top choices of coffee shop business
Post on 07-Aug-2015
10 Views
Preview:
TRANSCRIPT
Top Choices Of Coffee Shop Business
There are a few things to know when considering getting into the
coffee shop business. You can enter this business by one of three
ways- start your own coffee shop from scratch, buy an existing
independent business, or purchase a franchise. Each type of
business has its pros and cons. For instance startups have more
risk associated with them than buying an existing business or
franchise. In my opinion, buying an existing business, either
independent or franchise, is the easiest route and the more
popular way to get into the business. If you plan on buying an
existing coffee shop you will need to do your research. Check out
the location, the atmosphere, the menu and the financials.
Location
It's not a bad idea to visit the coffee shop business you are
interested in. You can act like a private investigator, after all
nobody knows who you are. This will allow you to watch the
business and its employees in action. It will also give you a real
feel for the amount of traffic going in and out of the shop. The
most successful coffee establishments are easily accessible to
foot traffic. Great locations produce greater revenues but come
with a price. High traffic equals high rent. High rents can eat up
profits. Monthly rent should not be more than 10-15% of gross
sales. Look at the current lease agreement. See if it's possible to
renegotiate the lease if the rent is too high. If the coffee shop is
not accessible to foot traffic then more advertising dollars will
need to be set aside in order to attract more customers.
Atmosphere
Check to see if the establishment has a pleasant atmosphere.
What is the decor like? Redecorating can be expensive. Are the
employees friendly? Customers will be more apt to spend time in
an inviting and comfortable environment. Will you keep the
current employees? These are important factors to consider
when negotiating the purchase price.
Menu
During your visit to the coffee shop for sale check out the menu.
Sample different types of coffee and ask questions. Some coffee
businesses sell food items and some do not. Adding food to the
menu can boost profits. Cost of goods sold should be around 28-
32% of annual sales.
Financials
Once you have investigated the location, atmosphere and menu
you will need to look at the financials. Pre-tax profits should be
around 16-20 percent of annual sales.
If the shop is adhering to industry standards and everything else
seems to be in order concerning the location, atmosphere, menu
and financials then all that's left to do is close the deal.
top related