How to start a Café Business?

How to start a Café Business?

 

Either you are kicking off your day or singing off from work, the need for a good beverage never ends. All over the world, people depend on drinks and snacks a lot. If we talk about working people, there 40 to 60% of everyday meals rely on quick solution meals. If you have a love for food or plan to run your own café business, it may be the right decision to go with the café business. There are three ways you can invest money in this business.

 

Investing in An Existing Cafe Business

If you knew someone or connected with a business owner, you can show interest in the partnership. However, this option might sound risky, but it may work out if you come with a good marketing plan.

 

Purchasing a Cafe Franchise

It is another excellent way of getting involved in the food-chain business. But you need to do a detailed search before saying yes to it as it involves legal matters. 

 

Starting from Scratch

Building up anything new from scratch sounds challenging. Indeed you have to put your heart and sleepless nights to gain outstanding results. Whereas, this option has the most perks of generating maximum profit.

 

Thought Process for Pre-production of the Idea

Thinking of stepping into something new and big demands proper research. One should always consider every inch of detail before finalizing anything. The revenue in the café segment amounts is the US $67,633m this year. Moreover, the market is expected to grow annually by 8.7% in the upcoming years. Besides, if we talk about global comparison, most revenue is generated in the United States. 

If we talk about the figure of coffee consumption only, the average coffee drinker has 3 cups per day. So now you can have a rough idea that the café business had great demand indeed. 

 

Key Factors to be Considered

● Target Audience 

● Budget for the investment 

● Location 

● Strength and weakness of your competitors

● Parking space

● Limit for hiring staff members

 

Legal Requirements for a Cafe Business

Every country has its own rules and regulations for every work. In the United States, the license requirement differs from state to state. To get the job done, you need to consult with concerned authorities. Have is a list of necessary licenses that you will need to start the business.

 

  1. Business License - You need to get a business license for your café business you are planning to start. You can check out the pertinent details and application procedure on the official website of the state government. It is the most basic and initial license you need to get before applying for any other.
  2. Food Service License - The second most important legal document is the food service license. It is issued by the country’s or state’s health department. 
  3. Liquor License - If you want to open a bar or add liquor to your menu, you need to get a liquor license from the liquor control board. 
  4. Music License - If you wish to have music in your café to enhance the environment, you need to buy a license. 
  5. Employer Identification Number - It is mandatory to obtain the Identification number for your employees. It is a tax ID and is given by the IRS. It is free of cost, so you don’t need to worry about too it.

For every State, there are separate online sites and departments for the license. Here is the list of sites of few Major states, rest you can check on cityapplication.com, SBA.com, or SBA.gov for further information regarding legal work.  Once you have the license and legal documents in your hands you can go for the logo designing option. You can go for one of the best logo design company, Logozila for the service.

 

ALASKA STATE

Alaska Commerce Department: Licensing

CALIFORNIA STATE

CalGold.

FLORIDA STATE

Florida Department of Business and Professional Regulation.

HAWAI STATE

Hawai’i Professional and Vocational Licensing.

NEW JERSEY STATE

New Jersey Business Portal

NEW YORK STATE

New York State: Business Wizard


Other things included in the legal documentations are sign permit, certificate of occupancy, resale permit, and food handler’s permit. 

 

Budget Scale for Starting a Cafe

The budget scale for your café business will entirely depend on the café’s location, size, equipment, and staff needs. You can check out some rough estimates:

● An average café shop costs between $200,000 and $350, 00 to set up

● Small-sized kiosk might cost between $25,000 and $80,000

● A franchised café might cost up to $700,000

● License total may cost between $8000- $10,000

 

Average Profits in Cafe Business

On average there a café business can make around a 3-5% or 10 -15% profit margin, depending on the size of the cafe and the items included in the menu. This profit margin includes full-service cafes. The number varies wildly depending on the sale, location, menu type, turnover rates, staff members, and more. If you will include a fast-food menu too, then the profit margin could be around 6-9%. You can gradually increase your café business by providing catering service, to increase the sales and profit margin. The average gross profit margin can be 40% and the net profit margin 30%.

 

Average Revenue

Starting from scratch requires patience and hard work. Do not always rely on the number provided on different websites, as it depends on your luck and dedication. How much money you can make from the café business depends on the following factors:

  • Daily sales
  • Average amount per receipt
  • Inventory cost
  • Wastage of food

 

In general café business can generate annual revenue of $140,000 to $160,000.

You can check out more here: https://www.sba.gov/business-guide 

From the café business, you can make an annual profit of $100,000 on average depending on the level and popularity. Your café can make around $8% to $10 % profit from sales at the start. 

 

Funding Organizations

You can apply for loans through the Small Business Association (SBA) loan program that allows partnering leaders, community development organizations, and micro-lending institutes to invest in small businesses. You can also go for crowdfunding sites like Kickstarter, FoodStart for funds. You can also check out SimpleChoiceCaptial.com for funding.

 

Cafe Staff Hiring 

Another most essential requirement to open a café business is to hire the staff. Just like customers are critical to the sale of your product. Likewise, the team represents your brand. Therefore, you have to make sure you hire the best people for each task. Staff requirement depends on the type and condition of your café. Also, do not employ extra people; in the end, you cannot give them their stipend.

Moreover, make sure in which area or state your café will be, hire your staff accordingly. Staff must be fluent in the language. Secondly, for a high post like a manager, make sure they already have some previous experience to help your business run smoothly.

Café’s employees must have to complete a state-approved food handler course; otherwise, it can put you in trouble. 

 

Digital Marketing Channels


Social Media

There are approximately 2.2 billion active people on Facebook. 32% of users regularly engage with brands. Well, not only Facebook, but Instagram also has a huge number of active people. Moreover, social media isn’t just for socializing: it holds a great important role in the professional world. Website is another great way of grabbing audience attention, especially if you are new in the market. You can choose Logozila as they are an affordable website development company.

Use Instagram and Snapchat for visually striking, inspirational posts that will display your personality and attract new followers. Facebook will help you build a strong relationship with your customers via active participation through comments, likes, and sharing of the post with other people. Twitter is where you announce news and join in discussions with the wider coffee community. Café lovers check out a café’s opening hours and monthly specials. During office and college breaks, people often check out new random places to try. 

 

Sponsored Blogs and Banner Ads

Apart from social media, blog posts and sponsored articles play a major role in digital marketing. For good sale rates, customer needs to see your brand more often. For that, you can go for Banner ad. They are suitable for startups as they are low investment channel that increases brand exposure. The ads help potential customers to recognize and remember your brand name. They work alongside your social media projects, blog posts, and sponsored content to make your entire marketing campaign more effective. 

 

Influencer Market

Another great way to promote your café business is through the influencer market. People do follow influencers and act on their choices as well. In the future, brand owners predict that the influencer market will be a highly effective tool for digital marketing. 

 

Conclusion

Everything is hard before it becomes easy. The above information might scare you, but it is not that difficult if you truly aim to open a café business. Just remember to take one step at a time and always look at the bright side. We wish you all the best for the future endeavor, do let us know if you have any queries or suggestions in the comment section below.

 

If you are looking forward to starting a business in the Food industry, like a catering business, stay tuned to Logozila’s Industry section.  

 

Written by

Gary Roberts

Gary Roberts is a digital marketer. He loves to blog about digital marketing, designing, and business growth. A true lover of Coffee with chocolate cakes!

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