So how much does it really cost to run a cafe?
Apart from the initial investment you’ve spent on either buying the business or renting out a shopfront, what other costs are there?
Starting up your business in Australia is a big investment, and needs to be taken very seriously. Besides the existing competitions between surrounding cafes (more than a thousand in Brisbane alone) and budgeting for land space, there are many more factors which can alter the cost needed.
That being said, all costs are still depending on individual cafes (as all cafes are special and unique), but the basic expenses are still more or less the same. To have a better overview, below is a list of main expanses, broken down to stages. \
Stage 1: Planning and Licensing
We’ll first start by listing possibly needed licences, which could have already been provided to you if you purchased an existing business.
- Business License
- Employer Identification Number
- Certificate of Occupancy
- Food Service License
- Sign Permit
- Resale Permit
- Building Health Permit
- Employee Health Permit
- Seller’s Permit
Leasing is another big expense (again, could’ve been included to your existing, purchased business). As lease varies greatly depending on the premise’s size and location, your expanse and the rental cost may be higher or lower than your initial budget. Typically, a coffee shop would need around 1000 square feet per 20 seated customers, and including other walking spaces, this would need around 1300 to 1700 square feet in total. With that in mind, calculate the amount of people passing by the location each day, and you should have a rough idea of how big your premise will need to be.
Refurnishing and repairing should be the first thing you do with your premise, regardless if you are an existing business or new start-up cafe. this is crucial as the image of your cafe will leave a strong impression for your customers, and can be a big factor determining whether or not they want to re-visit your shop. The functionality of your cafe building can also allow greater efficiency, or limit your productivity if it is left unattended.
Creating a menu is more than just “food listing.” It is to create a unique identity for your cafe, allowing you to stand out amongst all other cafes in Australia. You need to be creative, revolutionary, and eye catching. The items on your menu will also decide the kind of kitchen you need, food station, fridge, storage, etc. So prioritise this.
Bear in mind that the kind of food you’ve chosen and its price will directly affect your cost as well, so keep tab on that!
Stage 2: Equipment and POS system
A POS system (point of sales system) is another big component of your cafe. This method of accepting payment needs to be fast, efficient, and reliable. Especially during peak hours, your cash flow should never be interrupted by faulty machine, server errors, or connection issues. An inventory integrated POS system will allow you to keep track of your products in the future; planning ahead is a big part of this long run. The ability to connect with your customers is also essential, as they are your source of income. So POS system with CRM (customer relation management) system embedded are ideal for expending cafes.
There are many more equipment that you will need, and that will depend on the type of menus you have. Espresso machines, coffee grinders, and tamps are a must; freezers and ovens, or microwaves will depend on the menu you’ve built. Coffee beans can vary from $30/kg to $70/kg, so again, decide on the type of menu you want to serve, and the profit you need to earn in order to maintain your business.
Stage 3: Supplies
Now that you have a location and storage, you can look at potential suppliers to fill up your pantry. Apart from the cost for food, the delivery and process fee of those will also be an additional cost. Keeping the food in freezers will increase the electric bill, and so on. Time of delivery, frequency, and amount will be a handful to keep track of, so your POS’s inventory function will definitely come in handy.
Stage 4: Security and Staffing
Once you have all your items sorted out, you need to secure them. Training staffs to handle goods and monitoring their progress is important. Investing in security cameras and alarm monitors can reduce loss of profit in future, so the type of CCTV provided to you needs to be carefully calculated and requires strategic placements.
The total cost will round up to approximately 200k to 500k, so plan, plan, and plan again for your business!