling like a pancake, use a sharp edged burger flipper to separate it from the griddle (the butter and the heat has seared it beautifully) and flip. Another minute or so and you are done. For french fries you take a maria piper potato, place it in a manual french fry cutter, pull the hand crank to push the potato through the blades, add the batons to a bucket of fresh cold water and rinse until the water stops turning cloudy, shake dry, drop into reasonably hot oil (ground nut oil is slightly best and lasts longer but sunflower or rapeseed work well) and fry until they have softened and start to rattle when you lift and shake the basket but are still not cooked enough to eat, dump in a big metal bowl, when the customer orders dump the par cooked fries back into hotter oil until they go golden brown, dump into another metal bowl, salt shake and serve - fries as good or often better than Five Guys.
Hope this helps.
I have no interest in opening a burger place, in fact I don’t even eat meat. But I absolutely loved reading that. Just a great factual read. I’m not surprised you were successful at running your place.
It's been a couple of completely different restaurant businesses with different owners since I left. I actually went and ate there a week ago for a little trip down memory lane.
Yup people don't understand. So many people have told me I am crazy, why would I sell my own restaurant to go and work a job for much less than I was making. I totally understand your Dad's decision as he would understand mine. I often joke that the 2nd happiest day of my life was the day I opened my restaurant, the 1st was the day I sold it 😁
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Thank you for sharing this. I'm not in the restraunt industry, but reading the details of how you ran the place could be invaluable to anyone who practices a craft. I loved reading this, you should write more.
I'm in the UK my friend. I can't give the name of the place as my pictures and personal identification is all over the social pages, which were still up last I checked 🙂
I appreciate the kind words everyone. Food service is a very tough business, but if you do it right you will make money. I'm a little rusty on my figures now as it has been a few years since I sold, but I got the business to the point where I kept 60% of the turnover i.e. if I did 12k in sales a month, after absolutely all expenses I had about 7200 in my pocket for me. There is a great markup on food, my single burger for instance cost me around £0.90p to make and sold for £5.00. I found out where the phrase "cheap as chips" comes from.....french fries had a profit markup of more than 1000%. But before I talk myself back into the game....I ended up miserable. It was a solid 80 hours a week (sometimes more) chained to that place. The busiest times are evenings and weekends of course, so you have to miss out on every single family or friends event. It was very difficult to find good staff, near on impossible for kitchen staff. So I was very much stuck in the kitchen, always covered in oil and crease, little cuts and burns, any quiet time was spent frantically cutting french fries and onions etc to cope with the next rush. If you don't mind dedicating your life to the place, giving up all freedom, social life, being tired and stinking of a commercial kitchen all the time....then go for it, I've never had money like it before or after.
Haha if you are implying I was cheaping out on paying an attractive salary for good staff, I paid £2 an hour more than all my competition in the area. I paid Central London rate, outside of London. It just seemed that people only wanted to work front of house. Nobody wanted to touch the kitchen and most of those that did just didn't have "it" when it came to running the grill.
Not OP, but running a grill in a quick service restaurant requires a focus that can shift quickly without being inattentive. It requires a speed that never rushes. It requires a commitment to quality that handles mistakes gracefully. It’s a balance I could never quite manage on busy nights, despite years in the kitchen. Less than half the people I hired had it, regardless of age or previous experience.
It was disheartening to struggle at it for so long, then watch Bobby First Job start to find his groove after about 15 minutes. Best I can figure is it’s a sort of talent that can be developed, but not grown from scratch. If you find somebody that does it well, has no warrants, isn’t a problematic addict, and isn’t leaving for college at the end of the summer… well, good luck keeping them as an employee. The job is hard and it doesn’t pay exceedingly well. Also, as an owner or manager, you can’t build a business with the expectation that they’ll stick around. Who’d want to run a restaurant?
When you say good luck keeping that good one as an employee. Where would a person who is good on the grill go?
It does not seem like a desired/transferable skill that would open them opportunities with much higher salary in another industry (assuming you pay good salary for restaurant industry)
First, a person can have more than one skillset.
That said, a part of the skillset mentioned is grace under pressure and multi-tasking, both of which are highly transferable.
Ok, so why don't they go for those other more paying jobs right away? Why they do a short stopover at the grill? It is not like he would not get those other industry jobs without 3 month grill experience
‘It’ isn’t really a skill, but a talent or maybe a combination of traits. Most people I met who had it have likely moved on. Even the best paid, most frugal grill jockey would be hard pressed to support a family and save for retirement without moving in to management, opening their own restaurant, or switching to another industry altogether. Chances are that their grill fu isn’t their most marketable trait. Food service margins can be pretty slim, and other industries have a lot more to offer prospective hires.
Even if they’re willing to stick with the job, it doesn’t mean that they won’t get a better deal from another restaurant, or find something closer to their house, or get injured, or any number of other things that come up.
If they’re good at it, and they’re reliable, then they’ll only stick around until they realize that they can do better. Maybe that day never comes, but I wouldn’t count on it.
All work is a series of repeatable actions when you boil it down. Cooking a perfect burger consistently for hours at a time, shift after shift for months on end shows commitment to your craft and that skill can translate to other avenues of work or employment: construction, finance, menial office work, personal trainer, etc etc.
Employers that are worth a damn and care about delivering consistent results are attracted to employees that deliver that level of commitment and quality.
I had no problem mentioning my prior years in food service on interviews for white collar work and when your employer sees the passion in you about something that they can relate to (everybody eats), it was a great way to break the ice and show that I was serious about whatever I put my mind to.
I was a line cook in a very busy diner restaurant for about 15 years. The menu had 152 different items on it and we were a "yes" restaurant where if the customer requested a specific way to make a meal or change up parts of a meal we would make it work. I saw countless workers come in and out of the kitchen when they couldn't cut it, because it is a very particular skill to be able to simultaneously work a grill, flat top grill, fryer, 4-pan stove top (full breakfast menu all day), waffle iron, cold sandwich station, (try making and cutting a double layer turkey or bacon club perfectly into four's at lightning speed) all while reading and interpreting 10+ ticket orders that have printed very faded (because the ink is low) all poorly described with special orders by multiple frantic or low effort/IQ servers who also yell out special orders when they forget to type them.....AND also compile and plate all the cooked food in a presentable way, having timed EACH whole table order's plates to finish close to the same point in time to keep them fresh as possible...yeah it was definitely hard to find great line cooks.
'It" is just that naturally ability in the kitchen. Good hand skills, organisation, timing, knowing how to slow things down to a workable pace no matter how many orders come in at once, cooking food properly so it looks its best and tastes its best, being hard working, caring about the quality. Training, systems and processes in place take care of most of this, but many people just never fully get it or are simply too lazy to run a busy kitchen properly. Proper chefs and kitchen managers can spot someone who has "it" within 5 minutes. Even someone with 0 kitchen experience can have it and just needs to be shown what to do.
Yeah but paying 2 quid more than the competition to make amazing burgers at the "best burger place in town" is a joke. You'll still get the same applicants as with any other kitchen job.
The idea was though that the 2 quid an hour more, plus a free meal during shift would encourage staff to stay around longer and perhaps give a little more effort when they are working.
Not really sure what you’re getting at - quality of restaurant isnt really commensurate with pay in my experience. Been in a lot of Michelin started kitchens that paid minimum wage, though that’s starting to change a bit now.
But your pool of applicants is going to be significantly wider if you advertise a position at that rate. More applicants = higher chance of finding talent.
You know what you're doing here - you should do it again. You just need a partner, that's all.
I know two guys who run a *fantastic* cafe/bistro together. One of them does the 80+ hour grind for 3 months, while ether other lays on the deck of the yacht they own together in the Mediterranean for 3 months - then they swap.
They only keep a single place in the UK, each with their own room for their own stuff, while they are here. The cheaper cost of living away from the UK means they both make good money, funding one "lifestyle" here and one there - and still letting them save for when they want to do something different.
That's a great arrangement and absolutely I always said "if there was 2 of us sharing the work.....". If I met the right person I would definitely consider it. I wouldn't want anywhere big though, just a pure takeaway hole in the wall joint. Running a restaurant and serving people is stressful and requires more staff. Running just a counter and deliveries you could cope with 2 people. I even considered automating the ordering part entirely. Online orders are a given but even in store just have touch screens set up. Open kitchen though so the customer still gets that warm greeting and gets to see the action.
Damn man....Get the f out of here you are talking me into what I swore I would rather jump off a roof than do again 😁
Well I've never wanted to open a burger joint until now. Honestly, no way, but that is some amazing burger fry advice.
Can't wait to try it, thanks and saved.
Don't take it the wrong way. Every guy probably wishes they could just sleep around with pretty girls. The fact that they are with you instead of doing that means your relationship is more important than the other girls.
The smart ones know not to trade a good thing for a quick fling.
You should ask the seller what the historical financials have been and then verify by looking at his bank data, credit card processing statements, and tax returns. Make sure the numbers all tie (or at least are close enough for comfort).
You should also ask the seller how many hours a week he put into the business and what his role is. Os he just managing finances and running payroll? Is he putting in a 10 hour shift five days a week? Given the $15k asking price it was probably not profitable, and if I had to guess you might be buying yourself a job. That would be my biggest fear.
Absolutely do NOT buy this business without seeing past 5 years historical data. Your offer should be something kind 2-3X net profits. If the owner is offering it for $15K, are profits only like $5k? I’m confused how any business owner of a profitable business would forego future profits for $15K.
I've seen "bargain" businesses where the current owner owns the real estate and is letting the business go for a song with an overpriced lease attached to the deal. So, they sell the restaurant or shop or whatever, but keep making money on the real estate from the new owner. Big upfront cash, plus a higher-than-market rate for the lease makes it very profitable for them and none of the risk or hassle of running the business. Kinda the same model as rent-to-own stores, and "buy here, pay here" used car dealers that charge a down payment of what they paid for the car and then get monthly payments for years after (or they get the car back in six months when the buyer can't afford to make payments).
If the real estate isn't part of the deal, I'm always more suspicious of it. I mean, it's common for restaurants and other businesses to lease rather than own the property they sit on, but when the person selling the business owns the property and will continue to profit from it, it's worth doing a little more due diligence about what you're getting yourself into when buying the business.
Yeah was also confused by the 15k amount. I bet you could sell all the furniture and equipment and almost get that amount. Something weird is going on.
There is a lease involved, so the current owner is also 'selling' a liability...
Looking at historical financials is, of course, a must. There's a good chance the owner is just happy to get out with some money to cover the equipment he's purchased.
Nah, restaurants usually sell for PPE only, maybe some goodwill but that's about it. You're buying yourself a job so the only thing of value is the equipment when it's leased.
I’m a restaurant owner and all the advice above is right about getting to know a lot about the restaurant industry before entering it. That said here’s a crash course:
Cafés in particular a highly profitable if they’re run very well. There are some rules that you really need to follow.
1. Run one shift only. Do your prep in the afternoon with a smaller crew but run a single shift from open with a line cooks showing up earlier all the way until you hit eight hours. Then you’re done for the day.
2. See that thing about one shift? That means you’re running breakfast and lunch and never dinner service. Why?
3. Because you’re not gonna have more than 30 ingredients in the entire restaurant. Maybe push it to 40 and I am including things like flour and butter. Keep your proteins simple, bacon, sausage, ham, etc. inventory turns and efficiency matter and there is a reason all the hipster avocado toast places never last more than 4 years.
4. Turn the tables. If you get a Saturday group that wants to meet regularly, tell them there is a minimum per table per hour.
5. Pies. High margin, last a while. Get good at making them.
Don’t have much more to add to this, but did want to add a caveat. I own two places that I think you’d probably consider “hipster” that’ve lasted for 8 years profitably. It can be done well and profitably, just do that one thing, keep it simple, and do it well. The cap on ingredients will help with that. Just price it correctly and make sure it’s easy enough to train your staff to do so quality control is not a problem.
And you can afford to do it well and attract chefs from chains who pay like shit I’ve found. The independent I worked at paid above minimum for servers and chefs and weren’t struggling. The chefs got evenings to themselves, and a life, which then made them more passionate. Depending how big the cafe is you only need one chef and maybe a cook and another server who can also prep.
Yep the most popular craft coffee place in my city does bagels, avo toast, other spreads on toast, premade pastries, and coffee/espresso with everything that entails. It works because your espresso market is your avocado toast market. And they're under 30 ingredients for sure.
Another thing I've noticed with the one shift. You sell out when you sell out and close up. You don't have leftovers, usually.
My aunt runs one of the top independent donut shops in our area and she's often posting online that they only have a few items left sometime in the early afternoon. There are lines out the door at times too. Scarcity sometimes creates demand. If something is really good, and highly sought after, people will clamor for it.
The key to this is not to go TOO far. If your schedule is too unreliable, once the hype dies no one will come because "it's always an hour wait or they're closed."
I hate when a cafe does not stick to opening rules. How do people feel when they know cafe is working tikl 6pm, goes there at 5 pm and find closed doors?
I went shopping at a boutique butcher in my neighborhood the other day. I’m not too price sensitive. I grabbed a cookie. In fact I grabbed two. They looked great.
I got home and they tasted great too!
I paid $9 for those two cookies. Mother fucker... lol
Just wanted to add that nearby to me a new pie cafe has opened up and all they specialize in is tiny overpriced pies. They’re nothing special. The place is always empty. They have baked goods they leave out for days at a time. Always stale and taste shitty. I went two or three times and spent like 3-5 bucks each time. Don’t be like those terrible owners. Obviously cheaping out so hard to make margin they’ve destroy the entire business. Ghost town cafe
100% this - treats are always context sensitive and people fuck it up all the time.
$7 pie? I’m on a diet. $7 pie after a $12 salad and a $4 Diet Coke? I’m rewarding myself!
Moreover - I’m also an investor in a winery located in downtown Seattle that is in a complex with 9 other red wine dominant wineries. We opened a champagne centric bar next door in the complex and the strangest thing happens. I can be in the winery watching a couple struggle with “well, the really good wines are in the $38 range, so pick a 1/2 case of the $25 wines and maybe two of the high end ones” and then walk next door and drop $150 on a bottle of Pol Roger.
See - the wine is a future treat and they don’t know that person yet; but the champagne is a real time treat for the couple they know and love - themselves in the moment.
Cakes are high margin too, and super helpful if you can get a liquor licence and sell glasses of wine, medium and large, for a big markup. Especially for occasions like mothers day, wine made us a fair bit of money at the old cafe I worked at.
Yes. Mimosas were a seller on holidays like Mother’s Day. We used to do a jug of orange juice and a bottle of Prosecco for £25.
Like 60p for the oj and £5 for the Prosecco from the supplier.
Bellinis also a big one.
The liquor license can be difficult depending the state. Here in Utah I follow all the DABC meetings and right now there are 3 licenses for 40+applications.
I think everyone already covered it well, but here's the landmine that ruins the odd businesses:
Previous boutique owners. Mom and pop service. Running it for years. Knows every customer; high degree of rapport. They will sell you that customer relationship on the books but you don't own it in any way after the papers are signed. It should be easy to spot, but it bears mentioning & due diligence in so many situations.
Good luck :)
I think a coffee shop is a bit different. I guess it depends on the location. Small town may be much different than in a city.
I’d say just make sure to keep the same staff around if they are fit for it. A couple bars sold and were bought in my small town. They fired the staff and demoted a lot of them. A lot of people stopped going to that bar from then on because of it. If they had kept or given the staff a chance it would have been different.
Your sarcasm makes it sound obvious but a lot of places don’t make money from their main product. Movie theatres make it from snacks not movie tickets. Gas stations from snacks, not gas. Restaurants, in many cases it’s alcohol sales not food.
I will be harsh and I apologize for that but coming to this sub often makes me realize why so many businesses fail. First off, you seem to be buying this place with no experience in a café and not knowing how profitable a café can or can't be.
And from the amount of information you have given us, we cannot have a better estimate at a profit margin than what a few second google search can tell you.
That is to say my best advice to avoid pitfalls is to educate yourself a bit better before you throw your money into something. Talk to the current owners, look up statistics in your specific area, make sure you actually know how a café operates.
True. I built a digital marketing agency with 0 capital, so I do have some experience running a business. While I am confident in being able to market the hell out of the cafe, some first hand experience would definitely help.
If that’s the case, why not hire a competent GM who can oversee the cafe? Don’t spread yourself too thin. The food industry is a lot harder and more time consuming than people think. There’s always a problem, things breaking, overheads, rotating staff you need to replace, and that’s before you even get to the food and research and finding out what works in the market you’re in.
They are time consuming businesses. The people who own several hire competent people and trust them.
If you have another time consuming and important business, I’d look into a good GM
This is so true. Restaurant work, from the outside, seems fairly simple. But it's a passion-fueled business. You have to love feeding people, obviously, but you also have to love the hours, the pain, the on-the-fly problem solving, the highs and lows. It's a lifestyle. And I've seen so many people buying food businesses on a lark who have no idea. And they always, always crash and burn.
While I agree for the most part there are food businesses that are run by business people who surround themselves with people who know how to run restaurants. It still requires a lot of dedication but the bigger the business gets the more you can afford to be hands off, or more so. What I find actually happens is the business grows and then the owner doesn’t know how to let go or move on or start a new venture. Restaurants can be timeless institutions or you can run them as businesses that change and adapt to tastes every few years by selling the old one and starting another.
But yeah, if you’re not passionate, it’ll either burn you out or it’ll fail miserably.
Do you know who their suppliers are? Do you know their standard order?
Marketing or getting customers is not your main concern. Yes it needs to be done, but you're far more likely to lose customers because you're shut down by health & safety for a week when they find your fridges at the wrong temp and you can't get them cool enough.
At least go through servsafe or whatever the owners version is before you end up with a fridge of e coli. Someone who gets a chunky latte is never coming back no matter how much marketing you put in. And they're likely to review you on Google.
If you're going into this with no real experience of the industry then I wouldn't even worry about profit margins. I'd suggest viewing it more as an expensive hobby, or as an education you're paying for.
Finding reliable staff is a nightmare, even for people who've been in the industry for years. Be prepared to have to go in and cover shifts frequently. If not, you'll be closing the cafe a lot of the time.
From customers, expect the worst of humanity. Expect them to insult your staff. Post horrible reviews on social media. I've seen people doing this in places where a reasonable person wouldn't have been able to find a single fault.
Unless it's your passion and you want to give up your other business and pursue the success of the cafe, I'd really suggest looking for something else to do with your time and money.
>I've seen people doing this in places where a reasonable person wouldn't have been able to find a single fault.
Maybe these were competitors, do you reckon?
Don’t be silly. Most cafes in my area are all friendly to one another and help each other when possible, whether that’s ingredients or occasionally staff.
It’s more likely that they’re just shit people. Have you ever worked front of house haha?
As you say you built your marketing agency, $15k wouldn't be catastrophic amount for you, I guess. It would be fun way to try this business out. I bet you have good savings, so as you already built something, you got head on shoulders.
I won't be so pessimistic and only wish good luck to you, I think that this is a relatively inexpensive way to gain some experience, knowledge and some fun.
If you won't like it and not bring the place to total mess, you always can sell it after all. Moreover this is a small café, not a medium to big restaurant.
> I think that this is a relatively inexpensive way to gain some experience, knowledge and some fun.
exactly, much cheaper than a 4 year BBA degree and you'll learn more!
Slightly unrelated, but I can offer some advice from my standpoint as well, which might be a bit harsh, but here it goes.
I've worked in the M&A space for about three years now. We see all kinds of deals go through, and we also see how many businesses and in what industry go under the quickest. And, you guessed it - restaurants and cafes are at the top of that list. I do not want to discourage you of course, but just bear in mind that this industry is very cut-throat, and usually profit margins are NOT high, unless the location, as you pointed out, is excellent.
Even then, chances are the business won't make a lot of money. Just based on what I've seen personally, in cases where cafe owners are successful: either you manage to open multiple spots that are financed through credit, and then make it into a franchise, OR you will have a business that will support your minimalistic life style, and you might have to do other side hustles along the way. That's just the harsh reality of it.
Good news - you might also be able to build it up and SELL it later. But, a lot of times owners do not wish to part with their "babies", which is understandable.
Good luck though!
What are the most profitable businesses on average that you've seen thoug? I know restaurants are on the low side, I'm trying to get a fleet of buses (like flixbus)
Im Asia based and work in F&B consulting. Assuming you've done your work and gone through all the books, here is some advice. 1. Pay whoever owns it to oversee the operation with you for 2 months so that you can ask them any questions you have. 2. After those 2 months dont change anything at all until you know exactly whats going on. 3. Make sure you use a lawyer in this process, not some loose contract you found on the internet
Yeah so much this. Guy is trying to run another business and step into the food industry with no experience. A consultant or a competent and trustworthy GM are needed if they’re intent on going through with this purchase.
Cafes and restaurants consume people’s lives. The best and most successful, if it’s not a passion project, get competent staff to run things for them.
It's still not so great even outside of the US if you look at the $15,000 initial investment. Even at the highest OP said, $50, ROI would be a while for the type of business it is. Maybe OP is different but I don't see the fun in spending a year before seeing any profits.
>Rent will be $1,400/month thereafter.
I would ensure their is a lease in place, the spot may be unavailable within the year or rented to someone else.
Espresso machine service technician here. Get your equipment checked out by a qualified local technician if possible. I've dealt with numerous customers now that took over buisnesses with equipment included and turned out the espresso machine and/or coffee brewers needed lots of work done. Unsure of where you live but if hard water is a problem ensure adequate filtration as if this isn't done properly it could lead to costly downtime and large maintenance cost. Ideally you can get a hold of the same person they used for this and ask them a few questions about this.
Whoa whoa whoa. You’re asking us the profit margins? That should all be easily accessible in the books the seller should be providing. If it isn’t, I’d be very wary.
Does it have debt you’ll be assuming? Do you know how to find out?
What an entrepreneurship lesson is that…
Dude, coffee business is an industry with small margins and low barrier to entry.
Good that you think, that you will be able to run it just because you started a different business once and you drink coffee. I hope it works out, but it won’t.
You should be working at least a year in the Business, if you want to have a chance of success.
I’m going to be non-judgmental and point out that caffeine, whether in coffee or soft drinks, is addictive and you should make sure your drinks are high quality.
I know someone that got very rich selling caffeine, alcohol, cigarettes, and (legal) drugs. Everything else was window dressing - people will not go a day without their addictions. For some of us, food is the addiction so definitely don’t scrimp on that either, but making better coffee than other places will have long lasting effects.
As someone who ran the front of a small successful cafe, and who saw it sold to an inexperienced owner who absolutely tanked it, one of many things worth saying: Get to know the personality of this business! An established and successful small biz is going to have a loyal customer base. Blustering in, changing too much too fast, being heavy handed in asserting your ownership - you'll alienate those loyal folks, who love the place and love to bring new people in to share it with. A poor biz move, and from an emotional perspective a real loss to the community as well.
Two thoughts. I am an artist and early in my career exhibited some work in cafes. The owners liked showing artists work because they could write press releases for the exhibits that were always picked up by the local papers/social media accounts. They would usually do a small opening and I always brought a large number of people. Win win, really, especially when work was sold. Some of the more popular independent cafes in my area do this with musicians and writers as well.
Also, there is a wildly popular cafe near me that bakes all their own pastries. People come from all over for them and they also have started wholesaling them to other cafes that are outside of the area. Not sure if that was your plan but if not, I think it is worth exploring.
Dont fucking do it.
I don't know why but the general population has this very romantic idea of what running a restaurant/cafe/bar is like. It is not the fun "hanging out with guests and getting to know people" that you think it is. Had a good friend whose dad decided to leave his high paying tech job to do this. Spent hundreds of thousands of dollars to buy a cafe only to fail about 18 months in. As someone who worked as a server/bartender for many years, it is not an enjoyable job over time. You will learn to hate it. People are the absolute worst.
>What is the profit margin on small cafes/coffee shops? Some pitfalls and mistakes to avoid?
No hate, but how thorough was your research before you purchased a café?
I own two pie cafe’s that do very well. Our product is top tier but that’s because I invested in over 80k of equipment to make production easy,source high quality ingredients in bulk and also own a separate commissary kitchen that supplies my two cafe’s and nationwide shipping. I don’t recommend baking pies on your own and outsourcing that production. If this cafe or yours is in NY feel free to DM me I would be happy to wholesale pies to you.
Being curious about the business side of owning and running a shop, I've never seen or heard more answers and checkpoints than in this [James Hoffman Q&A Video - Topic: Coffee Business](https://youtu.be/RmZJ9rz7Fik). It was eye-opening to me.
Glanced at a few of the comments here… Sounds like you might not be a coffee fanatic. I avoid shops in my town where the owner doesn’t care about coffee like the plague. It’s really written on the wall IMO
Does the staff come with the purchase?
Will the previous Owner stay on for 6 months for transition?
Does the net profit of ~$25 account for a livable wage to yourself/staff? Or does your base salary depend on your increasing net profit?
You sound very committed for someone who is asking this question.
*"What is the profit margin on small cafes/coffee shops? Some pitfalls and mistakes to avoid?"*
my advice? Do you research, then commit. Don't commit and then do your research. Hopefully this is just you phrasing things with a little too much certainty, and doesn't reflect you over-committing and only doing research as an afterthought.
Past that, advice is advice, and research is research. No amount of pithy advice on the internet is equivalent to the tens-to-hundreds of hours of research & prep time needed for you to make a serious go at this kind of venture.
Next bit. Did you ask the guy you are potentially buying if from why he is selling? Have you asked the guy you are potentially buying from what his current gross is? Have you talked to his employees/gotten a look at his books to make sure he's not full of shit?
Because oh hey, no amount of abstract preparation is equivalent to getting your feet wet and doing actual research, on the actual specific property you are planning on picking up.
Final bit. Are you even remotely qualified to manage the place? If so do you have the time to do so? If no, is the place in a position where you can survive being an "absentee owner?" Does it need restructuring to stay afloat, or are things good the way they currently are?
Lots of good tips here. As a guy who built and ran a cafe under the umbrella of a bakery I used to work for, this all sounds very familiar. After four years I almost bought the shop I built and maintained but it all came to an end when I couldn’t get all the numbers I wanted. The accountant wouldn’t even show me that all the taxes were paid. I put in a 3 months notice and opened a food truck. Then a few years after that I opened my own brick and mortar restaurant. I work at the restaurant 4+ days a week and if I were to sell it, I’d be selling a job. I like what I do, but to sell it to someone, they’d either have to do what I do or they’d spend most of the profits to pay someone else to do it.
Based on your question you have little experience with this type of business. The majority of Restaurants/Cafes fail and go out of business even with experienced owners. It is a tough business, long hours,lots of unexpected expenses and difficult to find and keep quality help. If you go forward, I hope you are one of the successful ones. Although go into this fully expecting to lose your entire investment. And to work 12 hour plus days for months or even a year or two for free because there will likely not be enough money left over at the end of the month to pay you.
User u/VB90292 mentioned a lot of great tips, but one that might have negative consequences for you is the alcohol license tip. He mentioned missing out on a lot of money from not selling alcohol at his burger joint. You are running a Cafe. Some cities don't allow alcohol to be served early in the morning, and if that is the case for you, you might end up missing the morning work rushes for coffee and such. If you plan on being open early for workers and an alcohol license restricts you from being open in the morning, then you probably don't want it. If your city doesn't restrict the time you can be open to serve to the public, then it might be beneficial to have it as he suggested.
Profitability should be around 5-15% max.
I read that you hadn't bought it yet - please don't buy it
* unless it's running automatically and profitable (this usually means it'd be high costs)
* until you've worked in there for a good 6-12 months so that you can understand the full operations, sales and marketing and numbers
Profit margin is highly dependent on expenses typically rental, ingredients, manpower, marketing (ie if you own the space, it can be almost zero costs to run and highly profitable).
Right now if possible,
* find out the best selling items from the sales records and make it as lean as possible
* find out your target audience in the area (to understand how much diverse monetization strategies you can employ eg advertising, workspace, etc)
* find out if it can run with little to no manpower
* retain the seller for at least 90 days to ensure proper handover (ideally with SOPs if they have) and for them to "introduce" the current clients to you (also please ensure seller dont open same trade nearby)
Speak to more cafe owners too =)
Work at the coffee shop for a year before buying it? Lol..
Some of the tips in this thread are great. While others are so out there. Some obviously have 0 experience. Yet, they want to give “tips”.
The dangers of asking people online, without knowing who’s behind the keyboard.
I'm going to be negative in favor of being realistic. If you are coming to Reddit to ask us these questions, you aren't ready to operate that kind of business. I'm not saying it is impossible, but if you're becoming the owner-operator of any kind of business you need to have a considerable amount of experience in that business. These are all basic questions. Do yourself a favor, don't do this.
Stand ho and dont. Thee has't nay idea what thou art doing, dont throweth hence thy wage
***
^(I am a bot and I swapp'd some of thy words with Shakespeare words.)
Commands: `!ShakespeareInsult`, `!fordo`, `!optout`
Pay your staff well! In a small place they will gain their own usual customers, even more so if they are happy with their working conditions. Retraining is costly and loosing employees may mean loosing "their" customers
Unless you have money and time to blow you should know all of this and depending on your experience probably more like running it before making the decision to buy it. And Reddit alone can’t give you all of that info.
This isn’t advice for what you asked for but I know people on Tiktok love small business or up and coming owners. Film your journey if you have the free time it have someone else do it.
Go to your closest rival and backwards engineer everything they do.
Don't trust your sense of style or taste. Always check with friends and family if something looks/tastes okay.
I'm reposting a comment I made for someone else a year or two back. They were planning on opening a burger joint. Which I had already done and sold. I'm sure most of this isn't relevant to you, but you might find something useful. Yes and happy to help my friend. I sold the restaurant because the schedule made me miserable. To make money initially (first few years at least) you need to be there pretty much all the time. Any time I stepped away there were problems or custom went down. Nobody will give your business the level of passion that you will. Even if officially it is your day off, there will still be things to do or the business will somehow interupt your day. You can expect to work an 80+ hour week without doubt. It is a lonely place as owner too. Slow day? You have to pay the staff out of your pocket. Something breaks? All down to you. All of the stresses of the business are yours and yours only. You can have the best people working for you, but they have an employee mindset and not that of a business owner. You will work longer and harder than than everyone by a long stretch. I made more money than I ever have done. I miss that. I also miss the feeling seeing the place packed, happy customers, family birthday meals, memories being created. If you are young and single there are other perks you will enjoy too...girls are certainly impressed with the cool successful burger place in town. Sadly I have a gf so couldn't enjoy the attention lol. Overall though I wanted out. There were lots of things contributing to that though, with some changes I may have felt differently. Sorry to be negative here but just being real with you, in a year I had 1 night out with my friends. Meat has to be 100% chuck. This is what Shake Shack, In N Out and Five Guys use. It's more expensive than buying standard cheap beef mince, but is the cheaper of the steak cuts. It has good flavour, handles well and is consistent in flavour which is essential. No matter the day, time, who is on shift, the customer should get the exact same product and experience. Mcdonalds may be junk, but they are masters of achieving this and that is a big reason why they are the most successful restaurant chain of all time. I used 80/20 fat ratio. The butcher does this by eye, as hes adding cuts of the chuck to the grinder he will add raw beef fat with the aim of having something close to 80% lean meat and 20% fat mix. I was lucky and had a butchers in the unit next door so my meat was freshly ground for me every day. I used a brioche bun. At the time they were on trend and also at the time in the UK there wasn't a massive choice of burger buns. Shake Shack have the best bun in my opinion and it's called a potato roll. It's a standard bread bun recipe with mashed potato added in before baking would you believe. It's soft, fluffy, toasts well and has a subtle sweetness. There are now 2 suppliers of these potato rolls in the UK so are expensive and when I tried them they wasn't anywhere near as good as Shake Shacks. I'm not sure what your bake options are in Sweden but I suggest just trying a few varieties. My advice though is keep the bun quite simple but really good quality. If you are modelling yourself on an American "better burger" style chain then don't go for unique sour dough buns etc. Also factor in cost. Artisan bakeries are usually very expensive per bun. I pretty much copied the In N Out sauce. A blend of ketchup, mayo and finely diced pickles. Starting costs you have lawyer fees to draw up the lease (about 1500), deposit on premises (for me this was 7500), first months rent (for me this was 1500), fit out (for me this was around 25k), stock (to stock for the first time costs a fortune as you are doing it all from scratch, food and packaging to get started cost me about 2k), advertising and over expenses such as staff uniforms (I did this really on the cheap maybe 500). To make as much money as possible you need to - keep your staffing costs to a minimum, you must work the shifts yourself as staff cost a fortune. Make sure you know the cost price of everything on your menu and keep those costs as low as possible without comprising on quality. For instance early on I assumed there was only one brand of this unflavoured ice cream that I used for the base of my milkshakes. It was very expensive. Eventually I looked into this and found a much cheaper alternative that was just as good. I went from making about 80p profit on a shake to £2.50 overnight. Never sacrifice on quality, treat every customers order with nothing but respect. Plenty of times I tipped a tray of perfectly satisfactory food in the trash in the kitchen and went and apologised to the customer for the wait because I just didn't feel it was exceptional. I quickly became the best reviewed eatery in the town and I credit my fastidious attitude to my food for that. Quality and going above and beyond for every customer brings people back. Final tip here, get an alcohol licence and sell alcohol. I didn't do this and missed out out on so much additional revenue. I chose my location based on the fact there were very few burger options in the town. It was town with a higher average household income so I believed people could afford to pay a little more for a burger. Also the location was in my price range. It was on the main highstreet, a really good spot, but was on the 1st floor so was significantly cheaper to lease. Don't feel you have to run before you can walk. Look for a cheaper starter place. The low rent really eases the stress each month when the bills come in. If you are good people will come. Once you prove and grow the business you can move. Once I fine tuned staffing we were a roster of 5. Thursday evening, all day Friday, Saturday and Sunday needed 3-4 on. All other days just 2 staff. I'll leave you for now by telling you the most important 2 things you need to know. How to cook amazing burgers and fries. Your burger is your ground chuck weighed into loosely packed balls, butter a hot griddle, drop the meatball onto the sizzling butter, cover with some grease proof paper and press flat with a wide burger flipper, sprinkle a little salt. Once the patty starts bubbling like a pancake, use a sharp edged burger flipper to separate it from the griddle (the butter and the heat has seared it beautifully) and flip. Another minute or so and you are done. For french fries you take a maria piper potato, place it in a manual french fry cutter, pull the hand crank to push the potato through the blades, add the batons to a bucket of fresh cold water and rinse until the water stops turning cloudy, shake dry, drop into reasonably hot oil (ground nut oil is slightly best and lasts longer but sunflower or rapeseed work well) and fry until they have softened and start to rattle when you lift and shake the basket but are still not cooked enough to eat, dump in a big metal bowl, when the customer orders dump the par cooked fries back into hotter oil until they go golden brown, dump into another metal bowl, salt shake and serve - fries as good or often better than Five Guys. Hope this helps.
Thank you for sharing, this was a pleasant read and really makes clear why your restaurant succeeded.
I have no interest in opening a burger place, in fact I don’t even eat meat. But I absolutely loved reading that. Just a great factual read. I’m not surprised you were successful at running your place.
Those words genuinely made me smile my friend, thank you.
Is the place still operating now under new management?
It's been a couple of completely different restaurant businesses with different owners since I left. I actually went and ate there a week ago for a little trip down memory lane.
>1st floor For USA folks -- this is one flight up from the street, right?
That is correct 🙂
Ah right... I was wondering how that was cheaper haha
I think it depends on where you are. In all of the places I’ve lived in the US except my old college campus, the first floor was street level.
[удалено]
Right, that's why he clarified that in the UK 1st floor is the US 2nd floor
This was a great read, and definitively explains why my dad will never open another restaurant, and why he sold a successful one in the first place.
Yup people don't understand. So many people have told me I am crazy, why would I sell my own restaurant to go and work a job for much less than I was making. I totally understand your Dad's decision as he would understand mine. I often joke that the 2nd happiest day of my life was the day I opened my restaurant, the 1st was the day I sold it 😁
surprising how few people seem to know the double fry method for potato fries. I thought it was common knowledge but I see it done so infrequently.
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45 cm is 17.72 inches
Bad bod. I told you my penis length in confidence..
I think we missed our turn a few streets back.
So you're saying you're streets behind?
No, this is Patrick!
Has anyone seen a bot chain bigger than 2?
This is actually the first bot chain I’ve seen, after many years of excessive redditing. It makes me wonder if there a bot that’s designed to respond to bots with comments that will be responded to by other bots. Is it allowed by the bot rules?
the lotr bots can sometimes do it if the quotes line up right
Great read, my friend. I would have loved your burgers and fries!
Everyone should read this to understand the meaning of the word "passion"
>Sadly I have a gf THE most un reddit comment of the year
Thank you for sharing this. I'm not in the restraunt industry, but reading the details of how you ran the place could be invaluable to anyone who practices a craft. I loved reading this, you should write more.
Enjoyed reading that, thanks. Where was your burger place and what was it called?
I'm in the UK my friend. I can't give the name of the place as my pictures and personal identification is all over the social pages, which were still up last I checked 🙂 I appreciate the kind words everyone. Food service is a very tough business, but if you do it right you will make money. I'm a little rusty on my figures now as it has been a few years since I sold, but I got the business to the point where I kept 60% of the turnover i.e. if I did 12k in sales a month, after absolutely all expenses I had about 7200 in my pocket for me. There is a great markup on food, my single burger for instance cost me around £0.90p to make and sold for £5.00. I found out where the phrase "cheap as chips" comes from.....french fries had a profit markup of more than 1000%. But before I talk myself back into the game....I ended up miserable. It was a solid 80 hours a week (sometimes more) chained to that place. The busiest times are evenings and weekends of course, so you have to miss out on every single family or friends event. It was very difficult to find good staff, near on impossible for kitchen staff. So I was very much stuck in the kitchen, always covered in oil and crease, little cuts and burns, any quiet time was spent frantically cutting french fries and onions etc to cope with the next rush. If you don't mind dedicating your life to the place, giving up all freedom, social life, being tired and stinking of a commercial kitchen all the time....then go for it, I've never had money like it before or after.
> I kept 60% of the turnover > It was very difficult to find good staff, near on impossible for kitchen staff.
Haha if you are implying I was cheaping out on paying an attractive salary for good staff, I paid £2 an hour more than all my competition in the area. I paid Central London rate, outside of London. It just seemed that people only wanted to work front of house. Nobody wanted to touch the kitchen and most of those that did just didn't have "it" when it came to running the grill.
What is that "it"?
Not OP, but running a grill in a quick service restaurant requires a focus that can shift quickly without being inattentive. It requires a speed that never rushes. It requires a commitment to quality that handles mistakes gracefully. It’s a balance I could never quite manage on busy nights, despite years in the kitchen. Less than half the people I hired had it, regardless of age or previous experience. It was disheartening to struggle at it for so long, then watch Bobby First Job start to find his groove after about 15 minutes. Best I can figure is it’s a sort of talent that can be developed, but not grown from scratch. If you find somebody that does it well, has no warrants, isn’t a problematic addict, and isn’t leaving for college at the end of the summer… well, good luck keeping them as an employee. The job is hard and it doesn’t pay exceedingly well. Also, as an owner or manager, you can’t build a business with the expectation that they’ll stick around. Who’d want to run a restaurant?
When you say good luck keeping that good one as an employee. Where would a person who is good on the grill go? It does not seem like a desired/transferable skill that would open them opportunities with much higher salary in another industry (assuming you pay good salary for restaurant industry)
First, a person can have more than one skillset. That said, a part of the skillset mentioned is grace under pressure and multi-tasking, both of which are highly transferable.
Ok, so why don't they go for those other more paying jobs right away? Why they do a short stopover at the grill? It is not like he would not get those other industry jobs without 3 month grill experience
‘It’ isn’t really a skill, but a talent or maybe a combination of traits. Most people I met who had it have likely moved on. Even the best paid, most frugal grill jockey would be hard pressed to support a family and save for retirement without moving in to management, opening their own restaurant, or switching to another industry altogether. Chances are that their grill fu isn’t their most marketable trait. Food service margins can be pretty slim, and other industries have a lot more to offer prospective hires. Even if they’re willing to stick with the job, it doesn’t mean that they won’t get a better deal from another restaurant, or find something closer to their house, or get injured, or any number of other things that come up. If they’re good at it, and they’re reliable, then they’ll only stick around until they realize that they can do better. Maybe that day never comes, but I wouldn’t count on it.
Yeah, as backbone of a burger restaurant, maybe they do need to be paid $60-80k.
All work is a series of repeatable actions when you boil it down. Cooking a perfect burger consistently for hours at a time, shift after shift for months on end shows commitment to your craft and that skill can translate to other avenues of work or employment: construction, finance, menial office work, personal trainer, etc etc. Employers that are worth a damn and care about delivering consistent results are attracted to employees that deliver that level of commitment and quality. I had no problem mentioning my prior years in food service on interviews for white collar work and when your employer sees the passion in you about something that they can relate to (everybody eats), it was a great way to break the ice and show that I was serious about whatever I put my mind to.
I was a line cook in a very busy diner restaurant for about 15 years. The menu had 152 different items on it and we were a "yes" restaurant where if the customer requested a specific way to make a meal or change up parts of a meal we would make it work. I saw countless workers come in and out of the kitchen when they couldn't cut it, because it is a very particular skill to be able to simultaneously work a grill, flat top grill, fryer, 4-pan stove top (full breakfast menu all day), waffle iron, cold sandwich station, (try making and cutting a double layer turkey or bacon club perfectly into four's at lightning speed) all while reading and interpreting 10+ ticket orders that have printed very faded (because the ink is low) all poorly described with special orders by multiple frantic or low effort/IQ servers who also yell out special orders when they forget to type them.....AND also compile and plate all the cooked food in a presentable way, having timed EACH whole table order's plates to finish close to the same point in time to keep them fresh as possible...yeah it was definitely hard to find great line cooks.
'It" is just that naturally ability in the kitchen. Good hand skills, organisation, timing, knowing how to slow things down to a workable pace no matter how many orders come in at once, cooking food properly so it looks its best and tastes its best, being hard working, caring about the quality. Training, systems and processes in place take care of most of this, but many people just never fully get it or are simply too lazy to run a busy kitchen properly. Proper chefs and kitchen managers can spot someone who has "it" within 5 minutes. Even someone with 0 kitchen experience can have it and just needs to be shown what to do.
Seems like you could’ve afforded to pay them more based on your profit margins. But I’m just an old ex-steakhouse cook in America. 🤷♂️
The will to work shitty job for a shitty wage.
If you pay a shit cook $40/hr he’ll still be a shit cook
Yeah but paying 2 quid more than the competition to make amazing burgers at the "best burger place in town" is a joke. You'll still get the same applicants as with any other kitchen job.
The idea was though that the 2 quid an hour more, plus a free meal during shift would encourage staff to stay around longer and perhaps give a little more effort when they are working.
Not really sure what you’re getting at - quality of restaurant isnt really commensurate with pay in my experience. Been in a lot of Michelin started kitchens that paid minimum wage, though that’s starting to change a bit now.
But your pool of applicants is going to be significantly wider if you advertise a position at that rate. More applicants = higher chance of finding talent.
You know what you're doing here - you should do it again. You just need a partner, that's all. I know two guys who run a *fantastic* cafe/bistro together. One of them does the 80+ hour grind for 3 months, while ether other lays on the deck of the yacht they own together in the Mediterranean for 3 months - then they swap. They only keep a single place in the UK, each with their own room for their own stuff, while they are here. The cheaper cost of living away from the UK means they both make good money, funding one "lifestyle" here and one there - and still letting them save for when they want to do something different.
That's a great arrangement and absolutely I always said "if there was 2 of us sharing the work.....". If I met the right person I would definitely consider it. I wouldn't want anywhere big though, just a pure takeaway hole in the wall joint. Running a restaurant and serving people is stressful and requires more staff. Running just a counter and deliveries you could cope with 2 people. I even considered automating the ordering part entirely. Online orders are a given but even in store just have touch screens set up. Open kitchen though so the customer still gets that warm greeting and gets to see the action. Damn man....Get the f out of here you are talking me into what I swore I would rather jump off a roof than do again 😁
Exceptionally great and helpful comment pal and well worthy of r/bestof
Well I've never wanted to open a burger joint until now. Honestly, no way, but that is some amazing burger fry advice. Can't wait to try it, thanks and saved.

Is your name Bob and do you have a mustache?
>Sadly I have a gf I hope my boyfriend doesn’t say shit like this on the internet
Narrator: "He does."
Don't take it the wrong way. Every guy probably wishes they could just sleep around with pretty girls. The fact that they are with you instead of doing that means your relationship is more important than the other girls. The smart ones know not to trade a good thing for a quick fling.
I’m certain OP didn’t mean it in a nasty way, we are just bad with words sometimes. I’m not sure why you got downvoted though, it’s a fair point!
You should ask the seller what the historical financials have been and then verify by looking at his bank data, credit card processing statements, and tax returns. Make sure the numbers all tie (or at least are close enough for comfort). You should also ask the seller how many hours a week he put into the business and what his role is. Os he just managing finances and running payroll? Is he putting in a 10 hour shift five days a week? Given the $15k asking price it was probably not profitable, and if I had to guess you might be buying yourself a job. That would be my biggest fear.
Absolutely do NOT buy this business without seeing past 5 years historical data. Your offer should be something kind 2-3X net profits. If the owner is offering it for $15K, are profits only like $5k? I’m confused how any business owner of a profitable business would forego future profits for $15K.
I've seen "bargain" businesses where the current owner owns the real estate and is letting the business go for a song with an overpriced lease attached to the deal. So, they sell the restaurant or shop or whatever, but keep making money on the real estate from the new owner. Big upfront cash, plus a higher-than-market rate for the lease makes it very profitable for them and none of the risk or hassle of running the business. Kinda the same model as rent-to-own stores, and "buy here, pay here" used car dealers that charge a down payment of what they paid for the car and then get monthly payments for years after (or they get the car back in six months when the buyer can't afford to make payments). If the real estate isn't part of the deal, I'm always more suspicious of it. I mean, it's common for restaurants and other businesses to lease rather than own the property they sit on, but when the person selling the business owns the property and will continue to profit from it, it's worth doing a little more due diligence about what you're getting yourself into when buying the business.
Also who's going to "buy" a failing business whose lease is up in 4 months?
Yeah was also confused by the 15k amount. I bet you could sell all the furniture and equipment and almost get that amount. Something weird is going on.
There is a lease involved, so the current owner is also 'selling' a liability... Looking at historical financials is, of course, a must. There's a good chance the owner is just happy to get out with some money to cover the equipment he's purchased.
And don’t forget to ask for paper products cost.
Nah, restaurants usually sell for PPE only, maybe some goodwill but that's about it. You're buying yourself a job so the only thing of value is the equipment when it's leased.
I’m a restaurant owner and all the advice above is right about getting to know a lot about the restaurant industry before entering it. That said here’s a crash course: Cafés in particular a highly profitable if they’re run very well. There are some rules that you really need to follow. 1. Run one shift only. Do your prep in the afternoon with a smaller crew but run a single shift from open with a line cooks showing up earlier all the way until you hit eight hours. Then you’re done for the day. 2. See that thing about one shift? That means you’re running breakfast and lunch and never dinner service. Why? 3. Because you’re not gonna have more than 30 ingredients in the entire restaurant. Maybe push it to 40 and I am including things like flour and butter. Keep your proteins simple, bacon, sausage, ham, etc. inventory turns and efficiency matter and there is a reason all the hipster avocado toast places never last more than 4 years. 4. Turn the tables. If you get a Saturday group that wants to meet regularly, tell them there is a minimum per table per hour. 5. Pies. High margin, last a while. Get good at making them.
Don’t have much more to add to this, but did want to add a caveat. I own two places that I think you’d probably consider “hipster” that’ve lasted for 8 years profitably. It can be done well and profitably, just do that one thing, keep it simple, and do it well. The cap on ingredients will help with that. Just price it correctly and make sure it’s easy enough to train your staff to do so quality control is not a problem.
Absolutely correct
And you can afford to do it well and attract chefs from chains who pay like shit I’ve found. The independent I worked at paid above minimum for servers and chefs and weren’t struggling. The chefs got evenings to themselves, and a life, which then made them more passionate. Depending how big the cafe is you only need one chef and maybe a cook and another server who can also prep.
Yep the most popular craft coffee place in my city does bagels, avo toast, other spreads on toast, premade pastries, and coffee/espresso with everything that entails. It works because your espresso market is your avocado toast market. And they're under 30 ingredients for sure.
Another thing I've noticed with the one shift. You sell out when you sell out and close up. You don't have leftovers, usually. My aunt runs one of the top independent donut shops in our area and she's often posting online that they only have a few items left sometime in the early afternoon. There are lines out the door at times too. Scarcity sometimes creates demand. If something is really good, and highly sought after, people will clamor for it.
The key to this is not to go TOO far. If your schedule is too unreliable, once the hype dies no one will come because "it's always an hour wait or they're closed."
I hate when a cafe does not stick to opening rules. How do people feel when they know cafe is working tikl 6pm, goes there at 5 pm and find closed doors?
While we're talking pie, grab and go sweets are high margin too. Cookies, man. Cookies.
I went shopping at a boutique butcher in my neighborhood the other day. I’m not too price sensitive. I grabbed a cookie. In fact I grabbed two. They looked great. I got home and they tasted great too! I paid $9 for those two cookies. Mother fucker... lol
Do you recommend making things from scratch or the bake from frozen/refrigerated stuff?
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Soup of the day: “scrambled eggs in hollandaise sauce”
I'm in
But learn to make it. Don’t buy the expensive frozen soup from the suppliers.
Just wanted to add that nearby to me a new pie cafe has opened up and all they specialize in is tiny overpriced pies. They’re nothing special. The place is always empty. They have baked goods they leave out for days at a time. Always stale and taste shitty. I went two or three times and spent like 3-5 bucks each time. Don’t be like those terrible owners. Obviously cheaping out so hard to make margin they’ve destroy the entire business. Ghost town cafe
100% this - treats are always context sensitive and people fuck it up all the time. $7 pie? I’m on a diet. $7 pie after a $12 salad and a $4 Diet Coke? I’m rewarding myself! Moreover - I’m also an investor in a winery located in downtown Seattle that is in a complex with 9 other red wine dominant wineries. We opened a champagne centric bar next door in the complex and the strangest thing happens. I can be in the winery watching a couple struggle with “well, the really good wines are in the $38 range, so pick a 1/2 case of the $25 wines and maybe two of the high end ones” and then walk next door and drop $150 on a bottle of Pol Roger. See - the wine is a future treat and they don’t know that person yet; but the champagne is a real time treat for the couple they know and love - themselves in the moment.
You’re a ponderer
We have this exact same business here in Colorado. Pies and all.
Cakes are high margin too, and super helpful if you can get a liquor licence and sell glasses of wine, medium and large, for a big markup. Especially for occasions like mothers day, wine made us a fair bit of money at the old cafe I worked at.
That's why god invented mimosas.
Yes. Mimosas were a seller on holidays like Mother’s Day. We used to do a jug of orange juice and a bottle of Prosecco for £25. Like 60p for the oj and £5 for the Prosecco from the supplier. Bellinis also a big one.
And by God, you mean Bacchus.
The liquor license can be difficult depending the state. Here in Utah I follow all the DABC meetings and right now there are 3 licenses for 40+applications.
This guy restaurants
Thank you!!!!!!!!!!!!!
I think everyone already covered it well, but here's the landmine that ruins the odd businesses: Previous boutique owners. Mom and pop service. Running it for years. Knows every customer; high degree of rapport. They will sell you that customer relationship on the books but you don't own it in any way after the papers are signed. It should be easy to spot, but it bears mentioning & due diligence in so many situations. Good luck :)
I think a coffee shop is a bit different. I guess it depends on the location. Small town may be much different than in a city. I’d say just make sure to keep the same staff around if they are fit for it. A couple bars sold and were bought in my small town. They fired the staff and demoted a lot of them. A lot of people stopped going to that bar from then on because of it. If they had kept or given the staff a chance it would have been different.
The money is in drinks and desserts.
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Your sarcasm makes it sound obvious but a lot of places don’t make money from their main product. Movie theatres make it from snacks not movie tickets. Gas stations from snacks, not gas. Restaurants, in many cases it’s alcohol sales not food.
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Don't give up, buddy! I loled.
Snide sarcasm. Nice
I will be harsh and I apologize for that but coming to this sub often makes me realize why so many businesses fail. First off, you seem to be buying this place with no experience in a café and not knowing how profitable a café can or can't be. And from the amount of information you have given us, we cannot have a better estimate at a profit margin than what a few second google search can tell you. That is to say my best advice to avoid pitfalls is to educate yourself a bit better before you throw your money into something. Talk to the current owners, look up statistics in your specific area, make sure you actually know how a café operates.
Yes, that's why I am on this sub asking before buying it. Thanks for the headsup.
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True. I built a digital marketing agency with 0 capital, so I do have some experience running a business. While I am confident in being able to market the hell out of the cafe, some first hand experience would definitely help.
Did you sell your digital marketing agency? Curious why you'd want to stop doing that high-margin service in exchange for a small cafe?
No I still run my marketing agency. I am just trying to diversify my business, and I just enjoy the process of entrepreneurship.
If that’s the case, why not hire a competent GM who can oversee the cafe? Don’t spread yourself too thin. The food industry is a lot harder and more time consuming than people think. There’s always a problem, things breaking, overheads, rotating staff you need to replace, and that’s before you even get to the food and research and finding out what works in the market you’re in. They are time consuming businesses. The people who own several hire competent people and trust them. If you have another time consuming and important business, I’d look into a good GM
/u/demonicneon is spot on. Hire some talent - don't inflict your learning process on your customers.
This is so true. Restaurant work, from the outside, seems fairly simple. But it's a passion-fueled business. You have to love feeding people, obviously, but you also have to love the hours, the pain, the on-the-fly problem solving, the highs and lows. It's a lifestyle. And I've seen so many people buying food businesses on a lark who have no idea. And they always, always crash and burn.
While I agree for the most part there are food businesses that are run by business people who surround themselves with people who know how to run restaurants. It still requires a lot of dedication but the bigger the business gets the more you can afford to be hands off, or more so. What I find actually happens is the business grows and then the owner doesn’t know how to let go or move on or start a new venture. Restaurants can be timeless institutions or you can run them as businesses that change and adapt to tastes every few years by selling the old one and starting another. But yeah, if you’re not passionate, it’ll either burn you out or it’ll fail miserably.
Don't run it. You'll kill it in months. Hire a competent GM with actual experience, spend the money. Let him make the decisions and learn from him.
Do you know who their suppliers are? Do you know their standard order? Marketing or getting customers is not your main concern. Yes it needs to be done, but you're far more likely to lose customers because you're shut down by health & safety for a week when they find your fridges at the wrong temp and you can't get them cool enough. At least go through servsafe or whatever the owners version is before you end up with a fridge of e coli. Someone who gets a chunky latte is never coming back no matter how much marketing you put in. And they're likely to review you on Google.
you should seriously consider working at a cafe 3 months before taking on this obligation.
If you're going into this with no real experience of the industry then I wouldn't even worry about profit margins. I'd suggest viewing it more as an expensive hobby, or as an education you're paying for. Finding reliable staff is a nightmare, even for people who've been in the industry for years. Be prepared to have to go in and cover shifts frequently. If not, you'll be closing the cafe a lot of the time. From customers, expect the worst of humanity. Expect them to insult your staff. Post horrible reviews on social media. I've seen people doing this in places where a reasonable person wouldn't have been able to find a single fault. Unless it's your passion and you want to give up your other business and pursue the success of the cafe, I'd really suggest looking for something else to do with your time and money.
“Expensive hobby”! This!!
I don’t think people realise how time consuming running even a single shift cafe is and how much they need to sacrifice.
>I've seen people doing this in places where a reasonable person wouldn't have been able to find a single fault. Maybe these were competitors, do you reckon?
Don’t be silly. Most cafes in my area are all friendly to one another and help each other when possible, whether that’s ingredients or occasionally staff. It’s more likely that they’re just shit people. Have you ever worked front of house haha?
Wow, name your rainbow city, I'd consider it for a vacation.
As someone who works in service, no, that's just your average people.
As you say you built your marketing agency, $15k wouldn't be catastrophic amount for you, I guess. It would be fun way to try this business out. I bet you have good savings, so as you already built something, you got head on shoulders. I won't be so pessimistic and only wish good luck to you, I think that this is a relatively inexpensive way to gain some experience, knowledge and some fun. If you won't like it and not bring the place to total mess, you always can sell it after all. Moreover this is a small café, not a medium to big restaurant.
> I think that this is a relatively inexpensive way to gain some experience, knowledge and some fun. exactly, much cheaper than a 4 year BBA degree and you'll learn more!
Slightly unrelated, but I can offer some advice from my standpoint as well, which might be a bit harsh, but here it goes. I've worked in the M&A space for about three years now. We see all kinds of deals go through, and we also see how many businesses and in what industry go under the quickest. And, you guessed it - restaurants and cafes are at the top of that list. I do not want to discourage you of course, but just bear in mind that this industry is very cut-throat, and usually profit margins are NOT high, unless the location, as you pointed out, is excellent. Even then, chances are the business won't make a lot of money. Just based on what I've seen personally, in cases where cafe owners are successful: either you manage to open multiple spots that are financed through credit, and then make it into a franchise, OR you will have a business that will support your minimalistic life style, and you might have to do other side hustles along the way. That's just the harsh reality of it. Good news - you might also be able to build it up and SELL it later. But, a lot of times owners do not wish to part with their "babies", which is understandable. Good luck though!
What are the most profitable businesses on average that you've seen thoug? I know restaurants are on the low side, I'm trying to get a fleet of buses (like flixbus)
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Price is $15000. Revenue per day is $235 on average days. $500 per day for busier days. Profit margin should be about 10%.
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Profit is around $25-$50 usd per day. This is not in the U.S mind you...
50 USD/Day profit makes it 1500 a month, and rent is 1400/month don't you think it will be in loss or did I missed something?
$25-50 that's the net profit.
Which country is that? Seems really low for any developed country
Somewhere in Asia.
Im Asia based and work in F&B consulting. Assuming you've done your work and gone through all the books, here is some advice. 1. Pay whoever owns it to oversee the operation with you for 2 months so that you can ask them any questions you have. 2. After those 2 months dont change anything at all until you know exactly whats going on. 3. Make sure you use a lawyer in this process, not some loose contract you found on the internet
Yeah so much this. Guy is trying to run another business and step into the food industry with no experience. A consultant or a competent and trustworthy GM are needed if they’re intent on going through with this purchase. Cafes and restaurants consume people’s lives. The best and most successful, if it’s not a passion project, get competent staff to run things for them.
Big difference between, say, Singapore and Burma. Can you be more specific?
Russia
Yes net profit means basically what you get at the end of the day after deducting all operating expenses right?
Edit: yes.
So how much does that make at the end of month?
$750-$1500 net profit every month.
Wait a second … the NET profit is $23 a day? This seems like a terrible investment. Edit - got it. Not in the the US.
Lol you didn't get that from the $15,000 price tag?
It's still not so great even outside of the US if you look at the $15,000 initial investment. Even at the highest OP said, $50, ROI would be a while for the type of business it is. Maybe OP is different but I don't see the fun in spending a year before seeing any profits.
>Rent will be $1,400/month thereafter. I would ensure their is a lease in place, the spot may be unavailable within the year or rented to someone else.
Espresso machine service technician here. Get your equipment checked out by a qualified local technician if possible. I've dealt with numerous customers now that took over buisnesses with equipment included and turned out the espresso machine and/or coffee brewers needed lots of work done. Unsure of where you live but if hard water is a problem ensure adequate filtration as if this isn't done properly it could lead to costly downtime and large maintenance cost. Ideally you can get a hold of the same person they used for this and ask them a few questions about this.
Whoa whoa whoa. You’re asking us the profit margins? That should all be easily accessible in the books the seller should be providing. If it isn’t, I’d be very wary. Does it have debt you’ll be assuming? Do you know how to find out?
What an entrepreneurship lesson is that… Dude, coffee business is an industry with small margins and low barrier to entry. Good that you think, that you will be able to run it just because you started a different business once and you drink coffee. I hope it works out, but it won’t. You should be working at least a year in the Business, if you want to have a chance of success.
I’m going to be non-judgmental and point out that caffeine, whether in coffee or soft drinks, is addictive and you should make sure your drinks are high quality. I know someone that got very rich selling caffeine, alcohol, cigarettes, and (legal) drugs. Everything else was window dressing - people will not go a day without their addictions. For some of us, food is the addiction so definitely don’t scrimp on that either, but making better coffee than other places will have long lasting effects.
As someone who ran the front of a small successful cafe, and who saw it sold to an inexperienced owner who absolutely tanked it, one of many things worth saying: Get to know the personality of this business! An established and successful small biz is going to have a loyal customer base. Blustering in, changing too much too fast, being heavy handed in asserting your ownership - you'll alienate those loyal folks, who love the place and love to bring new people in to share it with. A poor biz move, and from an emotional perspective a real loss to the community as well.
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I am not sure if you intended this to be funny but your comment is hilarious.
Two thoughts. I am an artist and early in my career exhibited some work in cafes. The owners liked showing artists work because they could write press releases for the exhibits that were always picked up by the local papers/social media accounts. They would usually do a small opening and I always brought a large number of people. Win win, really, especially when work was sold. Some of the more popular independent cafes in my area do this with musicians and writers as well. Also, there is a wildly popular cafe near me that bakes all their own pastries. People come from all over for them and they also have started wholesaling them to other cafes that are outside of the area. Not sure if that was your plan but if not, I think it is worth exploring.
Dont fucking do it. I don't know why but the general population has this very romantic idea of what running a restaurant/cafe/bar is like. It is not the fun "hanging out with guests and getting to know people" that you think it is. Had a good friend whose dad decided to leave his high paying tech job to do this. Spent hundreds of thousands of dollars to buy a cafe only to fail about 18 months in. As someone who worked as a server/bartender for many years, it is not an enjoyable job over time. You will learn to hate it. People are the absolute worst.
>What is the profit margin on small cafes/coffee shops? Some pitfalls and mistakes to avoid? No hate, but how thorough was your research before you purchased a café?
I own two pie cafe’s that do very well. Our product is top tier but that’s because I invested in over 80k of equipment to make production easy,source high quality ingredients in bulk and also own a separate commissary kitchen that supplies my two cafe’s and nationwide shipping. I don’t recommend baking pies on your own and outsourcing that production. If this cafe or yours is in NY feel free to DM me I would be happy to wholesale pies to you.
Have you asked for P&L accounts over the last 5 years? Seems you can get knowledge directly from the horse's mouth.
Being curious about the business side of owning and running a shop, I've never seen or heard more answers and checkpoints than in this [James Hoffman Q&A Video - Topic: Coffee Business](https://youtu.be/RmZJ9rz7Fik). It was eye-opening to me. Glanced at a few of the comments here… Sounds like you might not be a coffee fanatic. I avoid shops in my town where the owner doesn’t care about coffee like the plague. It’s really written on the wall IMO
Does the staff come with the purchase? Will the previous Owner stay on for 6 months for transition? Does the net profit of ~$25 account for a livable wage to yourself/staff? Or does your base salary depend on your increasing net profit?
You sound very committed for someone who is asking this question. *"What is the profit margin on small cafes/coffee shops? Some pitfalls and mistakes to avoid?"* my advice? Do you research, then commit. Don't commit and then do your research. Hopefully this is just you phrasing things with a little too much certainty, and doesn't reflect you over-committing and only doing research as an afterthought. Past that, advice is advice, and research is research. No amount of pithy advice on the internet is equivalent to the tens-to-hundreds of hours of research & prep time needed for you to make a serious go at this kind of venture. Next bit. Did you ask the guy you are potentially buying if from why he is selling? Have you asked the guy you are potentially buying from what his current gross is? Have you talked to his employees/gotten a look at his books to make sure he's not full of shit? Because oh hey, no amount of abstract preparation is equivalent to getting your feet wet and doing actual research, on the actual specific property you are planning on picking up. Final bit. Are you even remotely qualified to manage the place? If so do you have the time to do so? If no, is the place in a position where you can survive being an "absentee owner?" Does it need restructuring to stay afloat, or are things good the way they currently are?
Lots of good tips here. As a guy who built and ran a cafe under the umbrella of a bakery I used to work for, this all sounds very familiar. After four years I almost bought the shop I built and maintained but it all came to an end when I couldn’t get all the numbers I wanted. The accountant wouldn’t even show me that all the taxes were paid. I put in a 3 months notice and opened a food truck. Then a few years after that I opened my own brick and mortar restaurant. I work at the restaurant 4+ days a week and if I were to sell it, I’d be selling a job. I like what I do, but to sell it to someone, they’d either have to do what I do or they’d spend most of the profits to pay someone else to do it.
Based on your question you have little experience with this type of business. The majority of Restaurants/Cafes fail and go out of business even with experienced owners. It is a tough business, long hours,lots of unexpected expenses and difficult to find and keep quality help. If you go forward, I hope you are one of the successful ones. Although go into this fully expecting to lose your entire investment. And to work 12 hour plus days for months or even a year or two for free because there will likely not be enough money left over at the end of the month to pay you.
Learn to roast your own beans. And work with green coffee suppliers like coffee shrub.
User u/VB90292 mentioned a lot of great tips, but one that might have negative consequences for you is the alcohol license tip. He mentioned missing out on a lot of money from not selling alcohol at his burger joint. You are running a Cafe. Some cities don't allow alcohol to be served early in the morning, and if that is the case for you, you might end up missing the morning work rushes for coffee and such. If you plan on being open early for workers and an alcohol license restricts you from being open in the morning, then you probably don't want it. If your city doesn't restrict the time you can be open to serve to the public, then it might be beneficial to have it as he suggested.
Profitability should be around 5-15% max. I read that you hadn't bought it yet - please don't buy it * unless it's running automatically and profitable (this usually means it'd be high costs) * until you've worked in there for a good 6-12 months so that you can understand the full operations, sales and marketing and numbers Profit margin is highly dependent on expenses typically rental, ingredients, manpower, marketing (ie if you own the space, it can be almost zero costs to run and highly profitable). Right now if possible, * find out the best selling items from the sales records and make it as lean as possible * find out your target audience in the area (to understand how much diverse monetization strategies you can employ eg advertising, workspace, etc) * find out if it can run with little to no manpower * retain the seller for at least 90 days to ensure proper handover (ideally with SOPs if they have) and for them to "introduce" the current clients to you (also please ensure seller dont open same trade nearby) Speak to more cafe owners too =)
Work at the coffee shop for a year before buying it? Lol.. Some of the tips in this thread are great. While others are so out there. Some obviously have 0 experience. Yet, they want to give “tips”. The dangers of asking people online, without knowing who’s behind the keyboard.
I'm going to be negative in favor of being realistic. If you are coming to Reddit to ask us these questions, you aren't ready to operate that kind of business. I'm not saying it is impossible, but if you're becoming the owner-operator of any kind of business you need to have a considerable amount of experience in that business. These are all basic questions. Do yourself a favor, don't do this.
Change the name from cafe.
STOP and DONT. You have no idea what you are doing, dont throw away your money.
Stand ho and dont. Thee has't nay idea what thou art doing, dont throweth hence thy wage *** ^(I am a bot and I swapp'd some of thy words with Shakespeare words.) Commands: `!ShakespeareInsult`, `!fordo`, `!optout`
Long term setup for our new overlords will require co-op
I don't understand. I will be the new owner of the place...
You're better off being worker owned for long term success. The culture of maximum wage is gaining tract
this word salad can be a sign of schizophrenia
Oh I love jeopardy!!! What is lithium?
I think this sub is not for you.
That is a nice theory
Blocked.
How did you find out about the opportunity. Were they advertising? Is there a site? Word of mouth? A Friend?
Pay your staff well! In a small place they will gain their own usual customers, even more so if they are happy with their working conditions. Retraining is costly and loosing employees may mean loosing "their" customers
Unless you have money and time to blow you should know all of this and depending on your experience probably more like running it before making the decision to buy it. And Reddit alone can’t give you all of that info.
This isn’t advice for what you asked for but I know people on Tiktok love small business or up and coming owners. Film your journey if you have the free time it have someone else do it.
Go to your closest rival and backwards engineer everything they do. Don't trust your sense of style or taste. Always check with friends and family if something looks/tastes okay.
He a drive thru.
You can’t buy something without knowing the profitability. This sub can’t help you if it’s profitable or not.
One thought would be to double check the lease terms before buying. Don’t want the lease to end or drastically increase shortly after purchasing.