Ultimate guide to running a cafe
Running a successful cafe doesn't have to be difficult, but with so many things seemingly stacked against you from the start – busy and bustling work days, long hours, and steep competition from other coffee shops, to name a few – it can seem almost impossible to get a new cafe business up and running.
Similarly, improving the fortunes of an existing business may appear just as daunting. But luckily, that doesn't have to be the case.
Having a successful cafe or coffee shop is achievable – the key is in thorough and clever planning.
Our ultimate guide to running a cafe will take you through the process of planning to start a new cafe - and the steps needed to actually open it.
If you’re already a cafe owner and are looking to give your business a boost, you can skip to chapter three and onwards, which will help you to tweak your cafe business strategy, and offer advice as to how to increase success.
How to start a cafe business
If you’re thinking of starting your own coffee shop, there are a number of considerations that need to be made beforehand.
As well as the business plan and funding options that virtually any business will need to consider, starting a cafe has a number of its own unique challenges that you will need to overcome.
The bad news is that there is not just one generic path to follow when starting a cafe, but rather, a number of steps that you will need to take time to work through. The good news is that thorough planning in the early stages of starting up will help to cement your coffee shop’s success in the future.
The ‘coffee shop market’ has been growing eight times faster in the UK than the overall British economy.
The number of smaller, independent cafes has risen dramatically in the past five years, as the British public becomes ever more conscientious about economical sustainability and the importance of supporting local businesses.
Although the cafe culture has been booming in Britain in recent years, it’s important to remember that this does not automatically guarantee success in starting a coffee shop.
How well do you know the cafe industry?
With any business start-up, it’s helpful to have some background knowledge of the industry’s workings before getting involved with cafes and coffee shops, this knowledge can be particularly essential for long term success.
Cafes typically fall into their own category, in a cross-section between catering and hospitality - and this so-called ‘coffee shop market’ has been growing eight times faster in the UK than the overall British economy.
In 2014, there were over 18,800 coffee-selling outlets in the UK, which sold over 2 billion coffees to the caffeine-craving British public. As these figures suggest, the cafe culture is alive, well, and rapidly growing in the UK.
While the market is dominated overall by the big brands – with Costa Coffee, Starbucks and Caffe Nero holding a combined 54% share of the branded marketI – this is not necessarily bad news for the specialists and independent coffee shops out there.
Have you considererd different Cafe concepts?
With the increasing popularity of both take-away and sit-in cafes, there has naturally been a subsequent increase in the number starting up, resulting in a relatively crowded market place. With the iron grip of the big chain cafes holding the market tightly, plus an ever-growing influx of independents and specialist shops filling in the niches – where can a new cafe start-up expect to fit in?
The key is in its concept.
With competition steeper than ever for Britain’s cafes, standing out is integral to success. Modern coffee shops need to be something more than just a place to get a hot drink in order to entice customers through their doors – and there are a number of ways that you can add something unique to your cafe:
- Specialise – whether that’s in a certain type of drink, such as this espresso bar, or an expert knowledge of the characteristics of different types of coffee bean, like this coffee shop, giving your cafe a specialism will give consumers a reason to choose it over others.
- Theme – choosing a theme for your cafe adds a novelty factor that can capture a customer’s curiosity. Anything from a dedicated cat emporium to an African-American soul music inspired cafe can be successful – as long as your theme is unique.
- Products – your cafe’s concept could be based around the products that you serve, for example, vintage cupcakes or even vegan friendly foods.
- Décor and atmosphere – a strong sense of style can sometimes be enough to pull in the punters – provided it is well-executed. Take this Egyptian-style cafe and this 50’s style diner as two good examples.
At this stage, you will also need to consider the logistics of actually running your cafe, for example:
- Will your cafe serve food or be primarily beverage-led?
- Will you offer table service, or will customers order at the counter?
- Will your service be takeaway style, table service, or both? These are all important elements to bear in mind throughout the whole start-up process, as they will influence your cafe’s overall proposition.
Have you worked out who your customers are going to be?
Before opening, it’s usually good practice to have an idea of who your core customers are likely to be, so that you can tailor your business proposition to their tastes.
For cafes and coffee shops, this can be a particularly difficult task, as they are not generally limited to one demographic. For instance, a single cafe could easily be frequented by business men on their lunch breaks, young mothers catching up with friends, as well as elderly people taking a break from shopping.
Before opening, it’s a good idea to work out who your core customers are likely to be.
Because of this, it’s easy to see how cafe owners may find it difficult to know who to consider their core customer.
For many cafes, determining who your target audience is will require looking beyond traditional traits such as age and gender, and instead considering customer characteristics such as:
- Intention – a worker on their lunchbreak will want to grab a coffee and go, whereas someone meeting friends is likely to want to sit and stay a while. Your cafe can cater to both of these customer intentions, or choose one over the other.
- Preferences – if your cafe has a strong theme or concept, then this will likely define your core customers based on their preferences towards that theme. For instance, a dog-friendly cafe will be looking to attract dog lovers almost exclusively.
- Lifestyle – the type of lifestyle that consumers lead can be a good indicator of the type of cafe they may be attracted to.
Location can be a good indicator of lifestyle, for example:
- Rural areas could indicate active, outdoor lifestyles
- An artsy district of a city centre may suggest a young, possible student population
- An up-market residential village could mean consumers are likely to be retired, or middle aged with children.
Where is your cafe going to be based?
Your cafe’s location may be one of the most important factors in determining its success in the future. While no one can tell you how to choose the ‘right’ location – as what’s right for your business will depend entirely on your unique proposition – there are some tips you can follow to make sure you don’t choose the ‘wrong’ location.
It’s important to remember that virtually everything about your cafe will be influenced by its immediate surroundings, including the amount of customers you get, as well as your theme or other unique selling points (USPs).
There are a number of different elements to consider when it comes to location, such as:
- Building – the actual building that your cafe is located in is important. Its size will dictate the volume of customers and number of covers that your cafe can handle, and its shape will influence the layout, flow and functionality of your day-to-day operations.
- Immediate location – the location of your business building will have an impact on the number of people that see your business, and the volume of customers that you receive. For example, in a town centre, are you located on the main high street, or down a quiet side street?
- Area – it’s important to consider the wider area that you’ll be based in too, and how this could affect custom. For instance, think of the differences between a busy city centre cafe, and a coffee shop on a village square.
- Competition – this is possibly one of the most important factors, as no matter how excellent your cafe’s proposition is, you may struggle to do business if the nearest 50 businesses are also coffee shops.
Trying to find a balance between the number of competitors and the number of potential customers can be tricky, especially when you bring space and size requirements - as well as your USPs and affordability - into the equation.
Chances are, you won’t be able to find a location that is 100% perfect for all of these factors, and as such you may find you have to make small compromises here and there. The important thing is that you thoroughly consider how your location will affect your business, and bear that knowledge in mind when choosing a premises.
Have you got a robust cafe business plan?
The prospect of writing a business plan for your cafe can seem daunting, and while this plan is an essential factor in your coffee shop’s success, it doesn’t have to be difficult.
A business plan is your chance to not only showcase your proposition, but show your enthusiasm and dedication to your venture.
Remember to include the following key topics in your cafe business plan:
- Introduction – a general overview of your business proposition.
- Objectives – targets that your business will aim to hit, and how you plan to measure them.
- Mission – your cafe’s purpose, and what you hope to achieve in opening it.
- Finance – this should be detailed, and include everything from initial investment to the cost of decorating, buying equipment and hiring staff.
- Location and premises – where your coffee shop will be located, and the implications of this location.
- Products – a description of the food and/or drink products you intend to sell.
- Industry and competition – your research of the market place and how your cafe will fit into it. Remember to relate this back to your objectives.
- Target market – a description of your core customers, why you are targeting them and how you intend on appealing to them.
What's the cost of starting a cafe?
It’s no secret that starting your own business will cost money. Calculating the total amount of money needed, and what it will be spent on, is often one of the most intimidating tasks for an entrepreneur to carry out.
Although it’s virtually impossible to predict what the exact start-up costs for a cafe will be – as much will depend on that cafe’s unique circumstances – we can provide you with a checklist of potential costs to take into account.
- Premises – this includes your initial deposit as well as rent.
- Fitting and decorating – you will probably have to furnish and decorate your business premises before you open, and there’s a chance that you may even have to commission some building work, too.
- Other overheads – make sure you don’t forget about other expenses such as energy, water and insurance.
- Tools and equipment – you’ll be relying on a number of tools and specialist equipment in your day to day operations, from coffee machines and fridges, to a till and card machine – all of which you will need to purchase before opening day. Make sure you remember kitchen equipment, too, if you plan on serving food. You may want to consider purchasing second hand equipment in a bid to keep costs down.
- Stock – as well as the products you’ll be selling to customers, this includes all the ingredients you may need to actually make those products.
- Wares – this includes cups, jugs, mugs, plates, bowls, cutlery and just about anything else necessary to actually serve your products to customers.
With all this in hand, it's time to think about opening up.
Opening a cafe
After laying the foundations that are needed to start a cafe, you’ll need to move on to tackling the process of physically opening a cafe and getting the business up and running. While it may have seemed a difficult task to put together a business plan and prepare everything needed to open your coffee shop, now is the time to carry out your plan.
How to open a cafe
The list of things that you’ll have to consider and coordinate in preparation for opening a coffee shop is a long one, but the key to working through it is to give each item due attention – don’t rush through anything. Discussed below are some of the most important aspects of preparing to open a cafe, as well as some tips on what to bear in mind when it comes to dealing with them.
What cafe products and services will you offer?
Before you open, you’ll have to choose which products you’re going to sell. This may seem like an obvious point, but this can be a more in-depth process than you may have anticipated. For example, you will need to decide whether you’re going to serve a primarily drinks-based menu, or have a full food menu and working kitchen, too. Just some of the products that may want to consider are:
Drinks Food Hot drinks - teas, coffees, hot chocolates, etc. Sandwiches, baguettes and paninis Refridgerated drinks - bottled water, juices, etc. Pasties and pies Iced teas and coffees Cakes and biscuits Milkshakes and smoothies Soups and stews Alcohol - spirits, liquors or just bottled beers? Crips nuts and other snacks
You should also consider other food offerings, such as burgers, pizzas and takeway food, as well as breakfast foods such as fry ups and porridge.
As you can see, the potential variety of products on a cafe’s menu spans a wide range. You’ll have to make a number of decisions about what types of product you want your business to sell, as well as consider the implications that selling certain products may bring – for example a licence to sell alcohol. Different products will have differing profit margins, and this is important to bear in mind, too.
You may find it beneficial to keep your menu short and simple to begin with. As some ‘teething problems’ are to be expected in your first couple of weeks of opening, you don’t need to over complicate things for kitchen staff or baristas with a complex menu. It’s always possible to rethink your menu at a later date and add to it if you feel capable of handling more.
What coffee will you go for?
It’s likely that coffee is going to be one of the most integral products on your cafe’s menu, so it’s important that you choose your coffee beans carefully.
Gone are the days when you could offer just black or white coffee, and maybe a 'frothy coffee' if you were feeling especially continental. Learning about the different varieties of beancan help you to make an informed decision – check out this guide for a good introduction.
What cafe menu ideas should you consider?
Once you have decided what types of food and drink your cafe will be selling, you can start thinking about designing and creating your menu. Remember, your cafe menu does not necessarily need to be a small booklet that customers leaf through while sat at a table. If you want to open a ‘grab and go’ style coffee shop, then your menu could be displayed entirely on large boards above the counter.
Whatever its format, your menu should be an extension of the idea behind your cafe – if your cafe has a theme, the menu should follow it. The menu is a chance for your business to speak directly to customers and pitch products to them, so it’s important that you put some thought into it. Some of the things that you may want to bear in mind while creating your cafe menu are:
- Colour scheme – the colours and any images you use should be appropriate for your cafe’s concept. They can also be used to draw attention to certain areas of the menu, for example any specials or products that you particularly want to promote.
- Tone – this should also be a reflection of your cafe’s overall character. For example, if your cafe is an up-market bistro, then you might want to keep your tone of voice simple and minimalist. On the other hand, if you’re opening a more casual cafe, you may want to inject a bit of humour into your menu. Layout __ – customers are likely to start reading your menu from the upper left corner – as they would a book – and finish towards the bottom right. Bear this in mind when considering your menu’s layout.
- Photos – You should use photographs of your products sparingly, and only if they have been professionally taken. Bad photographs can easily discourage customers from ordering. Attention to detail – menus with typos, incorrect prices or formatting errors look unprofessional – and the mistakes can even be enough to put a potential customer off.
As well as your main menu, you may also want to have an additional specials menu - or perhaps a seasonal menu. It’s also worth considering whether or not your cafe should have extra menu boards mounted on walls around the shop, or perhaps an A-board outside - and if so, what would be featured on them.
What's on your cafe equipment checklist?
It’s likely that you’re going to require a lot of specialist equipment in order to get your cafe up and running. It’s important to properly budget for the purchase of this equipment, as the cost can add up quickly. The list below details some of the most common pieces of cafe equipment that you may want to consider for your business:
Drink making equipment Food related equipment Other equipment Espresso machine Toaster Cash register Coffee bean grinder Microwave Card machine Filter coffee brewer Panini press POS systme Tea brewer Oven Television Bar fridge Hot plate Sports TV subscription Freezer Dishwasher WIFI router Blender Fridge/freezer Phone/laptop charging points Ice machine Deep fryer
Unfortunately, it’s not really possible to accurately predict how much all this equipment is likely to cost you, as prices can vary significantly. For example, you could easily spend thousands of pounds on a high quality espresso machine, or you may find a second hand one for a fraction of the price.
It is possible to source second hand cafe equipment rather than buying everything brand new, and many cafe owners opt to do this in order to keep costs down in the early stages of start-up.
The above list is in no way exhaustive, and there’s a chance that you may not even need to buy every single piece of equipment listed. Remember that you will also have to budget for other tools and equipment, such as:
- Storage and display units
- Kitchen pans and pots
- Food preparation utensils, such as knives and spatulas
- Serving utensils, cutlery and other tableware
- Wares such as plates and bowls
- Bar items such as stirrers, mixing glasses, bottle pourers and tongs.
Choosing a cafe premises
The chances are that, by this stage, you’ve already chosen a business premises - or you have a strong idea of where you would like it to be. The location of your cafe’s premises is incredibly important, but even after you’ve chosen the perfect place, there is still much to be done.
Layout, décor and atmosphere are all significant factors in making your customers as comfortable as possible, but also in ensuring that day-to-day activities run as smoothly as possible.
Premises size and layout
The size and shape of the premises you have chosen will ultimately influence the way that you lay out your cafe – for example where the entrance is, and where the main counter should go.
You may find it useful to use tools such as FloorPlanner.com to help you visualise how best to place in your cafe, as well as the logistics of queues and walkways. You may have to try a few different layouts before you get one that really works. Things to bear in mind include:
- The location of the door in relation to the main counter – the counter should be close enough to the door to allow customers to easily order coffee to go, but far away enough that a queue at the counter would not restrict access for customers who want to sit in.
- Food service – furniture should not block access to the kitchen or counter, and walkways should be open and easily navigable for waiting staff.
- Wheelchair access – your cafe layout should leave enough space to allow easy access for wheelchair users. You may also need to purchase ramps if your premises has steps, to make it more easily accessible.
Cafe décor and atmosphere
Decorating your cafe appropriately can help to enhance the customer’s experience of your business - and make it about more than just the products you serve. Your cafe should be decorated in accordance with your overall concept or theme – if you have one – and as such, there’s no real way of listing definitive décor dos and don’ts for all cafes. However, there are a few things worth bearing in mind when decorating:
- Colours – think about the experience that you want to give customers in your cafe - and indeed the demographic that you intend on attracting - and choose your cafe’s main colours based on this. For instance, if you’re intending on attracting a lot of young mothers to your cafe, then you may want to consider bright and colourful décor that they will be used to, having young children. Using visual sites such as Pinterest can help to give you inspiration.
- Lighting – consider not only the fixtures, but the actual levels of light in the room. You may want your cafe to be bright and sunny, or you may want to create an ambience with dimmed lighting.
- Sound – the music that you play in your cafe adds to the atmosphere. Think carefully about the style of music that you play, as well as the volume at which you play it.
- Temperature – you should keep your cafe at a comfortable temperature so that customers are neither too hot nor too cold. Keep an eye out for signs that the temperature may be wrong – for example customers wearing coats indoors.
- Cleanliness – making sure that your cafe is always clean – particularly in restrooms – is an important part of ensuring a positive customer experience.
- Furniture and wares – your cafe’s tables, chairs, cutlery and even cups and saucers should all reflect the overall design and décor theme.
If you have the budget, you may want to consider enlisting the help of an interior designer to help you decorate your cafe. They will be able to give you design tips that will facilitate a good customer experience, as well as give you tips on how clever product placement can facilitate upselling.
Cafe regulations and licenses to consider
As well as all the creative considerations that need to be made in preparation for opening your cafe, there are a number of technical and legal aspects to starting a business that you will need to make sure you address. You may need to ensure your cafe complies with certain regulations, and that you have certain licenses in place in order to operate. Some of these licences could include:
- Food business registration – if you plan to cook for or sell food to the public, then you will need to obtain a food licence.
- Alcohol licence – you will only need this if you intend on selling alcohol on your business premises.
- Entertainment licence – this will allow you to play music in your cafe.
- Health and safety – the Food Standards Agency may need to carry out a health and safety inspection on your cafe premises, and give you a food hygiene rating certificate. Check out the Food Standards Agency website for more information.
- Environmental Health Service – you will likely be required to register your business with the Environmental Health Service before opening your doors to the public.
- Insurance – you may be required to have some forms of insurance in place before opening, depending on your business’s circumstances. Read more about coffee shop insurance here.
In order to make sure that your business is compliant with all rules and regulations, you should coordinate with your local council. They will be able to inform you of any regulations you must comply with, and you will also be able to apply for most licences through them. You can find contact details for your local council through this tool.
Check back soon for part three of our guide - running a cafe.