The UK’s cafe culture continues to grow and evolve with the market fairly evenly split between non-specialists, independent cafes and large international brands such as Starbucks and Costa Coffee.
Experience suggests this diversity has remained a constant feature of the UK café sector. So, if you’re looking for a business which is less prone to the pressures currently facing many traditional high street retailers, then a cafe business for sale looks a realistic option.
A buyer’s profile
Strictly speaking, you don’t require qualifications to run your own café business. However, some background experience in catering would obviously give you an advantage. Remember too that you will also need a working knowledge of a menu of generic business skills such as business accounting, advertising and planning.
As a cafe owner, you are likely to have a high-profile presence throughout the working day. That means you should enjoy meeting people and catering for their needs and have a pleasant personality enhanced by good communication skills. As well as your potential front-of-house role, you will probably also be managing staff and thus should be a good motivator who can remain friendly and approachable.
Just like many other businesses, a would-be cafe owner will need plenty of energy as well as a resilient outlook and plenty of patience. For example, there are likely to be many instances where you will be putting in extra hours long after the close of business.
Finance and statistics
You will find business purchase opportunities at most price points. At the top end, a Kensington cafe restaurant is currently listed on BusinessesForSale.com at £1.25 million, while an ultra-affordable leasehold restaurant and takeaway in Plymouth is just £960, and a leasehold cafe in Bury is going for £1,950.
In between these extremes, there’s a roadside cafe in Skipton at £19,950 and a cafe restaurant in
Portree at £125,000. Many experts believe the ‘average’ cafe business may cost around £100,00.
If you’re looking for finance, there are two prerequisites you must put in place. Firstly, you must have a clear business plan which illustrates your business intentions and shows how you will repay any borrowing. And secondly, most lenders will expect to see evidence that you have also invested your own capital in the business.
Subject to those requirements, you may still find many banks and traditional lenders a little reluctant to offer unsecured finance given that as a new owner you will have no previous trading records to support your request. Nevertheless, you may qualify for a government-backed Start Up Loan of £500 to £25,000 which also comes with a years’ free mentoring.
With certain property listings, the seller may be prepared to offer some element of financing as part of the purchase deal. However, before entering into any seller-finance arrangement you should take professional advice both to validate the offer and to ensure you understand the nature of your commitment.
What to look for in a business
You should ask targeted questions in order to understand precisely how the business generates income. You will also need to find out what influence the features you observe actually have on the trading patterns you will subsequently wish to see in the balance sheet.
For instance, if a cafe restaurant is successful, is this because of its location and heavy footfall? Or is it actually because of a robust marketing strategy which has established the enterprise as a destination restaurant?
Tread carefully if there is a seasonal element, which is the case with some seaside towns and other popular tourist locations. In the UK, the domestic holiday business can be greatly influenced by the weather as well as by the country’s overall economic outlook. So, if your prospective business has a high season, you will need to think carefully about how you can survive out of season, or possibly diversify to overcome this limitation.
Provided it can accommodate your plans, the size of the business is rarely an issue. However, you must ensure that any business you buy has a highly visible frontage to maximise its kerb appeal.
Licences and permissions
You should research matters of licensing and permissions very carefully. There are numerous statutory food and hygiene regulations a cafe owner must comply with, and they become even more stringent if you serve alcohol.
In addition, there will be fire and health & safety legislation to observe, and if you employ staff, you will need to become familiar with employment law.
An experienced due diligence team will evaluate the actual worth of your target business in the light of the asking price. This review should take a critical professional look at the business and drill down into the trading detail.
There should not be any exaggeration or disparities in the financial records, nor should there be any undisclosed debts or liabilities. For instance, this examination should clearly establish the level of trade – e.g. by comparing a cafe/restaurant’s average sales each night against its maximum cover when fully booked.
Is this business right for you?
Running a cafe is not for everyone – and if you’re envisaging some kind of laid-back hospitality heaven, you’re surely in for a surprise. But if you have a good grasp of catering business realities, then making your cafe into a successful enterprise is mostly a matter of skill, stamina and hard work.