Taking The Plunge: Opening Your First Cafe

Thu 14 February, 2019

It seems like there's never been an easier time to open a café in Sydney. Commercial agents would have you believe that any space could be the next big espresso bar. With the shift of classic shop-front retailers to web-based merchants, there has never been more “ideal-for-café” spaces available.

For many, the thought of flipping the nine-to-five to open a passion project seems like a blue-skied future. A bit of cash here, some Block-stylised breakdowns, a few too many takeaway burgers and voila!

For those who have taken the plunge, the feeling of impact comes somewhere between painting your feature wall for the third time at 2am prior to launch and when the fifth barista you’ve hired in as many weeks tells you they want to pursue the noble art of carpentry.

Competition is cut-throat, cashflow is hard to manage, staff turnover is killing your spare time and everything looks tired already.

“What have I done?”

A fantastic question. Sadly, a question that is often asked at the wrong time. The best tense for this question;

“How am I going to get this done?”

The more thought and effort you put into the answer, the greater your chance of success. Simple.

We are lucky to have the unique perspective of operating out of our Roastworks as a partner to many great operators, and in the trenches as one of the many elements of Sydney’s thriving specialty coffee scene. We love the community we exist in.

We’ve seen hundreds of concepts; seeds planted that have grown into thriving operations in the Sydney scene, but we’ve seen hundreds more of those that haven’t made it. From our seat in the stands and efforts on the ground we give you our impression of what are fatal mistakes, and the steps you can take to avoid making them.

1) Develop a Business Plan:

We don’t mean an elevator pitch. We don’t mean mood boards, and we don’t mean architectural sketches. These are all great components of your business plans. You should have a section of your plans dedicated to each of these:

  • Business Concept: Vision, Mission, Strategy
  • Marketing Strategy: Research, Analysis, Recommendation & Channels
  • Financial Strategy: Budgets (fit-out & operational), Ratio Breakdowns, Targets & Contingencies
  • Employment, Recruitment & Staff Development Strategy: Structure, Accountability, Retention, Replenishment & Recruitment Strategies.
  • Product Strategy: Product Offer, Demographic Targets, Communications & Pricing.

Dig in. Dig deep and keep digging until you’ve found so many answers that you’re satisfied it would take the perfect storm to sink you. You will be amazed at what you find, the value is in finding the questions and answers you need rather than tripping over the hurdles and learning from the impact.

2) Find the Right Location:

If you sign a 5 year lease on a location which doesn’t fit your business plan, you will never be able to complete the plan you worked so hard on. So ask the question before you sign.

Are you a lobby lounger, take-away terrier or weekend warrior?

Finding the right location takes patience and the activation of your network. Some of the best commercial real estate leases are never listed on the market. For leasing agents, to have a buyers profile ready to go costs them nothing in marketing costs.

Don’t be afraid to pound the pavement and ask your café heroes how they sourced their site and if they have any insights. It’s amazing how helpful people will be when they see an opportunity to help someone with information they wish they had earlier, as long as you don’t open next door.

Be wary of location fixation. Many operators have fallen in love with potential sites and lost the focus on what makes that site valuable for their business. Just remember there are always more opportunities, so if the deal doesn’t stack up (i.e. if it’s more than 10% projected revenue), just move right on, this one hasn’t cost you anything yet.

3) Time = Money:

Your time in fitting out a café means nothing in comparison to paying a $500 callout for a stonemason to cut a hole in your bench. Do you have hands? Do you trust your hands? Cut that hole baby.

Here is a list of the most expensive professions per hour; from high-to-low:

  • Architect
  • Builder
  • Plumber
  • Electrician
  • Shop-fitter
  • Sales/Installation Techs
  • Labourer
  • Friend
  • You

Next, here is a list of people ultimately responsible for the success of the business:

  • You

Remember that in the execution of your plan, you pay the bills. Know when and where you can save money, do the work yourself. Ask friends, pull favours. You’re establishing a lifestyle; what better time to do it?

But one caveat… small mistakes break budgets, but big mistakes break businesses.

4) Set Your Priorities

Below are some of the key influences on the success of a modern Australian cafe, the trick is which of these influences you can achieve without breaking bank. This exercise is best applied when you’re running your business plan’s budget, and will help you place an emphasis on your priorities and identify your weaknesses.

  • Quality: The quality of product that you source, and the level of training and capacity of the staff creating it. This is expensive, but will stimulate growth if quality is prepared correctly.
  • Service: Service comes down to professionalism, knowledge and systems. All of this costs, such as investment in training systems, technology, infrastructure and wages.
  • Speed: Once again, professionalism, training, systems and equipment. Speed contributes to convenience and helps establish reputation.
  • Location: Key locations rarely come with a perfect balance of street frontage, parking, square-meterage storage and other features. Especially in Sydney, often you will need to make up for weaknesses in location with investment in marketing and promotional activities or investment in product quality
  • Culture: Work-life balances of staff and yourself, recognition of personal growth needs an professionalism. Cost = High. Value = Priceless.

As an example of this exercise, here is our priority list for our Alexandria cafe:

  1. Quality
  2. Culture
  3. Service
  4. Speed
  5. Location

This means that when strategising our budgets, I know the quality of our ingredients will cost more, but we can create a destination and culture around this. Due to our location, out of the way of the usual nine-to-five trade, we rely on promotion and marketing activities to acquire new customers, and customer service and culture to retain them.

5) How does hospitality fit with you?

Firstly, lets look at the etymology of Hospitality…

Derived from the latin term “Hospes” which translates to ‘host’, ‘guest’ or ‘stranger’. ‘Hospital’ stems from this latin term, as does ‘hostile’. As hospitality has developed over the years, in a lot of instances it’s deviated from the route term of opening your home or other space to others and providing a good experience for them.

For a lot of operators, this hasn’t occurred to them. Lambasting someone for ordering ten modifications on their coffee is a contradiction to the term hospitality.

The veterans of the industry often state that you either have it, or you don’t. Though the ability to be welcoming, obliging, polite and knowledgeable about your product can be taught, it sure helps to “have” it.

We would suggest before you take a second mortgage and break your back for a couple of years try and pick up a few shifts in the industry. If you’re working a nine-to-five, and don’t have any time, it’s time to start working nights and weekends. Which, if you enjoy the job, you’ll end up doing anyway...

It’s not all doom and gloom. We love working in cafes. We still do it, every day...

Somewhere between the long days, late nights and take away lines there is a certain serenity to be found. It comes after you and the team have crushed the biggest rush your cafe has ever had, got through your first day, seen a new face and had an amazing interaction with your brand.

Working in the industry you are placed in quite a unique space, you are both punching bag and counsellor. For $5 a day, you may not fix someone’s problems, but damn you can make a good sounding board.

Operating out of a space which is uniquely yours, and through hard work, focus, planning and a sprinkle of good taste, you too can find the cafe success that many have come to know.

The litany of legends you will come to recognise as both competitors and peer, staff and lifelong friends will make up the community around you, the products you will experience from producers will inspire the passion in that community, and the life choice you made in opening your first cafe can very well be the best move you’ve ever made.

- Sebastian Shearman.

Sebastian is our Wholesale Partnerships Manager here at Mecca. He takes a great deal of pleasure helping people make their concepts a reality. If you want to get in touch with him or one of our coffee gurus, head over to our wholesale enquiry page here.

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