Setting up a cafe requires a fair amount of starting capital to pay rent, hire employees, buy supplies, set up supplier deals and conduct an initial marketing campaign. The competition in this sector can be ferocious. One advantage over restaurants is that acquiring a liquor license is unnecessary, reducing the overhead and time to profitability. In general, it's wise to start a cafe with a reasonable amount of capital held in reserve to ensure that the business can survive while it acquires new customers.
- Skill level:
Develop a business plan before starting your cafe. While you will be able to predict your initial costs to a reasonable degree of accuracy by finding out how much equipment and labour in your area costs, it will be challenging to determine how much your business will be able to earn. Focus on choosing an excellent location for your cafe. Depending on the area, you may rely on either foot traffic or auto traffic passing by the business.
Determine some methods to distinguish your cafe from competitors in the area. It may be difficult to win new customers away from cafes with an established clientele. Try to improve upon the competition by providing a unique and superior cafe environment, better quality ingredients and more friendly staff
Sign a lease with a commercial landlord at an appropriate location. You may be required to pay for rent multiple months in advance in order to secure the lease. There may be special stipulations that you will need to follow according to the lease. Study the carefully and ensure that you can develop a positive relationship with your landlord.
Conduct an initial promotion campaign for your cafe. An initial discount to secure new customers is an example of an effective promotion. If your cafe space is large enough, you may also use music performances, book or poetry readings and other events as a means to draw more customers to the cafe. Customer-loyalty programs can also encourage people to keep returning to your business.
Tips and warnings
- Try to think of your customers in terms of their lifetime value to the business rather than focusing on short-term profits. Generating the loyalty of a single customer can make for thousands of dollars in profit over the long term because they will most likely bring in their friends and tell others about the cafe.
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