Ever considered opening your own cafe? This guide helps you navigate the most common questions we get asked when considering how to open a café with a low budget, and running a profitable coffee shop with advice from veteran coffee roasters who seen it all...

 

COVID19 and on-going lockdowns and restrictions has certainly put the pressure on the hospitality industry, and sadly, we've seen the closure of many favourite venues around Australia. And while it has been a tough time for all, many are taking the opportunity to chase their dreams. To leave the cities and buy their own job by opening their own cafe or restaurant. 

Whether it has always been your dream to open a café or you’re looking at it from an investment perspective, the same three principles apply to successful café ownership: Knowledge, finance and organisation.

Unsurprisingly, these three pillars can be applied to just about any business, but when it comes to the running of a café, there are certainly some specifics that you should pay attention to.

The strongest advice that the crew at Crema Coffee Garage can give is this: You personally don’t have to love coffee or hospitality to run a successful café, but you do have to hire or go into business with someone who does. It is essential. Advice, advice, advice: get it.

 

Can you open a café with no experience?

Absolutely, but you do need to examine who will be your guiding light in a specialised industry and there are some certifications you’ll need along the way. 

Cafes and coffee shops run on emotion, and it’s a circular economy. Your customers walk in each day and are greeted (or not) by the smiles and friendly welcomes or jokes of your staff. This is reflected back at staff, who do an even better job when they feel close to their customers and part of a community. 

Your customers rightly don’t want to feel like a burden for a service they pay for, and your staff don’t feel inspired to smile at customers who treat them badly. For this reason, investing in the right hire or business partner is a must. Knowledge is power.

 

Why you should hire a hospitality professional

An experienced hospitality professional understands this customer-staff dynamic like an instinct, something ingrained. For some it might be natural, and others will have learned it over many years. Without a person like this to steer your ship, creating a good vibe and reputation – which translates to profit – in your café will be difficult or hard to sustain. As we all know, relationships take work. 

Key benefits include:

- Being able to identify problems and provide solutions that fit
- Understanding the business aspects in context – this is extremely important in such an emotion-driven, specialised industry
- Being a mentor to staff and offering solid training foundations to new trainees
- Sorting the truth from the fiction – hard to do when you don’t know the nuances of café operations
- Dealing with suppliers – having someone to navigate these waters is worth its weight in gold
- Support and guidance – Café ownership is undoubtedly hard work, and having someone experienced on board is priceless

At the end of the day, owning a café can be mentally and physically exhausting despite the massive benefits. If you don’t invest in including someone experienced from the beginning, you’re going to be setting yourself up to fail. Few people are prepared for the true labour of love that a café can be, but hiring someone who is will make all the difference.

What qualifications do I need to open a café?

You don’t need any specific qualifications to open a café, but there are some good suggestions to form a strong framework. Qualifications matter less than real on-the-ground-experience in the café ownership world, but there are certainly advantages to skilling up to get ready.

Courses, qualifications and topics for café owners to consider:

- A Certificate III in Hospitality up to a degree in Hospitality Management
- Accredited Barista Training – a statement of attainment in Prepare and Serve Espresso
- Food Safety Certificate
- Commercial cookery courses
- Business administration
- Accounting
- Small business
- Marketing
- Social media and digital marketing
- Human resources

All of the above will help you on the road to setting up a coffee shop with a strong knowledge framework, and Crema Coffee Garage offers great Accredited Barista training & Food Safety courses to get you started. Your local council may also require you to obtain specific licenses and permits and undertake regular risk assessments. Be sure to check with your local council. 

 

How much money do I need to open a cafe?

The costs associated with opening a café can be many and varied, and depend on a number of factors. We break the main considerations down here, and if you work on finding the answers to these questions then writing a detailed business plan will be easier.

Buying an existing café VS setting up a new café?

There are definite pros and cons on both sides of the table here, and it truly comes down to your personal vision and goals.

Buying an existing business can be invaluable because:

- You’re buying an established brand and customer base
- Café profits and financial trends are known and predictable
- Staff are settled and well trained (in theory)
- Rental contracts are established
- Suppliers and accounts are already set up
- Basic stock and day-to-day operations are in place

While buying an existing business might limit the amount of creative decisions you can make initially, over time you will be able to put your own stamp on it. With that short term sacrifice, you gain a lot of background information that makes identifying problems and planning new strategies far, far easier that a clean slate.

Setting up a new café is exciting and has some serious upsides, but there is far more to consider if you choose this path. Benefits include:

- Building your own brand and vision
- Finding a location
- Setting up paperwork, policies and procedures
- Getting council permits
- Considering shop fit outs and equipment purchasing
- Connecting with customers in your own style
- Hiring the staff you want to contribute to your goals
- Having full control over the types of rental contracts and venues you ultimately choose
- Having full design and fit-out control
- Choosing your own stock and menu items

Setting up a new café won’t necessarily come with different responsibilities to buying an existing one, but there will definitely be more ground work to cover. The frameworks, history and structure will all need to be put in place by you first.

 

Café set up costs to consider

There are a huge range of variables when it comes to nailing down the cost of setting up a café, and you can probably now tell that already. This is where getting advice from industry professionals, backed up by legal and financial advice are key. Let the experts guide you here – it’s what they do.

Other costs to consider include:

- Rent – is the dwelling you’re looking at leasehold or freehold? There’s a big difference
- Wages – How much do you plan to work in the business, and what kind of budget for wages can you afford? This budget might dictate the entire overall business model. For example, dine-in cafes with large customer capacities naturally need a higher number of staff than a take-away only café.
- Machinery & equipment – Are you planning to lease or buy your coffee machine? Both have benefits, and Crema Coffee Garage often suggests a mixture of both. Offering 12, 24 and 36 month contracts on equipment allows our customers to explore their options before committing to the purchase of expensive equipment.
- Stock – Cafes require significant stock to get up and running including packaging, administration, food and beverages, cleaning equipment and uniforms to name a few
- Legal – There will be a number of legal costs associated that relate to the business registration right through to building related legalities, wages, staff contracts, and intellectual property
- Insurance - You're going to need plenty of this, with the top picks being Employer’s liability insurance, public liability insurance, professional indemnity insurance, Buildings insurance and industry-specific insurances
- Financial – Here you will need to look at a getting advice from a few professionals, though once you find one you trust they can often refer you to people in their network who can help you with the specialities. These would include financial advisers, business tax accountants, book keepers and wealth management advisors.

How much does it cost to open a small coffee shop?

It can range wildly from $10,000 - $5, 000, 000 dependant on many factors. These can be things such as:

- Location
- Time in business
- Financial position and cash flow projections
- Exact type of sale - with building or without, for example
- Stock levels
- Other related business assets included in sale, such as equipment

This where consulting a business broker to examine the value of a cafe before purchasing it can be the best choice, as well as getting sound financial and legal advice. If you’re setting up a new café, writing a great business plan will help guide your choices when it comes to choosing a location and building to set up your coffee shop in.

 

Can I open a coffee shop with no money?

The simple answer to this is no – you’ll definitely need some capital to set your coffee shop up. Where that capital investment comes from though is entirely up to you. There are a number of ways you can look at setting up a coffee shop for a lower cost including: 

- Going into business with partners, so the overall individual investment cost is lower
- Finding an investor willing to back you entirely
- Getting a business loan from the bank – here’s a loan calculator
- Taking advantage of government grants and schemes for small business start ups

You can get pretty creative when it comes to how you gain some start-up funding, but you’ll definitely need some to get cracking.

 

Is owning a café profitable?

While owning a café can certainly be profitable, it might not be by the margin some bargain on. According to Australian Tax Office data and other statistics, the average profit margin for a café sits between 8-16% of total income, less expenses. For a café turning over 10K per week, that’s an annual profit of around $50k per year. 

Ways to increase this is by eventually scaling the business to make more, either by venue or services expansion, or by buying multiple locations. If your dream and vision is to stay small, you have to be content with earning a slightly-above-average salary for your efforts. For many, it’s definitely a project well worth it.

 

How to start organising your café set-up

While there are many things to organise in setting up a business, there are a few key things to address to get started:

- Identify your business vision, goals and values
- Write a business plan
- Secure funding
- Get educated
- Research and create policies
- Hire great staff
- Get advice from experts

The moral of the story is that setting up your own coffee shop heaven is 100% possible with but a little guiding assistance from the professionals around you. You just have to approach it with the appropriate amount of seriousness, and a heavy helping of passion and inspiration.

The team at Crema Coffee Garage talk people through this process every day, and have been part of the successful journey for hundreds of café owners – you can check out some hot tips here. Every member of the Crema team comes has first-hand industry experience and a deep knowledge of all things coffee. 

If you’re looking for a local, boutique coffee roaster that knows their stuff – get in contact with the team today.

Not sure where to go from here?

We love to share our passion for great coffee and one of the ways we do that is through providing services, training and café supplies to locations across Newcastle, the Hunter Region, Brisbane and surrounds. If you’re opening a café or want to take your current business to the next level, Crema Coffee Garage can provide café supplies to help you achieve your goals.

Our philosophy since we opened in 2002 is to deliver personalised service and to invest in our partners, ensuring everyone involved receives the best result possible. We make this happen by providing a team of experts to help you on your coffee journey.

As a family business, headed by Jane and Tim Peters, Crema Coffee Garage has established a dedicated team of passionate coffee lovers. Our aim, across all sectors, is to share our passion for coffee through offering great products, industry knowledge and impeccable service. The coffee industry is constantly innovating, so it’s important to partner with a business like Crema that is at the forefront of this innovation, sharing what we’re learning every day about new products and techniques coming into the marketplace.