People who want to run or open a cafe, such as "I want to start a nice cafe that is loved by locals" and "I want to run a cafe in the countryside when I retire," are concerned.
Isn't that the start-up capital, the operating capital, and the actual profits?
Running a cafe is not necessarily a highly profitable business. It is not uncommon for a business to go out of business within three years of its opening, so it is important to keep down opening costs and daily operating costs as much as possible in order to make a profit.
Can you really make a profit from running a cafe?
In response to the question, "Is it profitable to run a cafe?", most current and former cafe owners will probably answer "difficult" or "not profitable."
This is because the average cost per customer is low in cafe management, and the turnover rate is not good. When I asked a café owner, he answered, "When I open my business, I earn 100,000 yen a month, and after one year, I earn 100,000 yen to 200,000 yen. If I can reach 300,000 yen a month in two years, I'm good."
Let's take a look at the current state of the cafe and coffee shop industry in Japan.
According to Teikoku Databank's "Survey of 1,180 coffee shop and cafe management companies (2018 edition)", the total sales of 1,180 coffee shop and cafe management companies nationwide in 2017 were 641.5 billion yen, an increase of 4.6% from the previous year. 32 million yen and continues to expand.
Major cafe chains such as Starbucks Coffee Japan, Doutor Coffee, and Tully's Coffee Japan are driving sales growth, and these top three companies currently account for 42.6% of sales .
In Japan, coffee consumption is strong, so it is easy to establish a fixed user base, and it is not so difficult to stabilize business performance. However, unlike large cafe chains, which are manualized, individual management and small corporate cafe management are difficult to steer management, such as securing staff, providing services that meet the needs of the area, improving the quality and uniformity of services, etc. is more difficult.
In order to make a profit from cafe management, it is important to understand the current situation and think about how to secure cash flow and sales until it gets on track.
Estimation of cafe management and start-up capital
To run a cafe, it's important not to overspend at the beginning. Starting small will make it easier for you to manage your finances and lessen your mental burden.
As an example, the following is a trial calculation of the opening capital of a cafe with a rent of 150,000 yen for 10 tsubo, and the working capital from the opening until the management gets on track.
Let's take a closer look at each cost.
Property acquisition cost (1.5 million to 3 million yen)
This is the cost of acquiring the property necessary to run the cafe. where the interior and facilities of the previous restaurant are intact, and There are two types of properties, one is the "outdoor" the other is the "skeleton" where the basic structure is exposed . Property acquisition costs vary depending on the type of property and the area where the store is opened.
For example, the rent for a 9.4 tsubo coffee shop in Shinanomachi, Shinjuku-ku, Tokyo, is 152,280 yen, and the security deposit and security deposit total 15 months' rent.
n addition, you will also need to consider one to two months' worth of rent as "empty rent" between the time you sign the property contract and the opening of the cafe.
Interior construction cost (2.7 million yen)
After acquiring the property, the interior work must be completed by the day before the store opens.
The breakdown of interior construction costs includes design costs, material costs, furniture and interiors, etc., and the costs vary depending on the design of the cafe. In the case of a general cafe, it seems that it is often 200,000 to 500,000 yen per tsubo.
In the case of a detached property, you can also save on interior construction costs by utilizing the existing interior.
Kitchen equipment purchase cost (500,000 to 2,000,000 yen)
The necessary kitchen equipment varies greatly depending on the concept, such as whether the cafe is a coffee shop or whether it also serves light meals and alcoholic beverages. Regardless of the concept, essential kitchen equipment includes commercial refrigerators, ice machines, gas stoves, and sinks. If you buy everything new, it will cost about 500,000 to 1 million yen, and if you buy other cooking utensils for serving light meals and even a dishwasher, it may cost more than 2 million yen.
There is also a method of purchasing a second-hand product to reduce the initial cost, but in that case, you must also consider the maintenance cost later.
Tableware/equipment purchase cost (1 million to 2 million yen)
Tableware and fixtures are one of the important elements that determine the atmosphere of a cafe along with the interior.
If you buy a particular sofa, table, and chair, it will easily exceed 1 million yen. On the other hand, although the products of furniture mass retailers can keep costs down, there is also a disadvantage that it is difficult to demonstrate the originality of the cafe.
Depending on the scale of the cafe, it would be a good idea to assume 1 million to 2 million yen for about 20 seats.
Working capital (1 million to 2 million yen)
Working capital is the most important fund to get the cafe management on track. Even if a business continues to be in the red because it has just opened, it can avoid going out of business as long as it has working capital.
As for working capital, if it is a trial calculation that the store will turn from a deficit to a profit within 6 months after opening, it is roughly equivalent to 10 months' rent.
Other things you need to run a cafe
In addition to funding and equipment, there are things you have to prepare for cafe management.
Documents required to open a cafe
When starting a business, it is necessary to decide whether to operate as a sole proprietorship or to establish a corporation such as a corporation and operate a cafe. If you are a sole proprietor and want to open a café, you must submit a “Notification of opening/closing business, etc. of sole proprietorship” to the nearest tax office.
On the other hand, when establishing a corporation, it is necessary to submit a “Notification of Establishment of Corporation”. You must also complete an application for registration of incorporation at the Legal Affairs Bureau.
Do you need a license to run a cafe?
The required qualifications and applications differ slightly depending on whether the shop to be opened and managed is a “cafe” or a “coffee shop”. "Cafe" can serve alcoholic beverages and general cooking is possible, but "coffee shop" is not allowed in principle.
First of all, both cafes and coffee shops must have food hygiene officers. A food sanitation supervisor can be obtained by taking a course held by the Food Sanitation Association.
Also, if the shop is a cafe, it is necessary to apply for a restaurant business license from the public health center. In addition, if the number of people is 30 or more, you must apply for a “fire prevention manager”, and if you are thinking of manufacturing sweets and bread for takeout, you must apply for a “confectionery manufacturing business license”.
Creating an atmosphere in the cafe is also important
So far, we have introduced the essential items for opening and running a cafe, but creating an atmosphere in the store is also important for continuing to run a cafe for a long time. If you have enough money, why not show your commitment to interior design such as chairs?
Also, since the number of people working remotely has increased in recent years, it is also important to prepare a Wi-Fi environment.
Attractiveness of cafe management
What is the attraction of cafe management, which is said to be difficult to continue and even unprofitable?
The owner does not have to stand in the store
Cafe owners have a variety of jobs such as managing the cafe, planning the concept, considering the purchase of interiors, furniture and fixtures, and educating the staff.
If it is a small cafe, the owner can run the shop alone, or the owner can choose to hire a manager and staff other than himself and concentrate on running the shop. You can also
Running a cafe doesn't require any special skills and doesn't require a lot of labor, so one of the attractions is that you can start operating on a relatively small scale.
A business that does not incur advertising costs
Cafe advertisements include the distribution of flyers and shop cards, but the current mainstream is "word of mouth" using SNS and review sites.
In addition, users who use cafés often come to the store because they are “close” or “found it by chance”, and if repeat customers are born, it is easy to stabilize business performance.
How to run a cafe to avoid failure
So far, I have told you that running a cafe is difficult, but what methods should I take to get it on track?
Start business with own funds and loans
Most cafe openings are cases of self-financing + loans . With the savings from the time you were a company employee, you can get loans from banks, credit unions, Japan Finance Corporation, etc. to raise funds for opening a business and working capital.
Read Also : Apply for SME loan? We help you!
By using a system (loan product) called “start-up loan” at financial institutions, you can get a large amount of funds even if you do not have a track record or company history. However, in order to achieve the desired loan amount, a clear business plan and concept, and the enthusiasm of the person opening the business must clear the loan officer's interview.
Launched through small M&A
There is also a method by "small M&A" to acquire existing cafes and coffee shops and take over the business.
For example, if the owner of a long-established coffee shop offers to sell the shop for 3 million yen because of his age, he can take over the shop, kitchen equipment, furniture, and even customers for 3 million yen. I can do it. If you use small M&A, you can jump over various hurdles at once, such as funds for opening a business and know-how of cafe management.
Points to note when realizing cafe management through M&A
From here, we will introduce the points to realize cafe management with small M&A.
Flow of M&A
M&As generally proceed in the following ways:
Transaction amount calculation criteria
What is handed over in M&A is not limited to tangible things such as land and buildings, but also includes the name recognition and reputation of the store. Therefore, when calculating the acquisition price, it is common to comprehensively judge sales, future prospects, number of employees/stores, location, etc.
Where can I get advice on M&A?
As you can see in 1 of "Flow of M&A", when you decide to proceed with M&A, first consult with someone who has expertise in M&A. Specifically, we deal with financial institutions, M&A intermediary companies, accountants and tax accountants.
There are also places where you can consult with public institutions, such as the Business Succession/Handover Support Center.
Running a cafe is difficult, but it's attractive.
I explained the charm and specific methods of cafe management and opening.
As I told you so far, it is possible to make a stable profit from cafe management, but it is not a business that makes a lot of money. However, one of the great attractions of running a cafe is that it is loved by local residents and has the rare value of becoming a place of relaxation. If you want to run a cafe from now on, please consider M&A as one of the management methods.
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