If you’ve watched the Hollywood rom-com Something’s Gotta Give, did you feel inspired to open your own French Patisserie or cafe and channel your inner Meryl Streep?
If so, the reality is that opening and managing a successful cafe is not as romantic as it seems in Hollywood — about 20% of small businesses fail in their first year of operation. Or, you could look at it this way: 80% survive.
Regardless of numbers, if you have a passion for food and entertaining, a keen business mind, and are prepared to make a few sacrifices, then opening a cafe could be right up your alley. If you’re looking for an easy-to-digest guide on how to start a cafe, this blog is your go-to.
10 Must-Know Steps on How to Start a Cafe
Here’s a quick dose of reality — you have a vision of a small, quaint cafe that serves fresh pastries and delicious coffee on a busy street corner. But ”quaint” doesn’t pay your bills.
No matter how cute or trendy your interiors are, this doesn’t guarantee a loyal customer base. Check out www.richardsonseating.com for chairs that will keep them comfortable, though!
A good business plan, a significant upfront investment, long hours, commitment, and strong management skills will bring you business success. But if you have a dream of starting a cafe, this shouldn’t put you off.
Here’s how to get the proverbial ball rolling:
1. Draw up a Solid Business Plan
It doesn’t matter what type of business you plan to build, you’ll always need to start with a detailed and well-thought-out business plan. All good business plans take a look at their business market and carefully analyze it. This includes the standard of the market and its predicted growth for the future.
Think of your business plan as a roadmap to your success. It should also be viewed as a plan that you can confidently pitch to investors and financiers. If you need help writing out a business plan, then hire the help of a professional or a business attorney who can advise on what to include.
But generally, your business plan should cover an executive summary, company description, an overview of products and services, a marketing plan, an operational plan, a management plan, as well as your financial growth plan.
2. Understand Your Legal Requirements
This is one of the first major hurdles you’ll have to overcome when opening a cafe. But once you have researched your legal responsibilities and have that compliance, you can charge ahead with your plans.
When it comes to the foodservice industry, you’ll need to meet a plethora of health and safety requirements. You’ll also have to obtain a few licenses and permits based on state and federal requirements.
The first place to start is to determine the type of business you’re going to be. Do you aim to open a sole proprietorship, a limited liability company (LLC), or do you plan to go into a partnership?
Once you have made that decision, you’ll then need to research the types of business licenses and permits you’ll need, based on where you live. You can consult the Small Business Administration (SBA) for help with this.
You’ll then need to acquire an Employer Identification Number (EIN), for tax purposes and to keep the IRS happy! If you need assistance with all of this, it may be wise to consult your business attorney who can sort all of this legal paperwork for you.
3. Source the Appropriate Funds to Get Things Started
It’s no secret that opening a cafe requires a significant investment. But what if you don’t have all the funds you need? Your business plan should outline the exact amount of funds that are required. Once you’ve faced this reality, you’ll need to be creative in how to source these funds if you don’t already have them.
A few options include:
- Approaching investors
- Applying for a small business loan
- Using your personal savings
- Begin a crowdfunding campaign
- Approach family or friends for a persona loan — but do this with caution!
- Lean on a business partner for financial support until you’re on your feet
If you decide to apply for a small business loan, you can always approach the U.S. Small Business Administration (SBA) who will walk you through the process. Make sure to carefully assess your loan options before deciding on a financial institution for support.
4. Pin Down Your Ideal Location
You may or may not have heard, but location is everything when it comes to the success of your cafe. When choosing the perfect spot, you want to consider foot traffic in the area.
It’s a good idea to choose a location near other popular businesses in your area. Yes, some of them may become your direct competition, but this is the best way to guarantee a regular flow of customers. A location that is a little hidden or off-the-beaten-path can be difficult to market and build up your recognition.
Look at spaces that have previously been used as storefronts, cafes, or restaurants in the past. But don’t overlook why these businesses did not work before you take their space. Consider the pitfalls they could have faced and how you can overcome them.
5. Develop Your Layout and Décor According to Your Brand
Now for the fun stuff. Once you’ve secured a good location, it’s time to begin the development of your cafe brand. Depending on the condition of the space you’re renting, you may need to do some work to transform it to meet your aesthetic.
This means you’ll need to set aside some of your funding for remodeling, decorating, and cafe décor. While a beautifully designed and decorated cafe does not guarantee a loyal customer base, it sure does help.
Remember that you should also focus on the practicality of your cafe, including factors such as good traffic flow of both customers and staff. Think about the design of your cafe kitchen and how it meets your catering needs.
Consider customers on-the-go, too. Sure, you want your cafe to be a comfortable place to relax and enjoy a meal. But it should also cater to your takeaway clientele who just want to grab a coffee and go.
6. Plan Out Your Cafe Menu
What is your cafe without a well-planned and well-balanced menu? In reality, the success of your business relies heavily on your menu and how inclusive it is.
Essentially, food and drink are what bring customers back to your cafe, time and time again. So it’s important to take your time and develop a menu that’s truly memorable, but also suits your budget.
A cafe menu does not need to be pages and pages long, either. Generally, they are somewhat limited to a few key dishes and sides. When you’re just starting out, it’s best to keep your menu simple, at first. You can then concentrate on perfecting those dishes first before you add more.
If you prefer, you can also implement a seasonable menu that changes as ingredients become available. This is a great way to use local produce and save on your food budget, too. Make sure you have a thorough knowledge of all the ingredients you source and where they come from.
It’s important that you translate a personal connection with all of your dishes, no matter how simple they are. This is what will separate you from your competition and it shows your customers that you truly care about what you serve.
7. Source the Equipment You Need for Successful Operation
A good way to save money on cafe equipment is to repurpose existing items from a previous cafe owner. This could be things like existing tables and chairs, seating booths, and kitchen equipment.
If you are left with an empty shell, you’ll need to assign some of your financing for restaurant equipment. Or, you could rent the equipment you need on a monthly basis. This decision will come down to what you can and cannot afford.
When it comes to décor, it’s possible to make allowances on some items so that you can save money. But when it comes to equipment, this is where you don’t want to skimp. Your food and beverage quality could be majorly compromised, which affects your bottom line.
For a cafe, make a good investment in key pieces of equipment such as your coffee machine and other baking equipment. Otherwise, research equipment rental vendors in your area and find the best deal on leased equipment to suit your budget.
8. Build Relationships With Local Suppliers
Another huge factor to consider is the local suppliers, distributors, and vendors you partner with when managing your cafe. This can have a major impact on your budget and bottom line, too.
Remember that your suppliers are essentially the lifeline of your cafe. Without the items that they deliver, you would not be able to create and offer what’s on your menu. Do your research on reliable local suppliers and make sure you develop a good relationship with them.
You also want to find suppliers that offer decent prices to match your food cost budget. It’s worth asking other cafe and restaurant owners in your area who they rely on and recommend for outstanding service and prices.
9. Source and Train Your Team Members
Just as your suppliers are the lifeline of your business, so are your team members. Your cafe needs a solid group of people to help you run and manage it, in order to keep your customers happy.
This includes wait staff, kitchen staff, cleaning staff, and cafe management personnel. All of these people make a difference in the experience your customers have. Make sure you hire kitchen staff with experience in high-quality food creation. The coffee at your cafe should be made by a well-trained and qualified barista.
Your wait staff should also have experience in working with people. They should be even-tempered and be able to work well under pressure. Keep in mind that your employees are the face of your business when you’re not there. So don’t rush into hiring your team members — only hire people who ”feel right” and fit your business vibe.
10. Market Your New Cafe Like There’s No Tomorrow
Finally, you’ll need to market and promote your cafe to build up your brand recognition. You want your first opening week to be received well as this creates the best first impression. It’s never too early to start the promotion of your cafe, either.
The best way to market your business is with local press releases, across all social media platforms, with posters, flyers, business cards, and email marketing. Make sure to set aside some of your budget for marketing.
Don’t overlook how important this is for your business — a marketing budget is 100 percent necessary for success. Ideally, you should allocate at least 20% of your first year’s marketing budget to your grand opening!
Pro Tip: Only Open for Business When You’re Ready
One of the most important tips to remember is this: don’t rush into opening your cafe. Take the time you need to iron out the kinks in your foodservice, menu, team management, etc. Take action if you notice any issues and aim to resolve them before you actually open your doors.
A grand opening that is riddled with flaws can be disastrous for your first impression and the success of your cafe thereafter. Don’t take this risk — make sure you are 100 percent prepared and ready to blow your customers away.
Perfect Your Entrepreneurial Skills With Us
If you have a dream to start a cafe, we hope this blog has given you some insight into what it really takes. It’s no romantic walk in the park, but it could be one of the most rewarding entrepreneurial endeavors with the right amount of preparation.
If you’re interested in growing your entrepreneurial knowledge and skill to make a true success of your cafe, be sure to explore the rest of this site for more!