Are coffee shops actually viable?
Discussion
Monkeylegend said:
tumble dryer said:
Monkeylegend said:
Selling 40 cups of coffee a day is not a business, its a hobby.
Averaging 40 cups of coffee per day, every day, from a small outlet with low expected footfall is doing VERY well.I'll have around 200 clients that I supply (mostly rent) coffee machinery to and less than 25% of them achieve that figure.
My business is based in the north east and our biggest door to entry is our 'Three Month Trial Package' whereby we'll supply a machine (usually a commercial bean to cup, but also a traditional machine if required) along with sufficient ingredients to produce a mixed variety of 400 drinks for a fixed fee of £150 per month. No contract, just sufficient time for the 'new' entrant to establish viability or otherwise.
If it works for them, then great, we'll look after them and, historically, will probably keep that customer for life.
When and if the time comes that their sales warrant buying their own machine, we're well-placed to know and understand their business and to recommend the best machinery for their needs.
I wish her luck but I see many fail through overestimating their top line (sales).
Footfall is everything.
As an aside, I also supply around 20 golf clubs in my trading area with coffee machinery and 40 cups x 7 days is around the norm for these outlets too.
tumble dryer said:
Monkeylegend said:
tumble dryer said:
Monkeylegend said:
Selling 40 cups of coffee a day is not a business, its a hobby.
Averaging 40 cups of coffee per day, every day, from a small outlet with low expected footfall is doing VERY well.I'll have around 200 clients that I supply (mostly rent) coffee machinery to and less than 25% of them achieve that figure.
My business is based in the north east and our biggest door to entry is our 'Three Month Trial Package' whereby we'll supply a machine (usually a commercial bean to cup, but also a traditional machine if required) along with sufficient ingredients to produce a mixed variety of 400 drinks for a fixed fee of £150 per month. No contract, just sufficient time for the 'new' entrant to establish viability or otherwise.
If it works for them, then great, we'll look after them and, historically, will probably keep that customer for life.
When and if the time comes that their sales warrant buying their own machine, we're well-placed to know and understand their business and to recommend the best machinery for their needs.
I wish her luck but I see many fail through overestimating their top line (sales).
Footfall is everything.
As an aside, I also supply around 20 golf clubs in my trading area with coffee machinery and 40 cups x 7 days is around the norm for these outlets too.
You will not make a living or indeed keep trading a coffee shop in the High Street that sells 40 cups of coffee a day to the general public.
StevieBee said:
I camped out in one (Costa) for a day a few years back doing interviews. In between which and during the usual no-shows, I watched the operation. This was a busy city centre (Canterbury) with two tills operating. Rough average I counted was that each till rang 4 times every minute with an average order value of a fiver. That's takings of £20 every 60 seconds - £14k a day (on the basis they open for 12 hours a day) - £100k a week - £5.2m a year. I suspect it's a lot more than that with margins very high. Plus they are as much a real estate business as they are a coffee shop.
I think a lot of people look at what goes on in a Costa or Starbucks and it seems quite simple and they think "i can do that" but the reality is a little different.
I can assure you a Costa Coffee isn’t taking £5.2 million a year. I think a lot of people look at what goes on in a Costa or Starbucks and it seems quite simple and they think "i can do that" but the reality is a little different.
Mandarin VX said:
Based on purely selling coffee, She estimates selling circa 40 cups a day (Breakfast and lunch service) at an aproximate profit of £2 per cup, maybe 20x cakes at lets say £1.50 profit each. Now by my maths that's an estimate of £110 gross a day before staffing and costs.
Have you not just included costs twice there ? You say the profit is £2 a cup/£1.50 a cake. You have said "profit", i.e. after costs. But then you say still need to account for staffing and costs. So you have included costs twice.
snuffy said:
Mandarin VX said:
Based on purely selling coffee, She estimates selling circa 40 cups a day (Breakfast and lunch service) at an aproximate profit of £2 per cup, maybe 20x cakes at lets say £1.50 profit each. Now by my maths that's an estimate of £110 gross a day before staffing and costs.
Have you not just included costs twice there ? You say the profit is £2 a cup/£1.50 a cake. You have said "profit", i.e. after costs. But then you say still need to account for staffing and costs. So you have included costs twice.From that gross profit I then deduct running costs (fixed costs) to get to net.
I know what I mean anyway!!!
We have several very busy independents in Leeds. Seems very in vogue with the younger generation who eschew alcohol now as not fashionable and also a massive hub for the non-drinking Middle Eastern students who all have a lot of cash to burn and use the coffee shops as their social equivalent of a bar.
Shnozz said:
We have several very busy independents in Leeds. Seems very in vogue with the younger generation who eschew alcohol now as not fashionable and also a massive hub for the non-drinking Middle Eastern students who all have a lot of cash to burn and use the coffee shops as their social equivalent of a bar.
Combine the coffee shop with a hookah smoking place and you could be well in the money.Mandarin VX said:
No - I meant it as £2 per cup profit after per-unit consumables (coffee, milk etc) - these are variable profits.
From that gross profit I then deduct running costs (fixed costs) to get to net.
I know what I mean anyway!!!
You mean you have taken out your variable costs per cup and then are deducting your fixed costs (because for these it does not matter if you sell 1 cup or 100).From that gross profit I then deduct running costs (fixed costs) to get to net.
I know what I mean anyway!!!
I agree with what you are saying then.
A good way of assessing the potential viability of coffee shops in general is to have a good read of the coffee shops for sale in
https://uk.businessesforsale.com/
You can search by type of business and area, and get details of turnover and gross profit, rent etc. A bit of sleuthing will usually tell you the name and address even if that isn't mentioned in the listing, and Streetview will give you an idea of the quality of the location.
It's a subject I looked into in some detail a while back, and I concluded that in most cases some money could be made so it's got as much do with the whether the lifestyle suits as anything else.
https://uk.businessesforsale.com/
You can search by type of business and area, and get details of turnover and gross profit, rent etc. A bit of sleuthing will usually tell you the name and address even if that isn't mentioned in the listing, and Streetview will give you an idea of the quality of the location.
It's a subject I looked into in some detail a while back, and I concluded that in most cases some money could be made so it's got as much do with the whether the lifestyle suits as anything else.
I work alongside the food & beverage (commercial) industry, i design, a lot of coffee shops.
Selling just coffee isn't going to make you rich, to begin with you need to be doing more than 'coffee', sandwiches/salads/cake etc.
A half decent coffee machine can cost around £5k + all the other gear you need, (a basic shopfitted counter, some kitchen appliances etc.) You can quite easily sink £10k (doing it very cheaply), without furniture/fit-out costs etc.
Location is a huge factor, unless you're in a city or a 'trendy' town, you need the footfall & you need to look good & offer a good product or even something different.
I know of a coffee shop that's opened locally (more artisan specialist), than your greasy spoon kind of cafe, they do a few quality artisan dishes/cakes to go with it.
They open 7 days a week & are a bit different to all the other places around.
Some days they can do as much as £500, but then, they will also some days only do £100.
They have 1 member of staff, otherwise man it as owner/operator & didn't have to pay any fit-out costs.
I would say a guess somewhere between both figures would be an average, by the time you've paid rent/costs/wages, it really doesn't look like much point, however, it pays them a wage & it's something they love... so why not?
Selling just coffee isn't going to make you rich, to begin with you need to be doing more than 'coffee', sandwiches/salads/cake etc.
A half decent coffee machine can cost around £5k + all the other gear you need, (a basic shopfitted counter, some kitchen appliances etc.) You can quite easily sink £10k (doing it very cheaply), without furniture/fit-out costs etc.
Location is a huge factor, unless you're in a city or a 'trendy' town, you need the footfall & you need to look good & offer a good product or even something different.
I know of a coffee shop that's opened locally (more artisan specialist), than your greasy spoon kind of cafe, they do a few quality artisan dishes/cakes to go with it.
They open 7 days a week & are a bit different to all the other places around.
Some days they can do as much as £500, but then, they will also some days only do £100.
They have 1 member of staff, otherwise man it as owner/operator & didn't have to pay any fit-out costs.
I would say a guess somewhere between both figures would be an average, by the time you've paid rent/costs/wages, it really doesn't look like much point, however, it pays them a wage & it's something they love... so why not?
tumble dryer said:
Averaging 40 cups of coffee per day, every day, from a small outlet with low expected footfall is doing VERY well.
40 is doing very well? What's doing okay then, 20 cups per day? Many families are making more cups of tea and coffee at home per day!You really should be advising your customers to pack their businesses in, these numbers sound ludicrously low for a coffee shop or tea room.
theguvernor15 said:
I work alongside the food & beverage (commercial) industry, i design, a lot of coffee shops.
Selling just coffee isn't going to make you rich, to begin with you need to be doing more than 'coffee', sandwiches/salads/cake etc.
A half decent coffee machine can cost around £5k + all the other gear you need, (a basic shopfitted counter, some kitchen appliances etc.) You can quite easily sink £10k (doing it very cheaply), without furniture/fit-out costs etc.
Location is a huge factor, unless you're in a city or a 'trendy' town, you need the footfall & you need to look good & offer a good product or even something different.
I know of a coffee shop that's opened locally (more artisan specialist), than your greasy spoon kind of cafe, they do a few quality artisan dishes/cakes to go with it.
They open 7 days a week & are a bit different to all the other places around.
Some days they can do as much as £500, but then, they will also some days only do £100.
They have 1 member of staff, otherwise man it as owner/operator & didn't have to pay any fit-out costs.
I would say a guess somewhere between both figures would be an average, by the time you've paid rent/costs/wages, it really doesn't look like much point, however, it pays them a wage & it's something they love... so why not?
They must be doing something wrong as a previous poster has estimated coffee shop takings at £14,000 per day !Selling just coffee isn't going to make you rich, to begin with you need to be doing more than 'coffee', sandwiches/salads/cake etc.
A half decent coffee machine can cost around £5k + all the other gear you need, (a basic shopfitted counter, some kitchen appliances etc.) You can quite easily sink £10k (doing it very cheaply), without furniture/fit-out costs etc.
Location is a huge factor, unless you're in a city or a 'trendy' town, you need the footfall & you need to look good & offer a good product or even something different.
I know of a coffee shop that's opened locally (more artisan specialist), than your greasy spoon kind of cafe, they do a few quality artisan dishes/cakes to go with it.
They open 7 days a week & are a bit different to all the other places around.
Some days they can do as much as £500, but then, they will also some days only do £100.
They have 1 member of staff, otherwise man it as owner/operator & didn't have to pay any fit-out costs.
I would say a guess somewhere between both figures would be an average, by the time you've paid rent/costs/wages, it really doesn't look like much point, however, it pays them a wage & it's something they love... so why not?
I know of a chain coffee shop where the owner pays £150k pa rent to be sat in a massive footfall area. Still making enough to be trading 2yrs into the 5yr lease plus option. They do sarnies cakes milkshakes at very healthy prices mind alongside a full range of "artisan" coffees. Min 6 staff on at all times sometimes more.
the guvernor has it about right.
My ex wife has her own small coffee shop, seats around 25. On a Saturday she takes up to £500 but on other days it can be sub £100.
She's closed on Sunday but then she has to shop to stock up. Her shop is open 830-1600, she's tried earlier and later but that seems to be best (it's in small Shropshire matket town).
Biggest margin is on home made stuff - scones etc. But obviously she then has to come home and bake. Her coffee machine is on the blink (bought second hand originally) and replacements aren't cheap, I think she said around £1500.00.
She takes around £400 a week out of it, which probably doesn't even cover minimum wage, but she loves doing it. Once a month she'll have an event in the evening, local women's institute meeting or something which pays quite well and she's looking at doing more stuff like that.
My ex wife has her own small coffee shop, seats around 25. On a Saturday she takes up to £500 but on other days it can be sub £100.
She's closed on Sunday but then she has to shop to stock up. Her shop is open 830-1600, she's tried earlier and later but that seems to be best (it's in small Shropshire matket town).
Biggest margin is on home made stuff - scones etc. But obviously she then has to come home and bake. Her coffee machine is on the blink (bought second hand originally) and replacements aren't cheap, I think she said around £1500.00.
She takes around £400 a week out of it, which probably doesn't even cover minimum wage, but she loves doing it. Once a month she'll have an event in the evening, local women's institute meeting or something which pays quite well and she's looking at doing more stuff like that.
At the risk of stating the obvious, much of the start-up cost is sunk (£10k fit-out, £5k coffee machine etc), and far easier to recoup over 100 covers in a heavy footfall area than 6 in a back street.
The OP's friend would benefit from:
- identifying other coffee shops locally and spending time in them estimating sales
- better still, take a job in one of them and learn how the business works
- buying second-hand equipment initially - lots available from other failed hobby businesses(!)
The OP's friend would benefit from:
- identifying other coffee shops locally and spending time in them estimating sales
- better still, take a job in one of them and learn how the business works
- buying second-hand equipment initially - lots available from other failed hobby businesses(!)
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